GENERAL PRINCIPLES OF MANAGEMENT Introduction

Even before describing and defining the term “management” it will be usefull to trace the need for it. The need for and the concept of management are associated with the phenomenon of group activity. Everywhere in a modern society, we find groups of people working in all spheres of human activity. Wherever there is an economic activity or a social activity (including religious and cultural activities) or a political activity or any other type activity undertaken by human beings for realising certain specific objectives; we find people working in groups. A school, a college, a university, a business enterprise (in private or public sector), a club, a hospital, a government administrative department, an army, a family, a sports association etc., are all examples of group activities.

Definition
Management is a distinct process consisting of planning, organising, actuating, and controlling, performed to determine and accomplish stated objectives by the use of human beings and other resources. -----George .R. Terry

Nature Of Management
The nature of management are examined by the following perspectives; 1. Management as an Activity: The way a teacher performs, a teaching activity; a player performs a sports activity; in the same way a manager performs a managerial activity. The managerial activity is, in fact, the managerial job i.e., the task performed by a manager or the group of managers in an enterprise. 2. Management as a Discipline: Management education is a gaining popularity in the present day times. Management as a subject is taught at schools, colleges, universities. Specialised management institutes are growing rapidly, imparting management education and prepare for a career in management.
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training and helping people to

3. Management as a Group: Management refers to the totality of all those persons, who are charged with the responsibility of managing a particular enterprise. Management means the group of all managers; who represents a distinct class of society viz. Management as a group could be considered at two levels;At the Micro-level, management as a group refers to all managers from the higher authority to the lowest authority; who are managing a particular enterprise. At the Macro-level, management has a group or class refers to all persons who are performing the managerial jobs in all different enterprises-economic, social, cultural, political etc.., which are located in an economy or a nation. 4. Management as an Economic Resource [or a Factor of Production]: The economist has all the time been speaking of four factors of production viz., land, labour, capital and enterprise. To this list of four, management, as a factor of production, must be added, to make it a complete list of all factors of production. 5. Management as a System of Authority: Management as a system of authority might also be referred to as the management hierarchy i.e. a gradation of managers; consisting of managers from the highest rank to the lowest one. Of course in any enterprise, this management hierarchy is found; because there are various managers, with different grades of authority. 6. Management as an Art: The art of management demands creativity on the part of the practitioner; so as to find or develop new and unique ways of understanding human behaviour; and making people work in the desired manner towards the best realisation of the common objectives. 7. Management as a Science: Management as a science; because There is a large body of knowledge about management, which is further extended into specialised areas of management like production, finance, marketing, personnel, etc.., There are a number of management concepts, principles, theories and techniques.
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8. Management as a Profession: A profession must be defined as an occupation; which involves rendering of services of a specialised and personal nature, for a fee called professional charges. Without going into the question whether management is a profession or not; it could be said that there is an imperative need for management profession, for the following fundamental reason:

Principles Of Management
1. The Concept Of The Term “Principle” A principle might be defined as a statement of fundamental truth; which is established with reference to a ‘cause and effect relationship’ between two (or more) variables or events. A principle, as such as, imparts the value of predictability to a science containing principles; and helps a practitioner of the discipline to calculate the effects of certain causes and apply the principles in practical situations of life-making the science meaningful and useful to human beings in society. 2. The Concept Of Management Principle In the concept of management ,too, a principle might be defined as a statement of fundamental truth ,which is established with reference to a cause and effect relationship between two variables or events; such relationship, however, being only a cause of nature. To illustrate the above concept, let us consider the division of work. according to the principle, if the work is divided and only a part of the job is assigned to an individual ; human efficiency would increase .admittedly , what the principle states is fundamental truth. However it is not possible to say and calculate how much human efficiency is likely to increase; if the work is divided in a particular manner, in the appropriate organisational context. 3. Derivation Of Management Principle There are two sources from which management principles are derived;

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3. Experimental studies in the field of management are basically of two types. the management structure depends upon the objectives of the enterprise. 4 . Principles Of Management 1. Division Of Work The total work should be divided . therefore the objectives of an enterprise must be clearly fixed. this gives an idea of the total work load of the enterprise. Span Of Control No executive in the management should be required to supervise more than he can effectively manage.(a)Experimental studies conducted with a view to testing the validity of some of the existing principles of management and (b)Experimental studies conducted with a view to developing new principles of management. Every part of management should be designed to facilitate the accomplishment of common objectives. (ii)outcome of experimental studies conducted by researchers In the present day times . 2.this is known as departmentation .a lot of research is being conducted by the practitioners and scholars of management.(i)Observation and experience of practitioners and scholars of management One most important and traditional source from which management principles have been derived is the observation and experience of the practitioners and scholars of management.all the activities must be planned. Effective organisation must promote specialisation. Unity Of Objectives The term objectives means a goal to be achieved.. An executive should be asked to supervise a reasonable number of subordinates.

the superior has a direct authority over his immediate subordinate .he is responsible for efficient performance of the work entrusted.this is necessary to ensure completion of tasks and co-ordination of activities. 9. Delegation creates obligation on the part of the subordinate. 8. He is accountable to his immediate superior.4. The different departments may have to function frequently in close consultation with other departments in a departmental store . The subordinates should be granted necessary powers and rights. The relationship between different jobs should be clearly specified. Dual subordination should be avoided. Unity Of Direction There must be one head and one plan for a group of activities directing towards the same objectives . it creates disorder and confusion and leads to indiscipline. Co-Ordination The various activities of undertaking should be co-ordinated to secure the desired results. 7.the purchase department and sales department activities must be well coordinated to increase profit. 6. 5. Unity Of Command Each individual should receive orders from only one boss . Scalar Principles Line of authority must proceed from the highest executive to the worker at the bottom level through a downward flow. Delegation Of Authority Delegation means the entrustment of the part of the work or some duties to the subordinates. He becomes accountable to his superior.a person cannot serve under two masters. 5 . Functional Definition The authority and responsibility of every individual should be clearly defined. Superior has to entrust some of his duties to his immediate subordinate. this is known as CHAIN OF COMMAND.

Too many levels of authority for example. There should be scope for expansion without disrupting the basic design. Management is what management does. He is accountable to his higher authorities. It should be adaptable to changing circumstances.Therefore the art of management lies in including people to work to the best of their efforts and energies. complicate communication channels and by causing confusion and friction makes achievements of co-ordination impossible. 12. The organisation structure should enable the enterprise to function efficiently and accomplish its objective with the lowest possible cost.10. in order to justify their existence and ensure stability of employment . so that people associated with the group are helped to give their best contribution towards the attainment of common objectives. working in a work endeavour. 6 . Ability As people constitute an organisation there is need for proper selection. Simplicity Another principle of organisation is that it should be simple. Management is the creation of the internal environment is an enterprise.Flexibility The organization should be flexible. Efficiency Efficiency should be the watchword of the organisation. 14. The organisation must ensure optimum use of human resource and encourage development programmes. A minimum work is performed by all people. The Principles Of Responsibility The superior should be held responsible for the act of his subordinates. 11.for the most efficient realisation of common objectives. Conclusion: Management is the art of getting work done out of others. 13. working in a group. placement and training to staff. He cannot escape from his responsibility.

S. Principles Of Management. 2. New Delhi.REFERENCES: 1.Maheshwari(1995). New Delhi.Maheswari.N. 3. R. Steven L McShane. Ram Nagar. Charles W L Hill.N. 7 . New Delhi. DR. Sultan Chand & Sons. Principles Of Management. Tata McGraw-Hill Publishing Company Limited.Chand & Company Ltd.S. Sharad K.Gupta. Principles Of Management.

an individual cannot be treated as a managing body running any organisation. The term ‘resources’ includes men.these Definition According to Terry. 3.it is an activity like walking . swimming or running. a minimum of two persons are essential to form a management persons perform the functions in order to achieve the objectives of an organisation. 2. Management Is An Activity Management is the process of activity relating to the effective utilisation of available resources for production. Management Is A Continous Process The process of management consists of planning. organising.reading. People who perform management can be designated as managers. material and machine in the organisation. The management function 8 . The resources (men and money) of an organisation should be used to the best advantages of the organisation and the objectives to be achieved. directing controlling the resources. Art As Well As Science Management is both an art as well as science.” Features The following are some of the features or characteristics of management: 1. members of management or executives leaders.MANAGEMENT DECISION MAKING Management Meaning Management is the art of getting things done by a group of people with the effective utilisation of available resources. . management is the science because of developing certain principles or laws which are applicable in a place where group of activities are co-ordinated.”Management is not people . money. It is an art in the sense of possessing of managing skill by a person. In another sense.

The practice of management is different from one organisation to another according to their nature. management is a continuous process. So. 4. 5. 9 . Organised Activity Management is a group of organised activities. Management As A Class Or A Team A class may be defined as a group of people having homogeneous characteristics to achieve common objectives. If there is only one course of action . These persons activities should be organised in a systematic way to achieve the objectives. Each and every doctor has the same objectives in life.of any one alone cannot produce any results in the absence of any other basic functions of management.need for decision –making does not arise. Just like engineers and doctors. Engineers and doctors are grouped as a class in a society. If the available resources are not utilised properly by him. A group is found not only in a public limited company but also in an ordinary club. The objectives cannot be achieved without any organised activities. The success or failure of an organisation depends upon the degree of right decision taken by the manager. Universal Application The principles and practices of management are applicable not to any particular industry alone but applicable to every type of industry. All the organisations have their own objectives. Decision making arises only when there is availability of alternative courses of action. Decision Making There are number of decisions taken by the management everyday. 7. Direction And Control A manager can direct his sub-ordinates in the performance of a work and control them whenever necessary. the management people have got similar options aspirations to achieve corporate objectives. 8. These objectives will be achieved only by a group of persons. he fails to achieve the corporate objectives in the absence of direction and control. 6.

Planning. 3. and by whom it is to be done . planning refers to deciding in advance that which will be done in the near future. Directing The actual performance of a work starts with the function of direction. Organisation is of two kinds. and adequate remuneration of personnel. the organisation takes the responsibility to create some more departments under different managers.organisation of material factor . training to those needy persons. book starts with planning. Organisation provides all facilities which are necessary to perform the work. 1. The business developed. 1. Planning Planning is the primary function of management. But the direction deals with making the workers learn techniques to perform the jobs assigned to them. retirement of old persons. organising and staffing functions are concerned with the preliminary work for the achievement of organisational objectives.supervision and motivation of employees. The success of any enterprise depends upon the successful 10 . In short .organisation of human factor.how it is to be done. Staffing Staffing function comprises the activities of selection and placement of competent personnel. Staffing includes selection of right persons. In the business world. Nothing can be performed without planning. the organisations should achieve the objectives. In order to achieve the objectives what it is to be done . In other words. 2. Organising Organising is the distribution of work in group wise or section wise for effective performance. appraisal of all the personnel. 4. . Writing a. promotion of best persons.Functions Of Management The important functions of management are briefly discussed below.when it is to be done . performance performance of staffing function. Direction includes guidance. staffing refers to placement of right persons in the right job. 2.

and new techniques in production. this is done by an resourceful approach. Representation A manager has to act as the representative of the company.flexibility. financial institutions. such grouped activities are coordinated towards the accomplishment organisation . Consumers are satisfied through innovation. and new design of a product and cost reduction. 7. new products.Innovation Innovation refers to the preparation of personnel and organisation to face the changes made in the business world continuous changes are made in the business.the workers expect favourable climate conditions to work. 8. government officials.. Innovation includes developing new material. leader . the control is very easy whenever the organisation has a fixed standard .. suppliers. 9. new package.now.. understanding and adequacy to organisational needs.motivation includes increasing the speed of performance of a work and developing a willingness on the part of workers. Motivating The goals are achieved by motivation .a good system of control has the characteristics of economy .necessary corrective action may be taken if there is any derivation. It is the duty of every manager to have good relations with others.effective communication and gentle 10. monetary or non monetary incentive .the difficulty of coordination of objectives of an depends upon the size of organisation . 6. Communication 11 .5. fair treatment. trade unions.. and the like. banks. He has dealings with customers.Co-Ordinating All the activities are divided group wise or section wise under organising function . Controlling Controlling functions ensures that the achieved objectives conform to pre planned objectives .the difficulty of coordination is increased with the increasing of the size of the organisation.

Without decisions. Decision-making is the key part of manager's activities. It is rightly said that the first important function of management is to take decisions on problems and situations. actions will not be possible and the resources will not be put to use. Decisions are important as they determine both managerial and organizational actions. Communication helps the regulation of job and co ordinate the activities." It represents a well-balanced judgment and a commitment to action. Definition The Oxford Dictionary defines the term decision-making as "the action of carrying out or carrying into effect". Decision Making Meaning Decision-making is an essential aspect of modern management. Decision-making is an indispensable component of the management process itself. He takes hundreds of decisions consciously and subconsciously. Decision making is the primary function of management: The functions of management starts only when the top-level management takes strategic decisions. A manager's major job is sound/rational decision-making. 12 . It is a primary function of management. Decision-making pervades all managerial actions. A decision may be defined as "a course of action which is consciously chosen from among a set of alternatives to achieve a desired result. "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem". It is a continuous process.Communication is the transmission of human thoughts. According to Trewatha & Newport. views or organisations from one person to another person. Advantages of Decision Making 1. Thus decision-making is the primary function of management. Workers are informed about what should be done.

3. Decision-making is a continuous managerial function: Managers working at all levels will have to take decisions as regards the functions assigned to them. Steps Involved In Decision Making Process Decision-making involves a number of steps which need to be taken in a logical manner. Planning gives concrete shape to broad decisions about business objectives taken by the top-level management. 5. Decision-making facilitates the entire management process: Decision-making creates proper background for the first management activity called planning. involves the following six steps: 13 . Decision-making is essential to face new problems and challenges: Decisions are required to be taken regularly as new problems. Decision-making process prescribes some rules and guidelines as to how a decision should be taken / made. maturity and capacity of decision-making. Continuous decision making is a must in the case of all managers/executives. Correct decisions provide opportunities of growth while wrong decisions lead to loss and instability to a business unit. Follow-up actions are not possible unless decisions are taken. Such lengthy process needs to be followed in order to take rational/scientific/result oriented decisions. Management activities are possible only when suitable decisions are taken. In addition. New products may come in the market. difficulties and challenges develop before a business enterprise. Such change leads to new problems and new decisions are needed. This may be due to changes in the external environment. All this leads to change in the environment around the business unit. according to him. This involves many steps logically arranged. staffing. This is treated as a rational or scientific 'decision-making process' which is lengthy and time consuming. In fact. new competitors may enter the market and government policies may change. Drucker recommended the scientific method of decision-making which. Decision-making is a delicate and responsible job: Managers have to take quick and correct decisions while discharging their duties.2. decision-making is necessary while conducting other management functions such as organizing. coordinating and communicating. they are paid for their skill. 4.

the manager should search the 'critical factor' at work. It is the point at which the choice applies. Clear distinction should be made between the problem and the symptoms which may cloud the real issue. Information relevant to the problem should be gathered so that critical analysis of the problem is possible. while diagnosing the real problem the manager should consider causes and find out whether they are controllable or uncontrollable. and Uniqueness of the decision.Analyzing the Problem: After defining the problem.Collecting Relevant Data: After defining the problem and analyzing its nature. Number of qualitative considerations involved. the next step is to obtain the relevant information/ data about it. 4. In brief. 3. This is necessary to classify the problem in order to know who must take the decision and who must be informed about the decision taken. 3. 2. the following four factors should be kept in mind: 1. There is information flood in the business world due to new developments in the field of information technology. the next step in the decision-making process is to analyze the problem in depth. 2. Futurity of the decision. All available 14 . The scope of its impact. This is how the problem can be diagnosed.Identifying the Problem: Identification of the real problem before a business enterprise is the first step in the process of decision-making. It is rightly said that a problem well-defined is a problem half-solved. Similarly. Here.1.

4. Here. 6. the next step is to convert the selected decision into an effective action. the manager has to convert 'his decision into 'their decision' through his leadership. the manager has to take follow-up steps for the execution of decision taken. To decide means to come to some definite conclusion for follow-up action. Without such action. Only realistic alternatives should be considered. This brings clarity to all aspects of the problem. Here. Acceptance of the decision by group members is always desirable and useful for its effective implementation.information should be utilised fully for analysis of the problem. the subordinates should be taken in confidence and they should be convinced about the correctness of the decision.Converting Decision into Action: After the selection of the best decision. If necessary. It is equally important to take into account time and cost constraints and psychological barriers that will restrict that number of alternatives.Ensuring Feedback: Feedback is the last step in the decision-making process. the manager has to determine available alternative courses of action that could be used to solve the problem at hand. 7. 5. the manager has to make built-in arrangements to ensure feedback for continuously testing actual developments against the expectations. group participation techniques may be used while developing alternative solutions as depending on one solution is undesirable.Developing Alternative Solutions: After the problem has been defined. Decision is a choice from among a set of 15 . the next step in the decision-making process is to select an alternative that seems to be most rational for solving the problem. For this. reports and personal observations. Feedback is possible in the form of organised information. the decision will remain merely a declaration of good intentions.Selecting the Best Solution: After preparing alternative solutions. Conclusion Means and ends are linked together through decision-making. The alternative thus selected must be communicated to those who are likely to be affected by it. It is like checking the effectiveness of follow-up measures. Feed back is necessary to decide whether the decision already taken should be continued or be modified in the light of changed conditions. diagnosed on the basis of relevant information. Thereafter.

2. management is rightly described as decision-making process.Maheshwari(1995). The effectiveness of management depends on the quality of decision-making. Ram Nagar.Maheswari. Tata McGraw-Hill Publishing Company Limited. Decision-making lies embedded in the process of management. Principles Of Management. New Delhi. In this sense.S. Steven L McShane. Without such decisions. For this. Charles W L Hill. Sultan Chand & Sons. S. no action can take place and naturally the resources would remain idle and unproductive. DOMESTIC AND GLOBAL BUSINESS ENVIRONMENT Introduction 16 . R. Principles Of Management. References 1.alternatives.N. New Delhi. 3. It is the top management which is responsible for all strategic decisions such as the objectives of the business. The word 'decision' is derived from the Latin words de ciso which means 'a cutting away or a cutting off or in a practical sense' to come to a conclusion. Sharad K. capital expenditure decisions as well as such operating decisions as training of manpower and so on. Decision-making has priority over planning function. The managerial decisions should be correct to the maximum extent possible.N.Chand & Company Ltd. Decisions are made to achieve goals through suitable follow-up actions. Principles Of Management. New Delhi. DR.Gupta. scientific decisionmaking is essential. Decision-making is a process by which a decision (course of action) is taken.

shutters fronting the store are opened to allow customers to negotiate from the street or sidewalk. These shopping centers usually offer entertainment and leisure activities as well. This is particularly true when doing business with the Japanese. the expansion of privately-owned retail outlets have competed with the cooperative sector. but it may have to do business in the "French language". Definition S. the organization's language of business may be "English". (produce means to create or make something). the scope of marketing is broadened when the organization decides to sell across international boundaries. promotion and distribution of ideas. Doing business "the French way" may be different from doing it "the English way". With the government's new emphasis on growth in private enterprise since the late 1980s. Some department stores and supermarkets have begun to appear in shopping centers in major cities. Often the Indian retail shop is large enough to hold only the proprietor and a small selection of stock. In most retail shops. There are no major national chains but foreign franchises do exist. pricing. goods and services to create mutual exchange that satisfy individual and organisational needs and objectives". the definition of marketing still applies. India's domestic trade is widely influenced by informal and unreported commerce and income. but the French cultural conditions have to be accounted for as well. known as "black money. Carter defines marketing as: "The process of building lasting relationships through planning. and mail/take it to other countries who cannot produce that food. However. retail outlets are often highly specialized in product and usually very small in quarters and total stock. This not only requires a translation facility. Domestic Trade Domestic trade is when trade people or the things they produced on a farm. this being primarily due to the numerous other dimensions which the organization has to account for. fixed prices are rare and bargaining is the accepted means of purchase. For example.Whether an organization markets its goods and services domestically or internationally. Most private commercial enterprises are small establishments owned and operated by a single person or a single family. executing and controlling the conception." 17 .

Amber Road). 18 . While international trade has been present throughout much of history (see Silk Road. globalization. Larger shops in Delhi are open from 9:30 AM to 1:30 PM and from 3:30 to 7:30 PM . and outsourcing are all having a major impact on the international trade system. multinational corporations. The main difference is that international trade is typically more costly than domestic trade. International trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. time costs due to border delays and costs associated with country differences such as language. and political importance has been on the rise in recent centuries. GLOBAL BUSINESS ENVIRONMENT:International Trade is exchange of capital. Without international trade. Increasing international trade is crucial to the continuance of globalization. In most countries. Industrialization. the legal system or culture. advanced transportation. Normal banking hours are from 10 AM to 4 PM on weekdays and from 10 AM to 12 noon on Saturdays. Monday through Friday. nations would be limited to the goods and services produced within their own borders. its economic. and services across international borders or territories. Another difference between domestic and international trade is that factors of production such as capital and labour are typically more mobile within a country than across countries. goods.Government and business hours are generally from 10 AM to 5 PM . social. it represents a significant share of gross domestic product (GDP). The reason is that a border typically imposes additional costs such as tariffs. with a lunch break from 1 to 2 PM .

Instead of importing Chinese labor the United States is importing goods from China that were produced with Chinese labor. there exist various restrictions to their movement across nations. and only to a lesser extent to trade in capital. promotion and distribution strategies and overall business plans to suit the specific requirements of the target foreign markets Key aspects in respect of which domestic and international businesses differ from each other are discussed below. An example is the import of labor-intensive goods by the United States from China.Mobility of factors of production The degree of mobility of factors like labor and capital is generally less between countries than within a country. social. cultural and economic environments across countries. Domestic Vs International Trade Conducting and managing international business operations is more complex than undertaking domestic business. One report in 2010 suggested that international trade was increased positively when a country hosted a network of immigrants. geographic influences and economic conditions come in a big way in their movement across countries. forms the larger branch of international economics. International trade is also a branch of economics. Because of variations in political. business firms find it difficult to extend their domestic business strategy to foreign markets. 1. labor or other factors of production. which. but the trade effect was weakened when the immigrants became assimilated into their new country. even the variations in socio-cultural environments.Thus international trade is mostly restricted to trade in goods and services. together with international finance. Then trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production.Differences in business systems and practices 19 . pricing. 2. While these factors of movement can move freely within the country. a country can import goods that make intensive use of the factor of production and are thus embodying the respective factor. Apart from legal restrictions. To be successful in the overseas markets. they need to adapt their product.

Countries differ from one another in terms of their socio-economic development. human resource and marketing plans as per the conditions prevailing in the international markets. Since a business person is familiar with the political environment of his/her country.Business regulations and policies Coupled with its socioeconomic environment and political philosophy. have a profound impact on business operations. finance. 3. and business customs and practices due to their socio-economic milieu and historical coincidences. But this is not the case with international business. political ideology. regulations and economic policies are more or less uniformly applicable within a country. each country evolves its own set of business laws and regulations. One needs to make special efforts to understand the differing political environments and their business implications. While this is not a problem for business firms operating domestically. Though these laws. political party system.Political system and risks Political factors such as the type of government. they differ widely among nations. cost and efficiency of economic infrastructure and market support services. import quota system. 4.. A major problem with a foreign country’s political environment is a tendency among nations to favor products and services originating in their own countries to those coming from other countries. he/she can well understand it and predict its impact on business operations. etc. political risks. Top Traded Commodities(Exports) 20 . it quite often becomes a severe problem for the firms interested in exporting their goods and services to other nations or setting up their plants in the overseas markets. subsidies and other controls adopted by a nation are not the same as in other countries and often discriminate against foreign products. Political environment differs from one country to another. Tariff and taxation policies. availability. services and capital. All such differences make it necessary for firms interested in entering into international markets to adapt their production.

155. etc.088 $348. Regulatory risk (e. 6. War. Vehicles other than railway. etc. 2.830. photo.226.813 $1. a change in rules that prevents the transaction). 8. nuclear reactors. etc.Rank Commodity Value in US$('000) Date of information 1 2 3 4 5 6 7 8 9 10 Mineral fuels. Credit risk (allowing the buyer to take possession of goods prior to payment). Non-acceptance (buyer rejects goods as different from the agreed upon specifications). For example.101.833. apparatus $465. oils.676 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 Optical. 5. and 7. freak weather and other uncontrollable and unpredictable events. electronic equipment Machinery.369 Risk In International Trade Companies doing business across international borders face many of the same risks as would normally be evident in strictly domestic transactions.076. $443.577 $379. Buyer insolvency (purchaser cannot pay). metals. Political risk (change in leadership interfering with transactions or prices).534. precious stones. technical.147 $377. distillation products.524 Pharmaceutical products Iron and steel Organic chemicals Pearls.763. piracy and civil unrest or turmoil.462. coins. tramway Plastics and articles thereof $2. 21 . 3.. boilers.183. etc. 1. Natural catastrophes.079. Intervention (governmental action to prevent a transaction being completed). 4.941 $1.371. medical. Electrical.596.856 $470.g.113.414 $1.

In the traditional image of exporting.A. Challenges and the Strategies. University of N. rather than focusing only on improving individual firm-level performance. However. A fundamental challenge for effective participation in global value chains is for Governments of GMS economies and enterprises to develop a new perspective.Globalisation and India's Business prospectives . Conclusion The transformation of international business and related developments in the global economy pose important and urgent new challenges and opportunities to the GMS economies individually and as a group. the potential benefit of favorable movements).Lecture .Ravi Kastia.Sagar Jain. a “GVC mindset” as the basis for achieving systemic efficiencies in value chains. to qualify for competing in the new world of international business such enterprises must meet a multiplicity of demanding requirements.In addition. This in turn is posing new challenges to governments and enterprises.Carolina.Globalisation: Imperatives.Prof . it is also redefining the framework for business-government relations.Dr. . large and small.The Indian and Global Business .Page 39.Ojha Jan 2004. Global value chains and associated production networks offer significant opportunities for qualified SMEs in GMS. References 1. 2. 22 . international trade also faces the risk of unfavorable exchange rate movements (and. 3. Page 30. an enterprise makes a product for the domestic market first then finds foreign customers for it through trade fairs or by contacting foreign buyers or brokers.K.

SOCIAL RESPONSIBILITY OF BUSINESS AND MANAGERIAL ETHICS Social Responsibility Introduction
The definition of social responsibility is the obligation an organization's management team has towards the interests and welfare of the society or community that provides it with resources and environment to not only survive but flourish. At the same time society is affected by the policies and the actions of the company. In other words, social responsibility is the way your company gives back to and takes care of the community it is located in and the greater society we are all a part of. There are a number of positive examples of companies acting socially responsible. Starting with the way the company operates on a day to day basis. Offering recycling bins at the workplace so that employees and visitors can recycle their trash instead of throwing it in the dumpster. Recycling office waste such as paper and empty ink cartridges are also small but effective ways to support the definition of social responsibility. In doing this your company is
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showing your employees on a daily basis how to make the work day more socially responsible. A great way for smaller companies to get involved is by sponsoring youth groups or youth sports such as PeeWee football or soccer. Helping raise money for a local charity or the food shelter, if money is an object you and your employees can dedicate time helping out at the homeless shelter or reading to children in the library. Some nursing facilities also have "adopt a grandparent" that your company could take part in. There are numerous ways, big and small that any size company can get involved in the community. Here are a few steps you can take to make social responsibility work for you
1. Set goals: What do you want to achieve? What do you want your company to

achieve? Do you want to enter a new market? Introduce a new product? Enhance your business's image?
2. Decide what cause you want to align yourself with: This may be your toughest

decision, considering all the option out there: children, the environment, senior citizens, homeless people, people with disabilities--the list goes on. You might want to consider a cause that fits in with your products or services. For example, a manufacturer of women's clothing could get involved in funding breast cancer research. Another way to narrow the field is by considering not only causes you feel strongly about, but also those that your customers consider significant.
3. Choose a non-profit or other organization to partner with: Get to know the group,

and make sure it's sound, upstanding, geographically convenient and willing to cooperate with you in developing a partnership.
4. Design a program, and propose it to the non-profit group: Besides laying out what

you plan to accomplish, also include indicators that will measure the program's success in tangible terms.
5. Negotiate an agreement with the organization: Know what they want before you

sit down, and try to address their concerns upfront.
6. Involve employees: Unless you get employees involved from the beginning, they

won't be able to communicate the real caring involved in the campaign to customers.
7. Involve customers: Don't just do something good and tell your customers about it

later. Get customers involved, too. A sporting goods store could have customers bring
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in used equipment for a children's shelter, then give them a 15 percent discount on new purchases. Make it easy for customer to do good; then reward them for doing it.

Arguments For Social Responsibility
Manager should have social responsibility for the people. Because manager is a person who is very skilled, if he will take interest in the social functions or problem, it will create a good impression on other people living or working under him it will motivate the sub-ordinates working under him. Thus, it creates a favorable impression on the society, which will ultimately helps the business. Managers have a creative and also communicative skill. As their main task is to have the cordial relations with people inside the organization or outside the organization. The had to interact with his subordinates, superiors and other members relating to business. So, the managers are very creative and if they will take part in social problems, the society is bound to improve in some kind or others. Managers take the input from the society e.g. education values etc. if managers will take part in social event or they will become responsible towards society, the society is sure to make progress become one man can change the whole environment. It will thus create the source of motivation towards the society. According to System theory, for the efficient working and smooth working small subsystems should work properly.
1. Business is a part of society: Since business organizations are a part of society they

must have a positive attitude towards the needs of society. Business is only a subsystem of society and this sub-system must contribute to the welfare of the main system.
2. Avoidance of govt. regulation: If business does not care of its social responsibility,

the govt. has to interfere increasingly in the business system, which adversely affects the progress of business.
3. Long term self-interest of business: the social responsibility of business, if taken

care of in the present ensures the success of the organization in the future.
4. Code of conduct: Members of a profession are bound to follow a code of conduct.

Code of conduct includes rules connected with profession, honesty and morality, which form its base.
25

interest groups etc) of improving are solving the problem of the society. manager should not move his mind towards social responsibilities of the society. 9. 6. Public image of business would be improved: The business will retain the needed credibility with the public if it performs its social obligations. So. which must have a general relationship with social responsibilities. ignorant or oppressed. Manager takes the salary for governing his organizing properly not for solving the social problem of the society. Thus. If they don’t get fair treatment form business. The social problem should be left for those people. He should not be able to do his work properly. It is necessary that every business are obliged to use the social resources for the common good of society. 8. So generally take the responsibility (political parties. they will organize themselves and compel the business its social responsibilities. customers and neighbours for business than those who are poor. It will also avoid conflict with the society in its own interest. People who have good environment. It is the moral and right thing to do: It is widely agreed that businessmen today have considerable social power. The social responsibilities of businessmen must be proportionate to their social power. their social power must be taken away by the society through government controls and regulations and other measures. 26 . Arguments Against Social Responsibilities The main function of the manager is to govern his organization smoothly and efficiently. consumers and suppliers will lead to success of business. Good relation with the workers. The consumers are well informed: They expect higher quality products at responsible rates. he should not make himself responsible towards the society. 7. The long-term self interests of the business are best served when business assumes social responsibilities: There is a growing realization on the part of the enlightened businessmen that it is in their self-interest to fulfill the demands and aspirations of the society. education. This power is virtually granted to them by the society. If the businessmen do not assume social responsibilities. Business is a creation of the society and so it should respond to the demands of the society: Since business uses the resources which belong to the society. and opportunity make better employees.5.

Inefficiency in the system: there is no power other than self-interest. Difficult implementation: the concept of social responsibility is ill conceived and ill defined and is difficult to be implemented. meaning character. giving beliefs. The word ethics comes from the Greek root. Contrary to the objective of business: Just as the primary objective of players in the play-ground is to achieve victory. or deals that pervade a group. start thinking of social responsibility the whole work-system will turn inefficient. namely.1. It means that when business is alive to its social responsibility. 8. 7. 6. Conflicting consideration: A business manager will be guided by two considerations. standards. which in itself is a painful delaminate. Arbitrary power: Business managers will get arbitrary power in the matter of allocation of resources in the welfare of the society. that in future business will come to occupy a position of predominance the idea of social responsibility of management opinion against. a people. resources. Managerial Ethics Introduction The term ‘ethics’ refers to value-oriented decisions and behaviour. in the same way the chief objective of business is to enhance its profits by utilizing its. Burden on customer: if the price in the market for a product does not truly reflect the relative costs of producing mechanism of the market place will be distorted. The consumers will have to pay higher costs. by ignoring self-interest. 4. a community. It owners of business. 2. ethros. They should have no right to interfere with the external environment of business. which can get work out of people. 5. the people in the beginning will be so thoroughly impressed by it. Effects of business values: Business should not have any social responsibility otherwise social values will come to be dominated by business values. private market mechanism and social responsibilities which are opposite to each other. Today ethics is the study of moral behavior the 27 . 3. Disregard of marketing mechanism: the doctrine of social responsibilities implies acceptance of socialist view that political mechanism rather than market mechanism is the appropriate way to allocate scarce resources to alternative uses.

500 per dose. Consider the dilemmas facing a moral agent in the following situations: 1. You know the employee needs the job as well as the health insurance benefits. corporate ethics. It is normative and prescriptive. You know the federal courts have upheld the right of an employer to modify health plans by putting a cap on AIDS benefits. As a sales manager for a major pharmaceuticals company. or legal ethics are used to indicate the particular area of application. medical ethics. You have read the reports saying the drug is only 1 percent more effective than an alternative drug that costs less than onefourth as much. Terms such as business ethics. and this will send premiums through the roof. 28 . The plant will employ many local workers in a poor country where jobs are scarce. you have been asked to promote a new drug that costs $2. You could save about $5 million by not installing standard pollution control equipment that is required in the United States. Your company is hoping to build a new overseas manufacturing plant. Right and wrong cannot be clearly identified. It addresses the question of what ought to be. Providing health insurance has already stretched the company’s budget. Ethics refer to a set of moral principles. A top employee at your small company tells you he needs some time off because he has AIDS. Yet building the factory with the pollution control equipment will likely make the plant too expensive to build. which should pay a very significant role in guiding the conduct of managers and employees in the operation of any enterprise. 2. But to have meaning. not neutral. 3. Ethics refer both to the body of moral principles governing a particular society or group and to the personal normal precepts of an individual. Your research shows that pollutants from the factory could potentially damage the local fishing industry. Dilemma Of Managerial Ethics An ethical dilemma arises in a situation concerning right or wrong when values are in conflict.study of how the standards of moral conduct among the individuals are established and expressed behaviourally. The individual who must make an ethical choice in an organization is the moral agent. Ethics is concerned with what is right and what is wrong is human behaviour. the ethics involved in each area must still refer to the value-oriented decisions and behaviour of individuals.

Many of the advantages being social responsibility was created. However. Management must maintain its wealth-producing resource intact by making adequate profits to offset the risk of economic activity. some of that was already discuss on previous pages. Managers must deal with these dilemmas that fall squarely in the domain of ethics. it would be danger to the human. and only slightly less important is the necessity for growth.4. References 29 . including production. as well as strict guidelines regarding personal use of the Internet. The division general manager asks you not to record the invoice until February. even more of the organizations would take action on social responsibility. Ethics is simply the rules that say what is right and wrong. your colleague was in his own office and not bothering anyone else. You have been collaborating with a fellow manager on an important project. Conclusion The first responsibility to society is to operate at a profit.000 of office supplies were delivered on December 21. And it must beside increase the wealth-producing capacity of these resources and with them the wealth of society. Approximately $20. 5. The social responsibility is very importance to both society and business organizations.000 below profit targets. The company has a zero-tolerance sexual harassment policy. Now turn to approaches to ethical decision making that provide criteria for understanding and resolving these difficult issues. management. The business organizations must have ethical responsibility as they are doing business. Without ethics. Although there are some arguments for and against social responsibility. Ethics play an importance role in social responsibility. You are the accounting manager of a division that is $15. One afternoon. you walk into his office a bit earlier than scheduled and see sexually explicit images on his computer monitor. The accounting rule is to pay expenses when incurred. The business is the wealth-creating and wealth-producing organ of the society. as defined by a particular reference group or individual. and services and so on.

or information are delivered through the parties of the value chain from producers to end users. Social Responsibilities of business. MANAGERIAL ETHICS-DILEMA Jossey-Bass. Each requires its own management channels and practices. Chris. Products. A value chain also has relationship and administrative aspects. and relationship management of both the demand chain business model and supply chain business model. value chain administrators can administer the operational aspects of the value chain in the hub. value chain models usually include a storefront. where customers can purchase their goods or services directly. Bizmanualz. value chain business models must manage the two sides of their businesses: their customers and direct sales.To sell directly to customers (direct sales). WebSphere Commerce supports the transactions through. 30 . To manage relationships with partners or suppliers. services. you can manage the relationship of the partners or enterprises in your value chain. As a result. goods. Rummler & Brache (1995). and their channel partners and suppliers. as well as offer some administrative services to those parties. Under these models. 2. July 22nd. These models support transactions involving multiple enterprises or parties. San Francisco VALUE CHAIN OF BUSINESS Introduction Value chain selling is supported through two business models: demand chain and a supply chain.1. 2009. the demand chain and a supply chain models within the value chain include a hub. setting them up. that is.Anderson. including enabling partners or suppliers to participate in the value chain by registering them.

Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others ("out sourced"). Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings: (1) Primary Activities . may increase effectiveness or efficiency (e. It is rare for a business to undertake all primary and support activities. and increase profits. Partners and suppliers can also access the hub to complete administrative tasks such as registering users. distributing.g. Definition The successive stages during which value is created when producing.and conducting various operations. (2) converting raw materials into a finished product.g. and servicing a product. and (2) Secondary Activities. add efficiencies. Primary Activities Primary activities include: Primary Activity Description Inbound logistics All those activities concerned with receiving and storing externally sourced 31 . (3) identifying customers and distributing the product. Identifying the value chain allows a firm to refine its operations in an effort to improve quality. Distinct stages in the value chain may include: (1) receiving and distributing raw materials. and (4) providing customer support. component assembly). Value Chain Analysis Introduction Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. which whilst they are not directly involved in production.those that are directly concerned with creating and delivering a product (e. human resource management).

materials Operations The manufacture of products and services . price etc.g.g. quality control and general senior management Those activities concerned with recruiting.g.the way in which resource inputs (e. planning. products) Outbound logistics Marketing sales Service and Essentially an information activity . motivating and rewarding the workforce of a business Description Steps In Value Chain Analysis Value chain analysis can be broken down into a three sequential steps: 32 . developing.informing buyers and consumers about products and services (benefits. sourcing and negotiating with materials suppliers) Human Resource Management Technology Development Infrastructure Activities concerned with managing information processing and the development and protection of "knowledge" in a business Concerned with a wide range of support systems and functions such as finance.) All those activities associated with maintaining product performance after the product has been sold All those activities associated with getting finished goods and services to buyers Secondary Activities Secondary activities include: Secondary Activity Procurement This concerns how resources are acquired for a business (e. materials) are converted to outputs (e. use.

performed to achieve a given objective or produce given outputs. Importance Of Value Chain Business processes comprise a set of sequential sub-processes or tasks.(1) Break down a market/organisation into its key activities under each of the major headings in the model. or identify current activities where a business appears to be at a competitive disadvantage. (2) Assess the potential for adding value via cost advantage or differentiation. Each process has one or more needed inputs. with alternative paths depending on certain conditions as applicable. The inputs and outputs may be received 33 . (3) Determine strategies built around focusing on activities where competitive advantage can be sustained Value Chain Business Model The following diagram provides an overview of the partners and relationships that can be supported in value chain models.

irrespective of the class of the task . the data and information that are being handled through the process may pass through manual or computer tasks in any given order. Typically. with a view to continuous improvement in four major areas: 1. improved. the various tasks of a business process can be performed in one of two ways – 1) manually and 2) by means of business data processing systems such as ERP systems. Business processes are designed to be operated by one or more business functional units. or internal or external stakeholders. One of its important tasks is the sub-process for supplier follow-up to ensure timely deliveries of materials. and these tasks may be sequenced in many ways. and emphasize the importance of the “process chain” rather than the individual units.whether manual or computerised . consider the material procurement process.it is important that each task . some process tasks will be manual. and is therefore a first measure of the basic adequacy of the process and its capability to fulfill the logical and reasonable expectations of process uses and operators.Effectiveness The overall effectiveness of a process is the extent to which the outputs expected from the process are being obtained at all. or sent to other business processes. Such a task is considerably less effective if it does not provide accurate and timely purchase order status reports for use of the purchase department staff responsible for follow-up. 34 . while some will be computer-based. For example. leading to delayed customer deliveries and consequent customer complaints. In other words. The Four Major Process Improvement Area The point to note here is that. other organizational units. In general.Efficiency Supposing it has been observed that the average time taken to prepare and send out a purchase order after receipt of a properly prepared intent from the end-user is unacceptably high.and hence the process as a whole – is designed and periodically reviewed. 2. or substituted by another task.from.

The rate contract data are stored in the ERP system’s database. purchase orders are generated mentioning the rate finalised in the rate contract.D. Whenever materials are to be ordered (with or without a delivery schedule).). research. but its efficiency is very low since it takes an inordinate amount of time and costs considerably more in terms of the cost to the company of the salaries of staff members involved. Value Chain Business Model Sitemap Specializing in business process modelling and business process management.the Value Reference model (VRM).Internal Control In a scenario where quantities of major raw materials are regularly ordered and consumed.D.D. This safeguards the organisation from unanticipated price escalation during the period. 35 . Moreover. An internal control exists to keep the purchase rate constant throughout the year. communication and collaboration. amounts must be deposited in government treasury accounts with banks on or before a specified date in the month following the month in which the payments are made. then this is a statutory compliance issue that makes the concerned executives liable to civil / criminal legal action. approved vendors for an extended period – commonly a year.S.The process of “converting” the end-user’s intent to a purchase order is effective because a purchase order is being somehow generated. reliable. the Value Chain Group provides a value chain business model and facilitates effective value chain communication by creating a unified business process framework and reference model . In such cases. if a business process does not provide for deduction of T. rates are fixed with selected. education.Compliance to various statutes and policies There are certain situations where payments made to consultants or service contractors must be statutorily made after deducting tax at source (T. and such T. and/or fails to ensure deposition into government accounts by the specified date. 3. The mission of Value Chain Group is to excel in value chain performance through market.S. 4.S. let us say that the rate contract does not contain a price escalation clause.

supplying global markets in many industries increasingly does not involve an enterprise making a finished product for sale to end-users. Consistent with this. coordinating the development and marketing of any constituent reference models. become a member of the Value Chain Group. As this paper suggests. This in turn is posing new challenges to governments and enterprises. To improve your business process management. It 36 . However to qualify for competing in the new world of international business such enterprise must meet a multiplicity of demanding requirements. Conclusion The transformation of international business and related developments in the global economy pose important and urgent new challenges and opportunities to the GMS economies individually and as a group. rather than focusing only on improving individual firm-level performance. large and small. an enterprise makes a product for the domestic market first then finds foreign customers for it through trade fairs or by contacting foreign buyers or brokers. The benefits of becoming a member include the right to access and use the Value Reference model (VRM) within your organization and a client server access to the ValuePoint database which manages the VRM framework. Global value chains and associated production networks offer significant opportunities for qualified SMEs in GMS. and providing a central point to establish architecture and coordinate compliance of standards integration across all enterprise value chain constituent domains.The Value Chain Group will continually develop the value chain business model for keeping the integration of business processes. the firm has been the basic unit of analysis in looking for ways to improve export performance and related efficiencies. a “GVC mindset: as the basis for achieving systemic efficiencies in value chains. it is also redefining the framework for business-government relations. A fundamental challenge for effective participation in global value chain is for governments of GMS economies and enterprises to develop a new perspective. In the traditional image of exporting.

2.k Sivakumar. Thomas Davenport (1993). Principles Of Management.involves more and more making parts of products to specifications given by or defined jointly with lead firms or global suppliers – providing opportunities for enterprises. Harvard Business School Press. G. This has important implications for public policy and strategy. including SMEs.Lakshmi Publication. to specialize and requiring value-chain-related coordination.Value chain sitemap. Boston • CREATIVITY AND MANAGEMENT OF INNOVATION 37 . References 1.

You may have heard many a definition of creativity.Introduction Creativity is the process of bringing something new into being. to find hidden patterns. and to generate solutions.. Creativity at Work Creativity is a core competency for leaders and managers and one of the best ways to set your company apart from the competition. simple and manageable explanation on the origins of creativity and how we get to use this marvellous function of the human mind to have more fun and find creative solutions to our own problems. The bigger the concept. but where does all of that leave us in trying to understand our own processes of creativity?Here. are part of the intellectual capital that give a company its competitive edge.A product is creative when it is(a) novel and (b) appropriate. Corporate Creativity is characterised by the ability to perceive the world in new ways. In essence. and the more the product stimulates further work and ideas. The verb at the bottom of the well is. to make connections between seemingly unrelated phenomena. and the ability to create new products.creativity requires passion and commitment. Creativity is a crucial part of the innovation equation. "to create". Definition First of all. Generating fresh solutions to problems. this means "to make something". and that means it was taken from a verb which describes an activity and frozen into this nebulous noun. Out of the creative act is born symbols and myths. the more the product is creative. I would offer you a completely NEW. The experience is one of heightened consciousness-ecstasy. taken a creativity test or have studied creativity research. processes or services for a changing market. A novel product is original not predictable.. and that's our first stop on re-defining creativity. It brings to our awareness what was previously hidden and points to new life. let's remember that although we use the word "creativity" all the time.it is a nominalisation. it is not something you can put in the boot of your car or sell in a can . 38 .

These innovations included wood to steel 39 . and learning. innovation generally refers to the creation of better or more effective products. design. plus left-brain logic and planning. and engineering. innovation is an important topic in the study of economics. performed by multiple actors from one or several organizations. whole-brain artistry and thinking. Interdisciplinary View Society Due to its widespread effect. technologies. Innovation differs from invention or renovation in that innovation generally signifies a substantial positive change compared to incremental changes. business." stemming from in-"into" + novus-"new". sociology. convenience. involving multiple activities. For instance. Definition Innovation is a process. Innovation Introduction The term innovation derives from the Latin word innovatus. In society. are developed and/or produced and/or implemented and/or transferred to old and/or new market-partners. during which new combinations of means and/or ends.Creativity right-brain requires imagination. Open communication. a high degree of trust and respect between individuals are crucial. and weight capacity for passenger services. or ideas that are accepted by markets. the benchmarks in railroad equipment and infrastructure added to greater safety. technology. intuition. risk taking. Although the term is broadly used. entrepreneurship. processes. which is the noun form of innovare "to renew or change. innovation aids in comfort. and efficiency in everyday life. Creativity is fostered in organizational cultures that value independent thinking. which are new for a creating and/or adopting unit. governments. and society. They are tolerant of failure and they value diversity. maintenance. speed.

which requires continual innovation is paramount for any specialized firm to succeed. brighter technology. innovation is the catalyst to growth. adoption of modems to cellular phones. gas lighting to electric lighting.[1] Other areas that add to everyday quality of life include: the innovations to the light bulb from incandescent to compact fluorescent and LEDs which offer longer-lasting. and faster trips at lower costs for passengers. the old world concepts of factor endowments and comparative advantage which focused on an area’s unique inputs are outmoded for today’s global economy. argued that industries must incessantly revolutionize the economic structure from within. quality. By mid-20th century. and others.2 million. durability. competitiveness. market share. more comfortable. who contributed greatly to the study of innovation. such as the shift from the craft shop to factory. innovation may be linked to positive changes in efficiency. This system aids in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. or the productive use of any inputs. less energy-intensive. entrepreneurs continuously look for better ways to satisfy their consumer base with improved quality. CitiStat saved the city $13. He famously asserted that “creative destruction is the essential fact about capitalism. stove-heated to steam-heated cars. Business and economics In business and economics. service. universities. iron to steel rails. former Mayor Martin O’Malley pushed the City of Baltimore to use CitiStat. For instance. With rapid advancements in transportations and communications over the past few decades. paving the way to smart phones which meets anyone’s internet needs at any time or place. Now. trains were making longer. and local governments. and price which come to fruition in innovation with advanced technologies and organizational strategies.” In addition. Economist Joseph Schumpeter. diesel-powered to electric-diesel locomotives. In its first year. a performancemeasurement data and management system that allows city officials to maintain statistics on crime trends to condition of potholes.cars. Even mass transit systems have innovated with hybrid 40 . including for example hospitals. All organizations can innovate. Organizations In the organizational context. productivity. cathode-ray tube to flat-screen LCD televisions and others. as Harvard economist Michael Porter points out competitive advantage. that is innovate with better or more effective processes and products.

the growing use of mobile data terminals in vehicles that serves as communication hubs between vehicles and control center automatically send data on location. Characteristics of innovative organization .the vehicles of exclusivity. 1. 41 • • • • • • . 2. vehicles of corporate profitability.Who should attend • • • Large and medium enterprise managers on all levels Owners and directors of small enterprises – entrepreneurs All organizations who need to increase their competitive advantage and achieve better business results Everybody who wishes to stimulate innovation on all organizational levels. mileage and other information. What are the innovation barriers in your organization? Industry analysis and trends. Organization’s innovation readiness audit – practical exercise – group workshop. with a goal of increasing your competitive advantages on the global marketplace.like yours. Competitive advantage The only competitive advantage for any company reflects in its ability to innovate. and increase efficiency – profit • 3.Training content • What is the innovation process and its role in increasing competitive advantage in your organization? 4P innovation management model – innovative company case study – group workshop. Competitive strategies and innovation plans . In addition. passenger counts.bus fleets to real-time tracking at bus stands. engine performance. This tool helps to deliver and manage transportation systems.TrainingGoals To enable you to gain hands-on experiences and give you practical tools to stimulate innovation processes in your organization.

EducationalMethods Training is realized using the most advanced educational methods trough intensive group work. You will discover how to practically improve your business (or organization’s efficiency). in local and global demographics.• Practical exercise to find vehicles of exclusivity in your organisation – group workshop. skype. is end-user innovation. Also. mood and meaning. on al levels. Sources of innovation There are several sources of innovation. by far. using the most advanced innovation management methodology. etc. This is where an agent (person or business) innovates in order to sell the innovation. facebook. in human perception. in your organizations (any organization). with active engagement of each participant. only now becoming widely recognized. You will learn on practical examples and through interactive workshops. developing of people skills. how to make your organization innovative. and enable you to increase the competitive advantage of your organization. Another source of innovation. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. we will introduce you to innovation management. cultural background. The general sources of innovations are different changes in industry structure. During this training course.Benefits for you and your organization • You will understand the importance of innovation process. Sources of 42 . language development. the most important and critical in his classic book on the subject. in the amount of already available scientific knowledge. In the simplest linear model of innovation the traditionally recognized source is manufacturer innovation. and increase its competitive advantage on the global marketplace. internet research. MIT economist Eric von Hippel has identified end-user innovation as. through interactive workshops and practical training exercises. ect. • • 5. 4. in market structure.

namely. ‘Creativity’ is not the miraculous road to business growth and affluence that is so abundantly claimed these days… Those who extol the liberating virtues of corporate creativity… tend to confuse the getting of ideas with their implementation – that is. Actually. the famous robotics engineer Joseph F. work closely with so called lead users (lead user approach) or users might adapt their products themselves. A recognized need. An important innovation factor includes customers buying products or using services. Yet. innovations can be developed by less formal on-the-job modifications of practice. action. and 3. it is even irresponsible. 43 . through exchange and combination of professional experience and by many other routes. This is because: (1) The creative man who tosses out ideas and does nothing to help them get implemented is shirking any responsibility for one of the prime requisites of the business. As a result. Since business is a uniquely ‘get things done’ institution. Competent people with relevant technology. firms may incorporate users in focus groups (user centred approach). Engelberger asserts that innovations require only three things: 1. engineering. 2. in a sense. with much attention now given to formal research and development (R&D) for "breakthrough innovations. Conclusion Creativity is thinking up new things." R&D help spur on patents and other scientific innovations that leads to productive growth in such areas as industry. Innovation is doing new things. while more incremental innovations may emerge from practice – but there are many exceptions to each of these trends. he is behaving in an organizationally intolerable – or. The more radical and revolutionary innovations tend to emerge from R&D. confuse creativity in the abstract with practical innovation. and government. at best. medicine.Innovation. In addition. creativity without action oriented follow-through is a uniquely barren form of individual behaviour. and (2) by avoiding follow-through. sloppy – fashion. Financial support. Innovation by businesses is achieved in many ways.

either to consumers or to the company. Rummler & Brache (1995Cretivity Innovation are not same. 2. Reference 1. Creativity = Novelty But Innovation = Novelty + Value Creativity is the generation of new ideas by approaching problems or existing practices in innovative or imaginative ways… Creativity is linked to innovation. The ideas are often judged more by their novelty than by their potential usefulness. Michael Hammer and James Champy (1993). Creativity: A Manifesto for Business Revolution. Harper Business. San Francisco 44 . Jossey-Bass.Creativity = Ideas but Innovation = Ideas + Action. which is the process of taking a new idea and turning it into a market offering.

2. they are Level 1 1. tenants/service users or other organisations). Interacts well with all customers taking into account customers diverse needs. firm's attention should be to what customers want or need. An organizational orientation toward satisfying the needs of potential and actual customers.CUSTOMER FOCUS AND RELATIONSHIP MANAGEMENT Customer Focus Introduction In a firm. 5. colleagues) and external (i. marketing. Here includes 4 level to focus the customer. Resolves customer enquiries promptly at point of contact and only refers to others when genuinely appropriate. This can be aided by practicing good customer relationship management and maintaining a customer relations program.e. should be built around the customer. Every department and every employee should share the same customer-focused vision. Definition Customer focus is the commitment to putting customers first and ability to deliver a consistently high quality service. from the planning of a new product to its production. Understands all services and accurately matches these to customers needs. Takes pride in delivering high quality services and seeks to expand own skills. 4. Customers are both internal (i. 3. and not just frontline service staff. Identifies and clarifies individual customers needs. the community. Customer focus is considered to be one of the keys to business success. All activities. and after-sales care. Achieving customer focus involves ensuring that the whole organization. Why Customer Focus Is Important All employees must demonstrate a full understanding of customer needs and expectations to enable the effective delivery and development of appropriate quality services which exceed customer expectations. 45 . puts its customers first.e.

Forms strategic & diverse groups/partnerships to improve services. Constantly questions “how will this benefit the customer?” 5. 6. 3. 3. Finds different ways to satisfy customer needs. Implements systems to record customer feedback and communicates ideas and information to appropriate people. Seeks customer feedback to investigate ways to improve customer experience. 3. Creates an environment where team/s are empowered to put customers first. Organises processes around customer taking account of complex and sensitive issues to meet their long term needs. 7. Consistently makes decisions focussed on customer needs. Level 3 1. Acts as role model in personal approach to customer focus. 4. 4. Translates operational feedback into strategic improvements. Makes sure the organisation continuously develops and improves services most important to customers. 4. 5. 5. Takes time to establish underlying needs of customers beyond those initially expressed. Recognises need for developing new customer bases & acts accordingly. Level 4 1. Analyses delivery of services and provides solutions to problems. Keeps customers up to date and informed. Goes beyond their day-to-day work to assist customers in a positive manner. Level 2 1. Identifies good practice & solutions and integrates into service provided. 2. 46 . Deals with customers fairly and equitably. 2. 2.6.

Goes the “extra mile” for customers. 6. Does not treat all customers with respect. Makes promises to customers that cannot be delivered. procedures and service delivery to meet customers’ needs. 5. 5. 7. Takes negative feedback personally. Warning Signs 1. 3. but is a strategy to learn more about customers' needs and behaviours in order to develop stronger 47 . 9. Does not prioritise customer needs. 7. Tries to see things from the customer’s point of view. Customer Relationship Management [ CRM] Introduction The better a business can manage the relationships it has with its customers the more successful it will become. Responds to all customer enquiries promptly. 6. bureaucracy and red tape . Uses jargon. Ignores customer feedback. Customer relationship management (CRM) is not just the application of technology. 4. 2. 4. Treats all customers with respect. Is insensitive to customer concerns and carries out tasks without thought of the impact on the customer. 2. Is not flexible about own way of doing things. Asks appropriate questions to identify customer’s needs. Therefore IT systems that help support dealing with customers on a day-to-day basis are growing in popularity. Brings ideas of ways to improve policies. Actively requests feedback from customers and acts constructively upon both positive and negative feedback.Positive Indicators 1. positively and courteously. 3. Makes assumptions rather than finding out the customers needs. 8.

and win new customers. entice former customers back into the fold. it is more of a business philosophy than a technical solution to assist in dealing with customers effectively and efficiently.relationships with them. automate. attract. It will also offer help on the types of solution you could choose and how to implement them. nurture and retain those the company already has. The success of the customer relationship management (CRM) depends on the adaptability of the organization to the new customer oriented work culture. customer is the heart of business. Definition Customer relationship management is a broadly recognized. This customer focus strategy helps to achieve maximum customer satisfaction and retain loyal customers. but also those for marketing. and synchronize business processes— principally sales related activities. A organization maintaining healthy relationships with its customers will always succeed in the competitive business environment. widely-implemented strategy for managing and nurturing a company’s interactions with customers and sales prospects. As such. A customer relationship management (CRM) is the modern business strategy to enhance the customer relationship with the help of latest technology. This guide will outline the business benefits and the potential drawbacks of implementing CRM. and technical support. Nevertheless. 48 . It involves using technology to organize. and reduce the costs of marketing and customer service. customer service. successful CRM relies on the use of technology. The overall goals are to find. Customer Relationship Management For any organization.

the more channels you have. In essence.Necessary Of CRM In the commercial world the importance of retaining existing customers and expanding business is paramount. 49 . use of agents. CRM helps a business to recognize the value of its customers and to capitalize on improved customer relations. The better you understand your customers. etc. The costs associated with finding new customers mean that every existing customer could be important. Customer relationship management (CRM) helps businesses to gain an insight into the behaviour of their customers and modify their business operations to ensure that customers are served in the best possible way. franchises. the greater the need to manage your interaction with your customer base. The more opportunities that a customer has to conduct business with your company the better. and one way of achieving this is by opening up channels such as direct sales. However. online sales. the more responsive you can be to their needs.

50 . opinions and preferences Profiling individuals and groups to market more effectively and increase sales Changing the way you operate to improve customer service and marketing Benefiting from CRM is not just a question of buying the right software.CRM can be achieved by: • • • Finding out about your customers' purchasing habits. HOW TO IMPLEMENT CRM:The implementation of a customer relationship management (CRM) strategy is best treated as a six-stage process. You must also adapt your business to the needs of your customers. moving from collecting information about your customers and processing it to using that information to improve your marketing and the customer experience.

Stage 1 . which analyse data to identify patterns or relationships. Stage 2 . the next stage is to make this information available to staff in the most useful format. you can begin to profile customers and develop sales strategies. Those businesses with a website and online customer service have an advantage as customers can enter and maintain their own details when they buy. a small number of complaining customers often take up a disproportionate amount of staff time.Collecting information The priority should be to capture the information you need to identify your customers and categorise their behaviour. Stage 3 . Stage 5 . your staff will have more time for other customers. Stage 6 .Accessing information With information collected and stored centrally. If their problems can be identified and resolved quickly.Analysing customer behaviour Using data mining tools in spreadsheet programs.a centralised customer database that will allow you to run all your systems from the same source. 51 . desires and self-perception.Storing information The most effective way to store and manage your customer information is in a relational database . ensuring that everyone uses up-to-date information.Marketing more effectively Many businesses find that a small percentage of their customers generate a high percentage of their profits. you can reward and target your most valuable customers. Stage 4 . Using CRM to gain a better understanding of your customers' needs.Enhancing the customer experience Just as a small group of customers are the most profitable.

Implements & Steps of CRM. In order to enhance our industry’s reputation. After reorganizing our operations into service teams. Vodim Kotel Nikov Founder of E-business Coach. we must continually distinguish ourselves by exceeding our customers’ service expectations. Chris. 3. we have data that supports this assertion. 2009. July 22nd. Workers’ compensation insurance is not a commodity. Focus on customer relationship management application on Friday October-15 2010 by Sidney Angelos. Overall.Conclusion Service teams work. Bizmanualz. They provide customer focus in ways that cannot be provided using other structures. we hired Ipsos Reid to conduct a customer satisfaction survey. 74% of our customers indicated they were satisfied or very satisfied with Montana State Fund’s customer service. Service teams provide the focus for us to attain those customer service aspiration. We found that customer satisfaction improved in almost every area because of the service team structure. Anderson. At the Montana State Fund. References 1. Price should not be our customers’ only consideration when selecting an insurer. it is hardwired into the foundation of the teams. We largely attribute this improvement in customer service satisfaction to our service team concept. 52 . Why CRM necessary?. 2. Customer service is not something that service teams do.

through reduction of barriers to international trade such as tariffs. Among other points. on political systems. In fact. The term can also refer to the transnational circulation of ideas. Globalization is not new. later. for centuries. such as through the famed Silk Road across Central Asia that connected China and Europe during the Middle Ages. This process has effects on the environment. and popular culture. it refers to economics: the global distribution of the production of goods and services. companies. on economic development and prosperity. Globalization accompanied and allegedly contributed to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage. people—and. though. a process driven by international trade and investment and aided by information technology. Opponents alleged that globalization's benefits have been overstated and its costs underestimated. people and corporations have invested in enterprises in other countries. Likewise. and on human physical wellbeing in societies around the world.GLOBALIZATION OF BUSINESS AND INTERNATIONAL TRADE RELATION Introduction Globalization refers to the increasingly global relationships of culture. and governments of different nations. corporations— have been buying from and selling to each other in lands at great distances. Definition Globalization is a process of interaction and integration among the people. For thousands of years. people and economic activity. on culture. and import quotas. languages. Most often. 53 . they argued that it decreased inter-cultural contact while increasing the possibility of international and intra-national conflict. many of the features of the current wave of globalization are similar to those prevailing before the outbreak of the First World War in 1914. export fees.

First of all. Today as the. we are sometimes guilty of talking as if the only organizations who need to think about “globalization” are large ones. by definition. There has always been international trade--throughout the millenia.. buyers. This makes it much more difficult for the average small business. Others take the view that it will increase poverty in some countries. My focus here is on the global opportunity for small businesses. a business in Kansas is as likely to be competing with companies all over the world.not so. Equally. One no longer can simply blunder into a business and expect to survive. There is a view that “globalization” will make the whole world look the same with no regional differences between nations. result of technological advances and more countries adopting open trade policies. not to . This is definitely not the case and so it like to set the record straight as well as pointing you at some fascinating articles in the Small is Beautiful column which make great reading. it has been frought with market inefficiencies and discontinuities. Outsourcing has become a "bad word" in many US political circles. competitors. It seems to be an evil that has arisen over the last few years. in the Multinational Search column. marketing and distributing mention substitute products and services. outsourcing 54 products and services to customers. But. enabling traders to make a pretty good living in the middle.. How Globalization Influenced In Business In short. buying from and supplying players internationally.Globalization For Small Business “Globalization” is a big word and not universally popular. producing. globalization has removed many borders and barriers to international trade and business. The result is heightened competition across geographies and reduced arbitrage from international trade--at least for those markets which are reasonably efficient and open to global business. It generally operates with suppliers. The Kansas entrepreneur may have thought s/he was just serving a local. manufacturing in several Asian markets. small town market and competing with companies across the street. Business is all about developing. This is an inaccurate view.

which are provided on this website and in the sourcebook. They need to be reviewed prior to each class. global antitrust and global mergers. Of course. International outsourcing or offshoring is not new either. Questions posted on this website form the basis of most class sessions and students are expected to consider them prior to each class. and high employee turnover. Issues examined relate to the World Trade Organization. extraterritoriality. economic legislation and 55 . The course is highly interactive and class participation will be considered as part of the final grade. It is important to understand the critical aspects of global trade in order to have a useful and critical discussion of the policy issues of competition and competitiveness confronting the global trading system and the United States. International Trade Relation “International Trade Relations” examines the political. The labor arbitrage which forms the business case of such outsourcing decreases rapidly. legal and institutional aspects of today's global trading system. the current round of global trade negotiations (Doha). there is no question it has come into its own over the past decade or so. as Japan does for instance. The principal material used this class is the actual documents emanating from official sources -. Issues also considered are those relating to the U. rapidly rising wages. US companies have certainly taken advantage of lower cost and higher quality labor forces within the US for decades. The assignments include a mid-term exam and two team projects /PowerPoint Presentations (recent DSU cases between the U. with booming economies comes prosperity. export controls. corruption. team presentation and guest lectures. This course is taught through lectures.S. the following specific topics are examined relating to the role of the United States in global trade relations: the constitutional concepts of separation of powers and federalism. Companies relying on cheaper labor in India and China need to plan for the day when they may be outsourcing to the US. class discussion. Attendance is required.has been around for a very long time. China and India are experiencing booming economies as a result of this. This assessment is from both public and private sector perspectives." import relief. its Dispute Resolution System. and China) (U. this course assesses critical issues concerning global trade. system as it interfaces with the WTO and the global trading system.S. trade sanctions. It doesn’t take a rocket scientist to forecast where this goes. But. In addition. It focuses on the WTO and the role of the United States in global trade relations. In particular. trade agreements / "fast track.S.

When such an agency failed to emerge. in 1947 (to take effect on Jan. students demonstrate their ability to apply concepts and theories from international economics and international political economy to explain policymaking and market dynamics in the global economy. When GATT was concluded by 23 countries at Geneva. International Economic Relation International Economic Relations provides students with the range of analytical skills needed to understand international economic and financial problems in a policy setting.A new geography of trade is emerging 56 . General Agreement On Tariff And Trade [GATT] General Agreement on Tariffs and Trade (GATT). Throughout the program. 1948). GATT was amplified and further enlarged at several succeeding negotiations. political science. it was considered an interim arrangement pending the formation of a United Nations agency to supersede it. The mid-term exam counts 50% of the final grade and each team presentation is 25%. set of multilateral trade agreements aimed at the abolition of quotas and the reduction of tariff duties among the contracting nations. finance.] This Website is continuously updated through the year. investment. [Good class participation can raise the final grade. Students learn to analyze critically economic issues and the political economy of policymaking in the areas of international trade. and development. business. and law. What distinguishes the program is its focus on specific international trade and financial policies and business transactions using analytical tools from economics. 1.global corporate competitiveness).

aid. diversification. and ideas in one global marketplace. and the South is gradually moving from the periphery of global trade to the centre. intergovernmental consensus building and technical cooperation. monetary. export restraints. Development assistance in creating the trade-supporting infrastructure and facilities for South-South trade is particularly critical. Globalization started after World War II but has accelerated considerably since the mid-1980s. and legal prohibitions. A similar pattern is emerging in international investment flows. A South-South cooperation strategy focused on a number of key thrust areas could consolidate and expand the transformation that is taking place in South-South trade. employment and poverty reduction in the South itself and in the rest of the world. finance. technology transfer and development policies and actions.and reshaping the global economic landscape. Conclusion Globalization” refers to the growing interdependence of countries resulting from the increasing integration of trade. The other factor has to do with the increasing liberalization of trade and capital markets: more and more governments are refusing to protect their economies from foreign competition or influence through import tariffs and nontariff barriers such as import quotas. and General Agreement on Tariffs and Trade (GATT). people. Developed countries can be instrumental in facilitating South-South trade through appropriate trade. communication. It is in a unique position to assist developing countries and their regional groupings in trade and investment promotion and trade negotiations through research andanalysis. A number of international institutions established in the wake of World War II—including the World Bank. This would enable the South to play the role of a genuine locomotive for sustained economic growth. International Monetary Fund (IMF). and computation to the extent that it is often economically feasible for a firm to locate different phases of production in different countries. International trade and cross-border investment flows are the main elements of this integration. One involves technological advances that have lowered the costs of transportation. succeeded in 1995 by the World 57 . driven by two main factors. financial. investment and economic cooperation. suggesting the possible emergence of a new geography of international investment relations. UNCTAD can be an important partner of developing countries in the revitalization of South-South cooperation. There is much that the international community can do to assist the South in this endeavour.

In Defense of Globalization. References 1.Trade Organization (WTO)—have played an important role in promoting free trade in place of protectionism. for countries that are actively engaged in globalization. Oxford. Ronkainen. New York: Oxford University Press. The balance of globalization's costs and benefits for different groups of countries and the world economy is one of the hottest topics in development debates. Jagdish (2004). and the share of major oil exporters fell sharply with the drop in oil prices in the early 1980s. the benefits come with new risks and challenges. and Singapore. In fact. Ilkka A. The share of Sub. except for most countries in East Asia and some in Latin America. 2. Volume 40. COMPETATIVE ADVANTAGE & COMPETENCY Introduction 58 . May 2008 Michael R. Bhagwati.Saharan Africa in world trade has declined continuously since the late 1960s. Empirical evidence suggests that globalization has significantly boosted economic growth in East Asian economies such as Hong Kong (China). developing countries have been rather slow to integrate with the world economy. Issue 2. the Republic of Korea. Moreover. But not all developing countries are equally engaged in globalization or in a position to benefit from it. Czinkota. Journal of World Business.

Competitive advantage rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy. Occurrence Of Competitive Advantage Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. Competitive advantage is based on the theory that seeks to address some of the criticisms of comparative advantage. comparative advantage. Successfully implemented strategies will lift a firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players. The other theory. can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade. Porter emphasizes productivity growth as the focus of national strategies. Competitive advantage attempts to correct for this issue by stressing maximizing scale economies in goods and services that garner premium prices. Superior performance outcomes and superiority in production resources reflects competitive advantage.Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. To gain competitive advantage a business strategy of a firm manipulates the various resources over which it has direct control and these resources have the ability to generate competitive advantage. “A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player”. Achieving competitive advantage strengthens and positions a business better within the business environment. The study of such advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in the present competitive market conditions. These attributes can 59 . Michael Porter proposed the theory in 1985. Definition The term competitive advantage is the ability gained through attributes and resources to perform at a higher level than others in the same industry or market. Competitive advantage theory suggests that states and businesses should pursue policies that create highquality goods to sell at high prices in the market.

include access to natural resources. individual. By using the internet as the middle-man. classroom training. has been a significant impediment in gaining competitive advantage. the central problem of information transmittal. leading to the rise of middle-men in the marketplace. Adam Smith's Wealth of Nations. Once the job requirements have been clarified then competency interviewing helps interviewers look for evidence of those requirements in each candidate. which in the past required extensive effort finding the right middle-man and cultivating the relationship. and occupational and functional levels. skills and abilities and provide a framework for distinguishing between poor performances through to exceptional performance. New technologies such as robotics and information technology either to be included as a part of the product. They can then integrate that into a learning plan that may include on-the-job experience. competencies provide a way to help identify opportunities for growth within their jobs. Competencies are the characteristics of a manager that lead to the demonstration of skills and abilities. For people already in jobs. or other developmental activities. businesses can gain a competitive advantage through creation of an effective website. such as high grade ores or inexpensive power. or access to highly trained and skilled personnel human resources. ' Information technology has become such a prominent part of the modern business world that it can also contribute to competitive advantage by outperforming competitors with regard to internet presence. the purveyor of information to the final consumer. 60 . i. Competencies can apply at organizational. Core Competence Introduction Competencies refer to skills or knowledge that lead to superior performance. Competencies are not "fixed"–they can usually be developed with effort and support (though some are harder to develop than others). which result in effective performance within an organizational area. Competencies are individual abilities or characteristics that are key to effectiveness in work. From the very beginning. These are formed through an individual/organization’s knowledge. Employees and their managers together can identify which competencies would be most helpful to work on to improve the employee’s effectiveness. team. or to assist making it.e.

g. (e. core competence is very essential. Corporations who enjoy a core competence in the root technology / process / expertise keep gaining lasting advantage. command over multiple streams of interrelated and overarching technologies. unique and inimitable strength of the firm that: (i) Provides the firm. through new and proprietary products and fresh value enhancement. (iii) Is an exclusive preserve of the firm and cannot be imitated easily by competitors. where technology is fast altering existing boundaries of businesses. Core competence is a knowledge base. a competence at the root technology in particular. Core competence is largely a technological competence. Often. 61 . The core competencies of these corporations are the outcome of their command over several overarching technologies. which gives rise to a variety of products with widely varying product missions. This is because new businesses/new products are largely the result of technology. Need For Competency 1. for firms playing the business game through the product route.The core competency concept is sometimes misunderstood as a perspective that restricts the numbers of businesses a company can be in. What matters is performance– being effective and meeting job expectations. Core competency Idea does not restrict the number of Businesses. Firms wrongly assume that when they adopt the concept of core competence. tele-computers.Competencies are not a tool to be used for evaluating people for layoffs. fiber optics) confers a core competences to a firm in the composite area. giving rise to many unique products. the access to a variety of products/markets. In particular. Competencies are only a way of talking about what helps people get results in their jobs. it compels them to remain with a single business. This is especially true in today’s technology-driven world. The best way to understand performance is to observe what people actually do to be successful rather than relying on assumptions pertaining to trait and intelligence. Fundamentals of Core Competency Core competence is fundamental. (ii) Contributes significantly to customer benefits in the end products.

which is a threshold competency. If there are different levels within the same position. Competencies can be learnt and developed. For the position of a typist it is necessary to have primary knowledge about typing. The best way to measure and predict performance is to assess whether people have key competencies. Differentiating competencies The characteristics. which differentiate superior performers from average performers. and a teller requires a different set than a maintenance worker. Knowledge of formatting is a competency that makes a typist to superior to others in performance. 4. Team working is an example of competency required by an employee working in a typing group in an office where they may be required to cover up for others as the work grows 2. which is a differentiating competency. 5. They should be linked to meaningful life outcomes that describe how people should perform in the real world Professional Competencies or functional competencies These distinctive competencies are grouped for each job within the organization. Threshold competencies The characteristics required by a jobholder to perform a job effectively are called threshold competencies. 3. They should be made visible/accessible. 3. then each job level might also have its own set of vertically derived competencies Measurement of Competency 62 . such characteristics are not found in average performers. A trainer requires a different set of competencies than an accountant.Behavioral Competencies These refer to competencies that are required by people in terms of behavior.2. come under this category. 1. The goal is to optimize performance by having the technical skills to perform a job.

All competencies are defined from levels in a competency framework. reference checks) are compared to these examples and rated accordingly. Competency is used to measure BARS. 6. It means focusing one's efforts on discovering and meeting the needs of the customer/client. Did not interrupt the client 2. phone numbers) on client’s other 9. oral presentation. Competency: Customer Service Orientation implies a desire to identify and serve customers/clients. Rating using BARS 3 ( Superior ) The applicant must exhibit all these behaviors to rated as superior 1. Paraphrased the client’s statements to ensure understanding. 8. role-play. addresses. 7. 5. The applicant’s behavior displayed (e. problems 2 (Adequate) The applicant must exhibit all these behaviors to pass … 63 . Each definition typically expresses the behavior expected of the associates if he were to be rated at that level.g. Behavioral-Anchored Rating Scales (BARS): A BARS describes behaviors differentiating between effective and ineffective performers that can be observed and anchors them at points on a scale. in-basket) or past behavior described (e. The content of the scale is developed from a job analysis and is based on responses to critical job incidents or situations. behavioral interview. Provided complete and clear information / service given the problem. Reflected the client’s thoughts for verification. Asked probing questions to ensure understanding 4.g. The scale used is usually a 3-Point or 5-Point scale but could also be narrative if appropriate. Remained patient when the client struggled with the language. Offered specific referrals (names. Took notes but maintained interest and eye contact 3.

2. 4. one can always find a core competence.1. Took no notes of the client’s information. Failed to obtain accurate or complete information. Displayed boredom or lack of empathy. 8. Provided inappropriate information or service given the problem. A competitive advantage does not constitute a sure success formula for a firm over a long term. 7. Conclusion A competitive advantage does not necessarily imply a core competence while a core competence does imply a number of competitive advantages. Displayed impatience when the client struggled with language. 3. A core competence provides a lasting superiority to the company while a competitive advantage provides a temporary competitive superiority. Did not prompt for further understanding. 1 (Ineffective) The applicant fails if he or she exhibits any four of the following plausible but inappropriate behaviors … 1. Took notes. 5. Interrupted the client. 6. Showed empathy for the client’s problems. And behind any lasting competitive superiority. 2. 4. 3. Did not check understanding. Obtained the required information. Provided adequate information / service for a problem resolution. 64 . a core competence usually does.

It is long lasting. A competitive advantage provides competitive strength to the firm in a given business or product. Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter 2. DOI:10. Managerial and Decision Economics 24. a core competence helps it in a general. A competitive advantage helps a firm in a specific and limited way. Core competence is an exclusive and inimitable preserve of a firm. A competitive advantage can be easily imitated and competitors catch up fast. a core competence is fundamental and unique to a firm. A core competence helps the firm to excel in a variety of businesses and products. & Barney J (2003). Reference 1. Smith 3. To conclude. far-reaching and multifaceted manner. competitors cannot easily catch up with the firm.While a competitive advantage accrues from a functional strength in any of the manifold functions performed by a firm. The strength has to be at the root of businesses and product. it has to be core strength like a unique capability in technology or process. Competitive advantages are not unique to any firm over the long term. a core competence does not normally accrue from functional strength.1002/mde. Unraveling The Resource-Based Tangle by Peteraf M. Creating Competitive Advantage: Give Customers a Reason to Choose You Over Your Competitors by Jaynie L.1126 65 .

Quality is meeting customer expectations: Quality is satisfying the customer. upon delivery.Quality is fitness for use: Quality means the product or service does what it is intended to do. 2. Common Meanings of Quality 1. The customer perceives the quality of a product or service. quality is a different concept when focusing on tangible products versus the perception of a quality service. The meaning of quality differs depending upon circumstances and perceptions. Meaning What is quality = how the recipient of the product or service views the product or service: before buying. or by adopting the new process of conformity assessment. 66 . The customer defines quality. Quality is a continual process that doesn't just happen but it evolves over time and with experience. it is essential that businesses continually improve to provide products and services of the highest quality.ROLE OF QUALITY IN BUSINESS Introduction As customers' expectations grow. The meaning of quality is also time-based or situational. For example. Poor quality of a product or service cost users if it doesn't do what it is supposed to do. and after the delivery-and use. Organizations can help secure their future by committing to a process of continual improvement and introducing a quality management system (QMS) such as ISO 9000.

Ease of Use. Simplicity of Design.3. Timeliness. Communication. Completeness. In some cases. Performance. Conformance to requirements and zero defect concepts have roots in producing a product / service that meets stated or documented requirements. Reliable. This approach is common in supporting the ISO 9001-based quality management system. Aesthetics. product / service requirements originate from customer requirements. Security. Serviceability. Maintainability. For Service. Ease of Disposal. Safe. 2-Products / Services A culture of product / service-driven quality was popular in the early stages of quality improvement. needs. Understand the Customer. Quality is delighting the customer. Examples of Quality Characteristics For Products. Credibility. 4. expectations. If the customer requirements is accurately stated and designed into the production / service delivery process.Quality is superiority to competitors: Quality is how a company’s products and services compare to those of competitors or how they compare to those offered by the company in the past. Customerdriven quality is a common culture within many organizations. but the focus of the culture is on the quality of the product/ service. the customer should be satisfied. then as long as the product / service meet the requirements. Drivers of Quality 1-Customers In a customer-driven organization.Employee Satisfaction 67 . Competence.Quality is exceeding the customer expectations Quality is the extent to which the customers or users believe the product or service surpasses their needs and expectations. Available. Reasonable Price. thereby creating a common link to customer-driven quality. Responsiveness. Accuracy. Available. Reliable. Safe. and preferences of customers. 3. Durability. quality is established with a focus on satisfying or exceeding the requirements.

2. mission. but to exceed them wherever possible. has a strategic impact on the organization. policies.Quality is strategic Quality. 4. The organization’s aim is to not only meet. Conformance is the norm.Quality planning. 3. and measurement techniques.Quality of design versus quality of conformance The organization’s values.Little q and Big Q Organizations focusing on quality control and inspection activities (little q) will fail to be fully effective they must transform their thinking to quality across organization (Big Q). process management approaches. Employee satisfaction is a primary measure of success for this type of organization. and practices with an emphasis on reducing variation and reducing cycle time. 4. Consumers buy certain products and request services based on their knowledge and perception of the organization and what it provides. customers' requirements.This concept is that an organization takes care of employee’s needs so that they can be free to worry only about the customer. control. The Baldrige Criteria doesn’t mention the word quality because every activity 68 . or the absence of it.Organizational focus Some organizations tend to focus on total organizational quality while others arequite successful at using a segmented approach to implementing quality. Accumulated experiences and perceptions of customers ultimately make or break an organization. Methods Of Quality Implementation 1. including cost of quality. processes. services. emphasis is placed on doing the right things right the first time. This dimension implies extensive use of the quality management tools. Few buyers knowingly buy poor quality. to the letter. goals. and practices reinforce designing into the product or service rather than inspecting it in. The organization’s overriding purpose is to excite the customers with extraordinary products and service. and improvement The focus of this dimension is for organizations to continually improve their products.

Under this assumption.is produced to high standards at the price of a toy. The methods promoted greater efficiency coupled with statistical controls that by and large eliminated manufacturing defects and their cause as and when they occurred. Although many low cost goods are of a high quality. The production methods and process controls introduced by Deming and other management gurus have resulted in huge gains in efficiency and the elimination of defects.and decision contained in the structure of the criteria must be a quality activity or decision. Quality important in business Quality is one of the main criteria in any buying decision. The old division between quality and cost became a thing of the past. The traditional generic strategies were cost or quality leadership. there are often more expensive goods that have additional features. A Japanese car was delivered to the customer at lower cost and with fewer defects than the US or European equivalent. In the twenty-first century quality counts and a business that sells low quality goods or services is generally doomed to failure. These were thought to be mutually exclusive. The quality of the product. Edwards Deming was a key influence in achieving the transformation of manufacturing processes and standards. The world's cheapest car . quality is built in to the very fiber of the organization. This is the preferred way to conduct the business of the organization. Electronic goods produced to high standards are sold at ever decreasing prices. The problem may not even be the initial product but the service provided when the product is returned. This was a recipe for success and the west was forced to follow suit. more luxury and so on. A 69 . Quality is measured not only by the absence of defects but by the overall finish of the product. Do you return to a supplier that provides a sub-standard service or to a restaurant if the service was poor. the quality of the service and the quality of the after-sales service are major reasons why a customer will buy from one supplier rather than another. But over the last thirty years a major paradigm shift has taken place. its durability and reliability. Companies such as Toyota demonstrated that it is possible to be both a cost and quality leader. Quality is of prime importance for any business. His methods helped Japanese industry to become a dominant world player.the Tata Nano .

on the other hand.Toyota Corolla is a high quality car. It can be implemented on several different levels. Team members often work on projects designed to improve the overall company’s value. products can be manufactured with value in mind that will benefit both the customer and the company in a major way. Quality improvement. In almost all cases. Quality control is the ongoing effort to maintain the integrity of a process that will also help in maintaining the reliability of achieving a certain outcome. It’s all about quality management. is the purposeful change of a process that is designed to improve the reliability of achieving a specific outcome. A decision may be price driven. Quality management is used in all areas of a company from the products that are manufactured to the customer services provided by the employees. Customers who 70 . Control and improvement can be distinguished from in the following manner. The Importance of Quality Management Quality management is centered around the management and control of producing fantastic products. Companies must test the quality control of their products to make sure they are on par with what is expected. and is important to the success of a company. Assurance is another important aspect and can be defined as the planned or systematic actions that are necessary to provide the confidence that a product or service will satisfy the given requirements that have already been set forth. There is too much competition for that to happen. a potential customer is more likely to place their business into its hands. The days of buying 'cheap rubbish' as opposed to buying a quality product are almost gone. A business that markets inferior products is unlikely to stay in business for long. features and status. A failure in quality can often mean a failure of the business. but the Lexus offers much more in terms of luxury. If that supplier has a record of consistent quality and service. Customer satisfaction is a very important part of quality control and this is an aspect of business that should definitely receive due consideration. Poor service drives customers away no matter what they charge. When these three aspects are met. and a business environment that will facilitate their production. It is an ongoing process. a customer will also consider the reputation of the vendor. The Importance Of Quality In Today's Business World There are numerous factors that are involved when a potential customer decides from whom they will purchase goods or services. or a product may be so unique that there is only a single source for it. control. and improvement.

have purchased products or services from a given company for a period of time will expect a certain level of quality. Due to the increased precision the computer age has brought to manufacturing. Strangely. it's becoming a necessity for companies to integrate a quality management system (QMS) into their business. in the form of goods and services. resources and implementation needed to produce quality management. we may reach a point where QMS certification is a requirement for survival. The idea is that if products or services can continuously be improved upon. It has also become a part of everyday operations for many businesses and is implemented into their normal agendas. procedures. That is why value management is a continual process that must be adhered to on a regular basis. and the quality control measures that ensure such goods and services are produced consistently. the longer the company who makes those products or services will remain in business. But the company has a policy of strict quality control and a regular customer will get 71 . Everyone knows what to expect. a QMS is the combined operational structure. other people enjoy these burgers and return time and again. I first tried their products in London in 1976 and have been recovering ever since. processes. Conclusion Quality does not mean that everyone will like the product. a quality management system ensures consistent output of quality goods and services for customer consumption. A burger from this chain is identical whether purchased in New York. This product certainly does not meet my criteria of quality food. Quality management is defined as a combination of high quality output. London. If this is new to you. In a nutshell.As the global economy continues to evolve. products can be made to near perfection at a significantly lower price. The growing importance of quality management systems With the global economy shrinking the world and the stressed economic conditions reducing the number of key players in many industries. Having a QMS in place is especially important for companies involved in manufacturing and technical sectors. Only time will tell. I tried the product again in 2003 in Johannesburg to be reminded why I had not returned. One company that comes to mind is a global fast food company that has opened branches on a franchise basis in every corner of the globe. Tokyo or Johannesburg.

edited by: David Barnes (2000) The Open University. References 1. Dare I mention MacDonald's. Food and clothing are a little different. 72 .. Obeng and S. The Third Wave. Understanding Business In Quality. E. There is a subjective quality to quality. And perhaps there is still a dichotomy of cost versus quality leadership. MK Press Slack et al. Quality In Management. appliances and motor vehicles have to be of high quality for the manufacturer to survive. 3. These are market segments where you get what you pay for. and can a Big Mac really qualify as a quality product. Perhaps this varies according to the type of product.exactly what they expect every time anywhere in the world. Electronic goods. but the poison must at least be manufactured to a certain standard. Crainer S (1993)QUALITY MANAGEMENT Financial Times Prentice Hall Howard Smith and Peter Fingar (2003). But the overriding trend in business is towards quality products accompanied by quality service. One man's meat is another man's poison. 2.

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