September 29, 2013

Facility Decisions: Network Design in the Supply Chain - Review Notes

Supply chain network design

During supply chainnetwork design facility related decisions are made. The decisions are
1. What is the role of the facility?

What processes are done at the facility.

2. Location Where should facilities be located?

3. Capacity decision How muchcapacity is to be created
4. Market and supply allocation What markets should each facility serve? Which supply sourcesshould feed each facility?

  Supply chain facilities are manufacturing, storage and transportation-related facities. We may need to think of adding information processing facilities also to them to have a wider view of the facilites used in supply chains. Location of these facilities, capacity of these facilities, capacity allocated to them in an period and role given to them etc. are facility related supply chain decisions. Facility decisions are referred to as supply chain network decision decisions.


Decision regarding role become important in providing flexibility. If facilities can serve demand in a region globally there is more flexibility. Similarly in a multi-product firm, if facilities can produce large number of products, there is flexibility.


Factors Influencing Facility Decisions

Strategic Focus of the Company

Technological Factors

Economic Incentives

Political Factors

Infrastructure

Competition

A Framework for Network Design Decisions

Phase I  Developing Supply Chain Strategy

Phase II. Regional Level Decisions

Phase III. Selecting Desirable Sites in Each Region

Phase IV. Choice of Location


Models for Facility Location and Capacity Allocation

Gravity Location Models
Gravity models are used to find locations thatminimize the cost of transporting raw materials from supply sources to conversion facilities and from them to market serving facilities.
Network Optimization Modesl
Locating plants and warehouses simultaneously
m  number ofmarkets or demand points
n  number of potential factory locations
l number of suppliers
t  number of potential warehouse locations

D annual demand customer j
K  annual capacity of factory at site I
S  annual supply capacity at sup h
W  annual warehouse capacity at site e
F  fixed ann cost of locating plant at site I
f  fixed an cost of locating warehouse
c hi  cost of shipping one unit of supply sourceha to site e
c ie factory I to warehouse e
c ej warehouse e to customer j

Minimize total cost
fixed cost factories fixed cost warehouses  totalcost warehousr to market  total cost factory to factories  total cost suppliers factories


Uncertainty and Network Design

Updated 29.9.2013

September 14, 2013

Management Theory and Practice - Bulletin Board - September 2013


Engineering and Management News - A Daily Publication  - Management Principles and Propositions

September - Management Knowledge Revision


14
Good Training Enriches Employees, the Bottom Line…and Workforce Loyalty
Sander van 't Noordende - Group Chief Executive at Accenture

HR for Neophytes

Great leaders understand that rallying the troops is not about scaring employees into working harder with threats and blame but inspiring them to want to “do battle” together, unified in purpose and determined to succeed.
The Right Way to Rally Your Troops

Confused about Big 5 Things to Do
http://www.forbes.com/sites/gregsatell/2013/09/13/confused-about-big-data-here-are-5-things-you-need-to-do/

Digital is full of examples of the unthinkable becoming the inevitable
Five Mistakes to Avoid in Managing Digital Teams




13

Replacement Decisons
Expected Values and Risk of Project Revenues and Costs


12

Engineering Economy or Engineering Economics: Economic Decision Making by Engineers
Introduction to Engineering Economics


8 September

Management Proposition
Follower companies do not challenge the market leader. But market followers have to know how to hold on current customers and win a fair share of customers in the growing market. The follower firms have a certain advantages for its target market in terms of location, services offered or financing offered.
http://nraomtr.blogspot.com/2011/12/competitive-strategies-for-followers.html

13 Simple Ways You Can Have More Meaningful Conversations
Millennials at Work: Gen Ys and Ambition

7 September

Management Proposition
Attack by a challenger has a greater probability of success when there customer dissatisfaction with the current leader. There is a gap in the market which the leader is not serving. Challengers have to identify the gap and then develop the product offering for it and then attack that target segment of the market.
http://nraomtr.blogspot.com/2011/12/marketing-strategies-for-challenger.html  (September 7, 2013)

Customer Intimacy - Needs to be supported Operations Excellence
http://blogs.hbr.org/cs/2013/09/customer_intimacy_meet_operati.html   

The backlash against running firms like progressive schools has begun
http://www.economist.com/news/business/21584947-backlash-against-running-firms-progressive-schools-has-begun-montessori-management

Revison articles
Cash Flow Estimation for Expenditure Proposals
Required Rate of Return - Cost of Capital


6 September

The Most Important Negotiation
Negotiating with yourself
http://blogs.hbr.org/cs/2013/09/the_most_important_negotiation.html

September 12, 2013

Strategic Management Theory - Research Propositions




The Strategic Management and Transaction Cost Nexus: Past Debates, Central Questions, and Future Research Possibilities

Nicolai J Foss
Forthcoming, Strategic Organization, 2003


Proposition 1: In industries where the probability that firms will exploit their market power (e.g., through predatory pricing) is high, buyers and sellers are more likely to enter into long-term supply agreements than in industries where the probability is smaller.
Proposition 2: In industries where the costs of contracting are high, firms will exploit their market power (e.g., through predatory pricing) to a larger extent than in industries where contracting costs are low.
Proposition 3: In industries in which consumers/users and firms can orchestrate their protection efforts at low cost (e.g., because they are few in number, are particularly well organized, have clearly defined shared interests, etc.), there will be more product upgrading, product differentiation, price discrimination, and
signaling on the part of would-be monopolizers than in industries where it is more costly to orchestrate protection. 

Environment Management Theory - Research Propositions





Environment and Globalization - Five Propositions

Adil Najam, David Runnalls and Mark Halle
2007, International Institute for Sustainable Development
http://www.unep.org/gc/gc24/docs/FivePropositions.pdf


PROPOSITION #1:
The rapid acceleration in global economic activity
and our dramatically increased demands for critical, finite natural resources undermine our pursuit of
continued economic prosperity.

PROPOSITION #2:
The linked processes of globalization and environmental degradation pose new security threats to an
already insecure world. They impact the vulnerability
of ecosystems and societies, and the least resilient
ecosystems. The livelihoods of the poorest communities
are most at risk.

PROPOSITION #3:
The newly prosperous and the established wealthy
will have to come to terms with the limitations of
the ecological space in which both must operate, and
also with the needs and rights of those who have not
been as lucky.

PROPOSITION #4:
Consumption—in both North and South—will
define the future of globalization as well as the
global environment.

PROPOSITION #5:
Concerns about the global market and global environment will become even more intertwined and
each will become increasingly dependent on the other.

Marketing Management Research and Theory - Propositions



Overpredicting and Underprofiting in Pricing Decisions

LUXI SHEN,  CHRISTOPHER K. HSEE,  QINGSHENG WU and and CLAIRE I. TSAI
Journal of Behavioral Decision Making, J. Behav. Dec. Making, 25: 512–521 (2012)

joint evaluation (JE)
single evaluation (SE)

H1 : Sellers who make a price decision engage more in
JE of alternative prices than do buyers who make a
purchase decision.
H2 : When setting prices, sellers who engage in the JE
mode will set lower prices than sellers who engage in
the SE mode
H3 : The prices sellers set are lower than what would be
profit maximizing
H4 : Encouraging sellers to mimic SE will lead them to set
higher and more profitable prices.
H5 : Buyers are more price sensitive toward priceevaluable products than toward price-inevaluable products
H6 : Sellers are less likely to underprice their product if
its price is evaluable to buyers than if it is inevaluable to
buyers.

These propositions (were given identifiers H1 to H6 but were referred to as propositions in the paper) were empirically tested.


Brand management to protect brand equity: A conceptual model

Simon D.M. M ’ zungu , Bill Merrilees  and Dale Miller
 Brand Management Vol. 17, 8, 2010, 605–617

P1 A brand orientation mindset is the fi rst essential requirement towards safeguarding brand equity.
P2 Brand needs to be clearly defined before it can be developed into a strategic asset.
P3 Brand needs to be communicated so that its meaning is understood internally and externally.
P4 Internal branding provides a key platform for living the brand within the organisation.
P5a Corporate ability or expertise to deliver the brand promise contributes to the brand ’ s credibility with stakeholders.
P5b Brand equity is conditional on consistent and reliable delivery of the brand.
P6 Brand recovery from perceived breaches of promise is essential to safeguarding reputation.

Conceptualization of Market Expansion

Strategies in Developing Economies
Vasant V. Bang and Sharad L. Joshi
Academy of Marketing Science Review
volume 12 no. 4, 2008 Available: http://www.amsreview.org/articles/bang04-2008.pdf

P1: The greater the extent to which a company targets un-served and/or underserved market
segments, the greater is the extent to which the company pursues market expansion strategy.
P1a: The greater the desire of a company to target market segments with high per capita income and
high per capita GDP, the less the likelihood that company pursues a market expansion strategy.
P1b: The stronger the belief that a market has reached its maturity phase, the greater the likelihood
of a company trying to strive for a higher share of the existing market.
P1c: The higher the estimated profitability from untapped/ underserved market segments as
compared to the served market, the greater is the likelihood of a company pursuing a market
expansion strategy.

P2a: The greater the extent to which a company targets non-customers of the industry, the greater is
the extent to which it pursues a market expansion strategy.
P2b: The greater the extent to which a company targets existing customers of its industry for
increasing their usage rate of the industry‟s products, the greater is the extent to which it pursues a
market expansion strategy.

P3: The greater the efforts a company makes on understanding non-customer behavior, the greater is
the extent to which it pursues a market expansion strategy.

P4: The greater the efforts a company makes to deal with the competition beyond the product
category level, the greater is the extent to which it pursues a market expansion strategy.

P5: The greater the extent of need awakening efforts a company makes, the greater the extent to
which it pursues market expansion strategy.

P6: The greater the extent to which a company makes efforts to deal with competition from
substitutes, the greater is the extent to which it pursues market expansion strategy.

P7a: The greater the extent to which a company makes efforts to improve potential customers‟
competence to use the industry‟s products, the greater is the extent to which it pursues a market
expansion strategy.
P7b: The greater the extent to which a company makes efforts to increase customer benefits and
decrease customer costs associated with its complementary products and services, the greater is the
extent to which it pursues a market expansion strategy.
P7c: The greater the extent to which a company makes efforts to improve the consumption context
and/or adapt its offering to the existing consumption context, the greater is the extent to which it
pursues a market expansion strategy.

P8a: The greater the extent to which a company adapts its pricing strategy to the disposable income
of customers in untapped/ underserved segments, the greater is the extent to which it pursues a
market expansion strategy
P8b: The greater the extent to which a company facilitates pre purchase or post purchase payment in
installment by customers, who can not afford to make one-time payments, the greater is the extent to
which it pursues a market expansion strategy.
P8c: The greater the extent to which a company facilitates credit access to customers, who do not
have access to formal sources, the greater is the extent to which it pursues a market expansion
strategy.
P8d: The greater the extent to which a company facilitates joint purchases by more than one
customer, who can not individually afford to buy, the greater is the extent to which it pursues a
market expansion strategy.
P8e: The greater the extent to which a company facilitates use of non–financial assets by customers
for financing their purchases, the greater is the extent to which it pursues a market expansion
strategy.
P8f: The greater the extent to which a company involves itself in wealth creation efforts for
customers, who have inadequate income, assets and credit access, the greater is the extent to which it
pursues a market expansion strategy.

P9: The greater the extent to which a company‟s sales and distribution efforts are directed at
untapped and/or underserved geographic market segments, the greater is the extent to which it
pursues a market expansion strategy.

P10: The greater the share a market expander company gains in the expanded market, the greater is
the sustainability of a market expansion strategy.

P11: The better the performance of a market expander company on economic, social, and
environmental parameters, the more sustainable is its market expansion strategy.

Reference Price Research: Review and Propositions

Tridib Mazumdar, S.P. Raj, & Indrajit Sinha
Journal of Marketing
Vol. 69 (October 2005), 84–102

Summary 1: The following factors involving a consumer’s prior purchase experiences have been shown to
influence IRP:
•The strongest determinant of a consumer’s IRP is the prior prices he or she observes.
•Prices encountered on recent occasions have a greater effect on IRP than distant ones.
•The greater the share of prior promotional purchases, the lower is the consumer’s IRP.

Summary 2: The negative effect of deal frequency on consumers’ IRP is moderated by (a) the dealing pattern (i.e., regular versus random) of the purchased brands, (b) the dealing pattern of competing brands, and (c) the framing of the deal (percentage off versus cents off). In addition, the marginal (negative) effect of deal frequency and depth on IRP decreases as the frequency and depth of promotions increases.

Summary 3: IRPs for durable products are influenced by such aggregate factors as anticipated economic conditions (e.g., inflation) and household demographics. In addition, in the formation of IRPs for durable products, competitive prices and differences in attribute configurations and features across alternatives are more salient than historical prices; historical prices of durable products are used only to discern a price trend, if it exists.
Finally, consumers’ price expectations are influenced by the technology used in a specific brand compared with other brands in the same durable product category

Proposition 1
: For continuously provided services, IRP depends on the pricing scheme adopted.
(a) For a fixed-fee option, IRP is a function of competitors’ prices for similar services; in addition, consumers
retain IRP as a dollar per unit of expected usage for monitoring actual usage.
(b) For a strictly variable pricing, IRP is a recencyweighted average of amount spent in the past.
(c) For a two-part pricing scheme, consumers retain either dual IRPs or a single IRP, depending on the relative magnitude of each part, budget importance, and perceived price–usage equity.

Summary 4: Research on how previously encountered prices are integrated to form a reference price has produced the following results:
•Assimilation contrast theory and the adaptive expectation model seem to depict the process of
integration of prior prices and contextual information accurately.
•Consumers update their reference prices (a) by weighting their existing reference price and the observed prices and (b) by factoring in a price trend observed from prior prices.

Summary 5: The findings on the integration of information at the store environment are summarized as
follows:
•Retailer-provided ARP that exceeds the selling price raises the consumer’s IRP, even when the
ARP is deemed to be exaggerated. The effect of ARP on IRP is nonlinear; it has an inverted-U
shape. A moderately discrepant ARP has a stronger impact on IRP than either very similar
or very dissimilar (i.e., implausibly high) ARP.
•The use of semantics aimed at competitive comparison (i.e., compare at) is more effective in
raising IRP than is the use of temporal comparisons (i.e., was–now). Cues that are distinctive
in relation to the competition and have low consistency have stronger effects on IRP.
•In an automobile purchase context, the seller’s invoice cost information is more readily integrated into an IRP than is a manufacturer’s list price. In an Internet auction context, reserve prices are more readily integrated into an IRP than is a minimum bid.
•When faced with a large amount of externally available information, consumers are selective
in deciding which pieces of contextually provided information are salient. Customers who are loyal to a few brands integrate prices of only the favorite brands, whereas switchers tend to integrate prices of promoted brands. In addition, lacking diagnostic information in the purchase environment, consumers unwittingly integrate readily available incidental and irrelevant price information.

Proposition 2
: (a) IRP for a durable product depends on the default option that serves as an initial anchor from which consumers insufficiently adjust their IRPs upward or downward on the basis of addition or deletion of product features, respectively. (b) In integrating the fixed and the variable part of two-part prices of services, consumers use either the fixed or the variable part as an anchor depending on their relative magnitude and then insufficiently adjust upward to account for the other part. Frequent payment of a moderate variable fee is more likely assimilated into IRP than are rare occurrences of large magnitude.

Proposition 3
: (a) Consumers retain IRP in both numeric and evaluative forms. The form changes from a numeric form to a more evaluative form with repetitive purchase experiences. Consumers use the numeric structure (e.g., spatial location of digits) of price to form price evaluations or to derive numeric price estimates from evaluations. (b) The representations of IRP in memory are ordered at different levels of aggregation (i.e., spending level, product category level, and brand and item level). The level of aggregation in which IRP is represented depends on consumers’ assessments of the cost and benefits of detailed price comparisons at the brand and item level.

Summary 6: Research on the differential use of memory for prior prices versus externally available information has produced the following findings:
•Consumers use both memory and external information, but they assign weights to each that
depend on consumer and product characteristics.
•The weight placed on memory (relative to external information) is related (a) negatively to the
size of the consumer’s consideration set, (b) negatively to the frequency of purchases during
promotions such as features and displays, (c) positively to the price level of the product category, (d) negatively to the increase of interpurchase time of the category, and (e) negatively to the frequency of promotions in the category

Proposition 4
: (a) In making a store choice decision, consumers retrieve store-specific reference prices as a basis for price comparison. However, the retrieval of store-specific reference prices may be biased as a result of erroneous sampling caused by relative familiarity with prices of different product categories and retail promotional strategies. (b) In consideration set formation, retrieval accuracy is moderated by the consideration set size and the frequency of promotions of the brands in the set.

Proposition 5
: (a) In low-involvement purchase tasks, price memory (i.e., IRP) is implicit and is retrieved outside of awareness by invoking heuristics such as ease of retrieval. (b) Retrieval and use of IRP is biased because of partitioning of price (i.e., consumer’s cost), spatial positions of the digits in price, and task interferences. (c) Consumers may infer IRPs of a brand based on available nonprice information.
However, the inference may be biased as a result of consumers’ prior beliefs about the relationship between price and these nonprice attributes.


Summary 7: (a) The symmetric sticker shock effect of reference price on brand choice is empirically generalizable. However, the evidence for loss aversion is mixed. (b) The effect of reference price on purchase quantity is mediated by household inventory position and brand loyalty. (c) Reference
price has a significant effect on consumers’ purchase-timing decisions, in which they evaluate the “attractiveness” for buying into a category now or later.

Summary 8: The confounding roles of consumer heterogeneity in the estimation of loss aversion and sticker
shock effects are as follows:
•The loss aversion effect in brand choice models is significantly attenuated (and may even disappear) when consumer price response heterogeneity is considered.
•Accounting for heterogeneity in consumer price sensitivities reduces the sticker shock effect in
brand choice models, but the effect remains significant.
•When reference price effect is present in purchase timing, ignoring purchase-timing heterogeneity overstates the reference price effects (both loss aversion and sticker shock) in brand
choice

A brand orientation typology for SMEs: a case research approach

Ho Yin Wong and Bill Merrilees
Journal of Product & Brand Management
14/3 (2005) 155–162

For the benefit of future research, the following research
propositions are identified.
P1. The relationships amongst the constructs shown in Figure 2 can be statistically estimated as a five equation structural model of the brand strategy process.
P2. Each of the five parameters contributes to explain key constructs of the brand strategy process.
P3. Both brand orientation and brand distinctiveness contribute to brand-marketing performance. It
stresses the importance of the antecedents, which are brand distinctiveness and brand orientation.

The Uses of Marketing Theory

Joep P. Cornelissen and Andrew R. Lock
Marketing Theory 5(2), 2005, 165–184

P1: Instrumental science use by practitioners is related negatively to substantive formal theory.
P2: Instrumental science use by practitioners is related negatively to substantive conceptual
devices.
P3: Instrumental science use by practitioners is related positively to methodological model
theory.
P4: Instrumental science use by practitioners is related positively to methodological methods
theory.
P5: Conceptual science use by practitioners is related positively to substantive formal theory.
P6: Conceptual science use by practitioners is related positively to substantive conceptual
devices.
P7: Conceptual science use by practitioners is related positively to methodological model
theory.
P8: Conceptual science use by practitioners is related positively to methodological methods
theory.
P9: Symbolic science use by practitioners is related positively to substantive formal theory.
P10: Symbolic science use by practitioners is related positively to substantive conceptual
devices.
P11: Symbolic science use by practitioners is related negatively to methodological model theory.
P12: Symbolic science use by practitioners is related negatively to methodological methods
theory.
P13: the greater the operational quality of a theory, the stronger the relationship between
theory type and theory use.
P14: the greater the goal relevance of a theory, the stronger the relationship between theory type
and theory use.
P15: the greater the descriptive relevance of a theory to practitioners, the stronger the relationship between theory type and theory use.
P16: the greater the timeliness of a theory to practitioners, the stronger the relationship
between theory type and theory use.

The Theoretical Underpinnings of Customer Asset Management: A Framework and Propositions for Future Research

Ruth N. Bolton, Katherine N. Lemon, and Peter C. Verhoef
Journal of the Academy of Marketing Science.
Volume 32, No. 3, Summer 2004, pages 1-20.

The Influence of Price Perceptions

Proposition 1: Increases (decreases) in perceptions of price fairness will have a positive (negative) influence on relationship length, where increases (vis-à-vis the customer’s price threshold) will have a smaller absolute effect on relationship length than decreases.

Proposition 2: Variable-rate pricing policies will reduce the customer’s usage of a service relative to
fixed subscription fee policies. The size of the reduction depends on the actual prices for both the variable-rate pricing and fixed-rate pricing.

Proposition 3: Customers’ price perceptions of currently consumed services will have a stronger effect
on their cross-buying for service organizations with a consistent pricing policy than for service organizations that do not use a consistent pricing policy.
Proposition 4:Current perceptions of the firm’s prices will have a smaller effect on cross-buying, in terms of explained variance, than on relationship length or service usage.
Proposition 5: Current perceptions of competitors’ prices will have a larger effect on cross-buying, in
terms of explained variance, than on relationship length or service usage.

The Influence of Customer Satisfaction

Proposition 1: Increases in customer satisfaction over time will positively influence relationship length,
where the effects of changes will be asymmetric: negative changes in satisfaction will have a larger effect than positive changes.

Proposition 2: Customer satisfaction will have a positive (no) influence on cross-buying for organizations with a high (low) similarity among the offered services.

Proposition 3:Customer satisfaction will have a smaller effect on cross-buying, in terms of explained variance, than on relationship length and service usage.

The Influence of Commitment

Proposition 1: Affective commitment will have no influence on service usage.
Proposition 2: Calculative commitment will partially mediate the effect of price and price perceptions on
service usage.
Proposition 3: Affective commitment will positively influence cross-buying, whereas calculative commitment will have no influence on cross-buying.
Proposition 4: The effect of commitment (especially affective commitment) on relationship length and
cross-buying will be stronger for service organizations providing hedonic experiences than those providing utilitarian experiences.

The Influence of Direct Marketing Promotions

Proposition 1: The positive influence of DM promotions on the length of the customer’s relationship
with the service organization is mediated by relationship breadth.
Proposition 2: Although the short-run influence of DM promotions on service usage may be positive,
DM promotions will have a negative influence on service usage in the long run.
Proposition 3: DM promotions will have a smaller effect on relationship length and service usage, in
terms of explained variance, than on cross-buying

The Influence of Relationship Marketing Instruments

Proposition 1: The positive effect of social reward programs on relationship length is mediated by satisfaction and commitment.
Proposition 2: Economic reward programs will positively influence service usage levels in the short
term, but not in the long term.
Proposition 3: Social programs will have a small influence on service usage levels in the short term (compared with economic benefits) but will also have an influence in the long run.
Proposition 4:The effect of social programs on customers’ cross-buying will be mediated by satisfaction
with prior experiences and commitment to the service organization
Preposition 5:Social programs will be more effective in influencing customer behaviors for service organizations offering hedonic experiences or serving highly involved customers.

The Influence of Advertising and Communications

Proposition 1: The positive influence of brand advertising on relationship length is mediated by commitment, where the influence of brand advertising on commitment is smaller for customers with longer relationships.
Proposition 2: Brand advertising will moderate the effect of price perceptions on service usage.

The Influence of Distribution Channels

Proposition 1: Customers acquired through channels with a focus on price information, such as DM channels, will have shorter relationships with the service organization.
Proposition 2: Customers acquired through channels with more (less) opportunities to create economic or
social relationships, such as personal selling or retailing channels, will have longer (shorter) relationships with the service organization
Proposition 3: Customers who are served through channels that create stronger (weaker) social and/or
economic bonds will have higher (lower) levels of satisfaction and higher (lower) levels of service usage.
Proposition 4: Customers who are served through channels that create stronger (weaker) social and/or
economic bonds will have higher (lower) levels of satisfaction and commitment, and higher (lower) levels of cross-buying.

The Moderating Influence of Service Industry Characteristics

Proposition 1:Switching costs will decrease (increase) the magnitude of the effect of customer satisfaction
(commitment) on the length of the customercompany relationship, his or her service usage levels, and cross-buying.
Proposition 2: DM promotions designed to increase the length of a customer’s relationship with a service
organization, service usage levels, and/or crossbuying will be less effective in highly competitive markets than in less competitive markets.
Proposition 3: Marketing instruments designed to increase the length of a customer’s relationship with a
service organization, service usage levels, and/or cross-buying will be more effective in markets with high performance risk perceptions (i.e., uncertainty) than in markets with low performance risk perceptions.



Toward a general theory of creativity in advertising: Examining the role of divergence

Robert E. Smith and Xiaojing Yang
marketing theory 4(1/2), 2004

P1a: Ads with high divergent will receive significantly more notice than ads with low divergence.
P1b: Divergence related to ad execution elements will play the bigger role in attracting attention, while divergence related to brand/message elements will play the bigger role in motivation
to process the message and depth of processing.

P2: Consumers will have significantly higher motivation to process divergence ads than nondivergence ads in order to attain closure.

P3a: When an ad’s divergence corresponds with the consumer’s divergent production system,
the consumer will have significantly more motivation to process the ad.
P3b: When an ad’s divergence corresponds with the consumer’s divergent production system,
the consumer will have significantly more favorable responses to the ad.

P4: Ads rated high on brand-related divergence will receive significantly more processing depth
than ads rated low on brand-related divergence.

P5: Some types of divergence should resist wear-out significantly longer than non divergent
ads.

P6a: Divergence related to execution elements is most likely to serve as a peripheral cue in the
persuasion process.
P6b: Divergence related to brand/message elements can serve as a motive for central processing of the brand message

P7: Ads rated high on divergence will produce significantly more favorable cognitive and
affective responses.

P8a: When divergence is execution-related it will produce more favorable consumer responses
in terms of ad cognitions and ad attitudes than when divergence is brand-related.
P8b: When divergence is brand-related it will produce more favorable consumer responses in
terms of brand cognitions, brand attitudes, and purchase intentions than when divergence is
execution-related.

P9a: Consumers will have better memory for ads high in divergence (on execution elements)
than for ads low in divergence.
P9b: Consumers will have better memory for brands in ads with high divergence (on
brand/message elements) than for brands in ads with low divergence.

P10: Relevance and divergence will show a significant interaction effect on ad notice, motivation to process the ad, depth of ad processing, and consumer responses.

P11: An interaction effect is predicted for consumer involvement and divergence. When consumer involvement is low, the pre-attentive, attention and motivation effects of divergent
execution elements are significantly higher than when consumer involvement is high.

P12a: Different levels of ad divergence and relevance will be needed for different communication-effects goals.
P12b: Different types of ad divergence (execution-related versus brand-related) will be needed
for different communication-effects goals.



Building Brand Equity Through Corporate Societal Marketing

Steve Hoeffler and Kevin Lane Keller

Journal of Public Policy & Marketing Spring Vol. 21 (1),  2002, 78–89

P1 : CSM programs (a) will lead to increases in awareness for a brand and (b) will not lead to enhanced associations related to specific consumption or usage situations.
P2: The more prominent user imagery is in the marketing program (e.g., as the focus of an advertising campaign), the more likely it is that the brand image will be enhanced.
P3: Abstract associations are more likely to be transferred from a cause to a brand than concrete associations are.
P4: Enhanced levels of feelings of social approval will be created when CSM programs provide consumers with external symbols to explicitly advertise or signal their affiliation to others.
P5: Enhanced levels of feelings of self-respect will be created when CSM programs provide consumers with moments of internal reflection that reinforce the positive outcomes associated with the cause program and the way their involvement contributed to that success.
P6: The more consumers perceive fit or similarity of the cause to the brand, the more likely consumers will infer similar associations to the brand.

Modelling the components of the brand

Leslie de Chernatony and Francesca Dall’Olmo Riley
European Journal of Marketing, 32,11/12, 1998
Proposition 1:Brand consultants have well-developed mental models to make sense of brands.
Proposition 2:There are similarities between the components constituting brand consultants’ mental models of brands.
Proposition 3:The atomic model of the brand represents a useful model and can reflect brand consultants’ conceptions of brands.

PERCEIVED PRICE FAIRNESS: A NEW LOOK AT AN OLD CONSTRUCT

Marielza Martins and Kent B. Monroe (1994) ,
Advances in Consumer Research Volume 21, eds. Chris T. Allen and Deborah Roedder John, Provo, UT : Association for Consumer Research, Pages: 75-78.

Proposition 1: Buyers may take into account the prices paid by other customers for the same products they acquire.
Proposition 2: A perceived disadvantageous price inequity likely will generate a more unfavorable customer response than a perceived advantageous price inequity of the same magnitude generates a favorable customer response.
Proposition 3: A decrease (increase) in the perceived price paid by the customer will have a similar reducing (increasing) effect on his/hers perceptions of monetary sacrifice as an equivalent increase(decrease) in the perceived price paid by someone else.
Proposition 4: A perceived disadvantageous price inequity, or a loss, increases buyers' perceptions of sacrifice and decreases buyers' perceptions of value and willingness to buy, while a perceived advantageous price inequity, or a gain, reduces buyers' perceptions of sacrifice, and increases buyers' perceptions of value and willingness to buy, as compared to a perceived equitable price.
Proposition 5: When an individual compares the price he/she is offered for a particular product to the price someone else is offered for the same product and finds a discrepancy, perceived price inequity is more likely to result if their income levels are similar than if their income levels are different.
Proposition 6: More favorable pricing terms offered to consumer groups generally perceived as low income on product categories considered basic necessities, such as food or transportation, are more likely to be perceived as fair by other customers than equally more favorable pricing terms offered to those groups on non-necessary products.


First Mover Advantage: A Synthesis, Conceptual Framework and Research Propositions

Journal of Marketing,Vol. 56, (October 1992), 33-52

Market Orientation: The Construct, Research Propositions, and Managerial Implications

Ajay J Kohli and Bernard Jaworski
Journal of Marketing Vol. 54, April, 1990, 1-18
19 propositions

P1a: The greater the variability over time in the gap between top managers' communications and actions relating to a market orientation, the greater the junior managers' ambiguity about the organization's desire to be market oriented.

Consumer Perceptions of Price, Quality and Value: A Means-End Model and Synthesis of Evidence

Valaree A. Zeithmal
Journal of Marketing, Vol.52 (July 1988), 2-22.

September 9, 2013

Security Analysis- Investment Management - Portfolio Management - Research Propositions




WHERE DO ALPHAS COME FROM?: A MEASURE OF THE VALUE OF ACTIVE INVESTMENT MANAGEMENT

Andrew W. Lo
JOURNAL OF INVESTMENT MANAGEMENT, Vol. 6, No. 2, (2008), pp. 1–29

Proposition 1 Under assumptions (A1)–(A2), the expected return of any portfolio P satisfies the following
decomposition:
Proposition 1 is a simple decomposition of a portfolio’s expected return into two components:
the sum of the covariances between portfolio weights and returns, and the sum of the products of expected portfolio weights and expected returns.

Proposition 2 Under Assumptions (A1)–(A3), the expected return of any portfolio P satisfies the following
decomposition:
Proposition 2 provides a more refined decomposition than Proposition 1, thanks to the linear Kfactor structure assumed in (A3). Expected returns are now the sum of three components: a securityselection component (18a) that depends on the αi’s, a factor-timing component (18b) that depends on the covariance between the portfolio betas and factors, and a risk-premia component (18c) that represents the expected return from passive exposures to factor risks.

Proposition 3 Under(A1) and (A2),the active component δp and active ratio θp of any portfolio P may
be estimated consistently by their sample counterparts (31) and (32), and both estimators are asymptotically
normal with variances that may be consistently estimated via the Generalized Method of Moments.


September 8, 2013

Management Principles and Propositions





Principles of Management - Koontz and O'Donnell


Principles of Planning


Related to Purpose and nature

1. Principle of contribution to objectives
          Every plan has to contribute positively toward the accomplishment of enterprise objectives.
          http://nraomtr.blogspot.com/2011/12/principles-o-principles-of-management.html


2. Principle of efficiency of plans
          Efficiency is measured by the contribution of the plan to objectives of the enterprise minus the costs and unsought for consequences in formulating and implementing the plan.

3. Principle of primacy of planning
          Planning is the primary prerequisite for all other functions of management. Every action of the manager follows a planning step.

Principles Applicable to Structure of plans

4. Principle of planning premises
          If more people in an organization use common and consistent planning premises, the enterprise planning will be more coordinated.

5. Principle of policy framework
          If more policies, appropriate to the organization, are expressed in clear terms and form and if manages understand them, the plans of the enterprise will be more consistent.

6. Principle of timing
          If plans are structured to provide a network of derivatives plans in sequence, there will be more effectiveness in attainment of enterprise objectives.

Principles Applicable to Process of Planning

7. Principle of alternatives
          Select the plan which is the most effective and the most efficient to the attainment of a desired goal.

8. Principle of limiting factor
          Consider limiting factor in generating alternatives and selection from alternatives.

9. The commitment Principle
          Planning can cover a period over which commitment of resources can be clearly visualized.

10. The flexibility Principle
          Building flexibility in planning is beneficial, but cost of building flexibility needs to be evaluated against the benefits.

11. The Principle of navigational change
          Manager needs to periodically check events of the plan and redraw plans to maintain the move toward a desired goal.

12. Principle of competitive strategies
          In a competitive arena, it is important to choose plans in the light of what competitor will or will not do and navigate based on what competitors are doing or not doing.


Principles of Organizing


Principles in Relation to Purpose

13. Principle of unity of objectives
          An organization structure is effective if it as a whole, and every part of it, make possible accomplishment of individuals in contributing toward the attainment of enterprise objectives.

14. Principle of efficiency
          An organization or organization structure is efficient if it is structured to make possible accomplishment of enterprise objectives by people with minimum unsought consequences or costs.
       

Principles  Related to the Cause of Organizing

15. Span of management Principle
          There is a limit at each managerial position on the number of persons an individual can effectively manage. But this number is not a fixed number and it will vary in accordance with underlying variables of the situation.


Principles in Developing the Structure of Organization

16. The scalar Principle
          The more clear the line of authority from the ultimate authority for management in an enterprise (CEO)  to every subordinate position, the more effective will be decision making and organization communication at various levels in the organization.

17. Principle of delegation
          Authority is a tool for managing to contribute to enterprise objectives. Hence authority delegated to an individual manager should be adequate to assure his ability to accomplish results expected of him.


18. Principle of responsibility
          The responsibility of the subordinate to his superior for authority received by delegation is absolute, and no superior can escape responsibility for the activities of his subordinate to whom he in turn has delegated authority.

19. Principle of parity of authority and responsibility
The responsibility exacted for actions taken under authority delegated cannot be greater than that implied by the authority delegated, nor should it be less.

20. Principle of unity of command
          The more completely an individual has a reporting relationship to a single superior, the less the problem of conflict in instructions and the greater the feeling of personal responsibility.
       
21. The authority level Principle
          Maintenance of authority delegation requires that decisions within the authority competence of an individual manager be made by him and not be referred upward in the organization.


Principles in Departmentizing Activities

22. Principle of division of work
        The better an organization structure reflects a classification of the tasks and activities required for achievement of objectives and assists their coordination through creating a system of interrelated roles; and the more these roles are designed to fit the capabilities and motivations of people available to fill them, the more effective and efficient an organization structure will be.

23. Principle of functional definition
        The more a position or a department has clear definition of results expected, activities to be undertaken, organization authority delegated, and authority and informational relationships with other positions, the more adequately individual responsible can contribute toward accomplishing enterprise objectives.
Principle of separation
        If an activity is designed to be a check on the activities of another department, the individual charged with such activity cannot adequately discharge his responsibility if he reports to the department who activity he is expected to evaluate.

Principles in the Process of organizing

24. Principle of balance
    the application of principles or techniques must be balanced in the light of the over-all effectiveness of the structure in meeting enterprise objectives.

25. Principle of flexibility
    The task of managers is to provide for attaining objectives in the face of changing environments. The more provisions are made for building organization flexibility, the more adequately organization structure can fulfill its purpose.

26. Principle of leadership facilitation
    The more an organization structure an authority delegations within it make possible for various managers to design and maintain an environment for performance, the more it will facilitate leadership abilities of managers.


Staffing Principles


Related to the Purpose of Staffing

27. Principle of staffing objectives
 
    The positions provided by the organization structure must be staffed with personnel able and willing to carry out the assigned functions.

28. Principle of staffing
    The quality of management personnel can be ensured through proper definition of the job and its appraisal in terms of human requirements, evaluation of candidates and incumbents, and appropriate training.

The process of staffing

29. Principle of job definition
    Specifications for the job rest on organization requirements andon provision for incentives to induce effective and efficient performance of the tasks involved.

30. Principle of managerial appraisal
    Performance must be appraised against the management action required by superiors and against the standard of adherence in practice to managerial principles.

31. Principle of open competition in promotion
    Managers should be selected from among the best available candidates for the job, whether they are inside or outside the enterprise.

32.Principle of management development
    The objective of management development is to stengthen existing managers. The most effective means of developing managers is to have the task performed primarily by a manager's superior.
Principle of universal development
    The enterprise can tolerate only those managers who are interested in their continuous development.

Principles of Directing

Related to the Purpose of Directing

33. Principle of harmony of objectives
    Effective directing depends on the extent to which individual objectives in cooperative activity are harmonized with group objectives.


Principles  Applicable to Process of directing

34.Principle of unity of command
    The more completely an individual has a reporting relationship to a single superior, the less the problem of conflict in instructions and the greater the feeling of personal responsibility for results.

35.Principle of direct supervision
    Effective direction requires that management supplement objective methods of supervision with direct personal contact.

36.Principle of supervisory techniques
    Since people, tasks, and organizational environment vary, techniques of supervision will be most effective if appropriately varied.

Principles of Delegation


37. Principle of functional delegation
    The more a position or department has clear definitions of results expected, activities to be undertaken, organization authority delegated, and authority and informational relationships with other positions, the more adequately individuals responsible can contribute toward accomplishing enterprise objectives.

38.Principle of delegation by results expected
    The authority delegated to an individual managers should be adequate to assure his ability to accomplish the results expected of him.
39. Principle of absoluteness of responsibility
    No superior can escape, through delegation, responsibility for the activities of subordinates, for it is he who delegated authority and assigned duties.

40. Principle of parity of authority and responsibility
    The authority delegated has to be consistent with the responsibility assigned to a subordinate.




Principles of Control


Related to the purpose of control

41. Principle of assurance of objective
    The task of control is to assure accomplishment of objectives by detecting potential or actual deviation from plans early enough to permit effective corrective action.

42.Principle of efficiency of controls
    The more control approaches and techniques detect and illuminate the causes of potential or actual deviations from plans with the minimum of costs or other unsought consequences, the more efficient these controls will be.

43.Principle of control responsibility
    The primary responsibility for the exercise of control rests in the manager charged with the execution of plans.
Principle of direct control
    The higher the quality of managers and their subordinates, the less will be the need for indirect controls.
(The principle may termed as principle of reduced controls. A superior can spend less time in control activities if he has more higher quality managers and their subordinates in his department.)

Principles related to Structure of control

44. Principle of reflection of plans
    The more controls are designed to deal with and reflect the specific nature and strucuture of plans, the more effective they will serve the interests of the enterprises and its managers.

45. Principle of organizational suitability
The more controls are designed to reflect the place in the organization structure where responsibility for action lies, the more they will facilitate correction of deviation of events from plans.

46. Principle of individuality of controls
    Controls have to be consistent with the position, operational responsibility, competence, and needs of the individuals who have to interpret the control measures and exercise control.

Process of control

47. Principle of standards
    Effective control requires objective, accurate, and suitable controls.

48. Principle of critical-point control
    Effective control requires attention to those factors critical to appraising performance against an individual plan.

49. The exception Principle
    The more a manager concentrates his control on exceptions, the more efficient will be the results of this control.

50. Principle of flexibility of controls
    If controls are to remain effective despite failure or unforeseen changes in plans, flexibility is required in the design of controls.

Principle of action

51. Principle of Action
    Control is justified only if indicated or experienced deviations from plans are corrected through appropriate planning, organizing, staffing and directing.
http://nraomtr.blogspot.com/2011/12/principles-o-principles-of-management.html

Principles of Efficiency - Harrington Emerson


52. Clearly defined ideals.
53. Common sense
54. Competent counsel
55. Discipline
56. The fair deal
57. Reliable, immediate and adequate records
58. Despatching
59. Standards and schedules
60. Standardized conditions
61. Standardized operations
62. Written standard-practice instructions
63. Efficiency-reward


Principles of Organization Behaviour

64. Managers cannot use only one motivation theory. There is a need to combine motivation theories and use them simultaneously as well as appropriately.
http://nraomtr.blogspot.com/2011/12/motivation.html

65. In personality theory, the "Big Five" personality traits. Conscientiousness, emotional stability, agreeableness, extraversion, and openness to experience have been found to significantly relate to job performance, especially conscientiousness.
http://nraomtr.blogspot.com/2012/02/personality-and-attitudes.html

66. Attitudes can be changed. Research shows that some of the ways of bringing about attitude changes are providing new information, and persuasion by friends or peers, and co-opting.
http://nraomtr.blogspot.com/2012/02/personality-and-attitudes.html

66. Managers spend more than three fourths of their time in communicating – exchanging information. Communication is found to make the biggest relative contribution to the effectiveness of managers.
http://nraomtr.blogspot.in/2011/12/communication-importance-and-definition.html

67. How groups are formed? Theodore Newcomb's Balance Theory: According to this theory, persons are attracted to one another on the basis of similar attitudes toward commonly relevant objects and goals. Once the relationship is formed, a balance is maintained between the attraction and the common attitudes. If an imbalance occurs, there is an attempt to restore the balance, and if the balance cannot be restored, the relationship dissolves.
http://nraomtr.blogspot.in/2011/12/groups-group-dynamics.html

68. A. One's own characteristics affect the characteristics one is likely to see in others.
B.. Persons who evaluate themselves favorably are more likely to be able to see favorable aspects of other people.
http://nraomtr.blogspot.in/2011/12/perception.html

69.Vroom's Motivation Model: The strength of motivation to perform a certain act will depend on the algebraic sum of the products of the valences for the outcomes times the expectancies.
http://nraomtr.blogspot.com/2011/12/vrooms-vie-model-of-motivation.html


70. Taking a more proactive approach, management of organizations can try to eliminate stressors, reduce work-family conflict, and implement employee assistance programs (EAPs). 
http://nraomtr.blogspot.com/2011/12/stress-conflict-and-negotiation-skills.html

71. Management is considered to have three major dimensions - technical, conceptual and human. Organizational behavior is a subject that examines behavior of human beings in organizations.
http://nraomtr.blogspot.in/2011/12/introduction-to-organizational-behavior_06.html

72. Goals with the commitment of the person,  provide a directional nature to his behavior and guide thoughts and actions to the outcomes specified in the goals.
http://nraomtr.blogspot.com/2011/12/goal-setting-and-performance.html

73. When individuals attribute their success to internal rather than external factors, they have higher expectations for future success, report a greater desire for achievement and set higher performance goals.
http://nraomtr.blogspot.in/2011/12/attribution.html

74. A leader provides more benefits/rewards than burdens/costs for followers.
http://nraomtr.blogspot.in/2011/12/theories-of-leadership.html

75. Leadership style can be changed. But it takes time.
http://nraomtr.blogspot.in/2011/12/changing-leadership-style.html


76. Accomplishment of  task successful leadership. Effective Leadership accomplishes the task and makes followers happy and contented.
http://nraomtr.blogspot.com/2011/12/successful-leadership-effective.html


Marketing Principles and Propositions


77. Kotler highlighted the fact that each business function has a potential impact on customer satisfaction. All departments need to think of customer satisfaction and work together to fulfill customer needs and expectations.
http://nraomtr.blogspot.com/2011/12/management-of-marketing-department-and.html

78. The marketing staff have to identify the potential market for the likely product (product idea) and must segment the market and select the appropriate target segment and then only product can be finalized for its specific attributes.
http://nraomtr.blogspot.in/2011/12/marketing-strategy-marketing-process.html

79. The CEO is the chief customer officer. He has to demonstrate strong customer focus, convince his top management team to be customer focused individually, then communicate with his employees to show customer commitment.
http://nraomtr.blogspot.com/2011/12/developing-enterprisewide-or-company.html

80. The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.
http://nraomtr.blogspot.in/2011/12/marketing-concept-kotler.html

81. Buyer’s needs, characteristics and decision making process interact with the stimuli created by the environment and marketers and buying decisions are made by the buyers.
Hence marketers have to understand what happens in the buyer’s consciousness between the arrival of outside stimuli and the buyer’s purchase decision.
http://nraomtr.blogspot.com/2011/12/consumer-behavior.html

82. From a consumer analysis point of view, a marketing strategy is a set of stimuli placed in consumers’ environments designed to influence their affect, cognition, and behavior. These stimuli include such things as products, brands, packaging advertisements, coupons, stores, credit cards, price tags, salespeople’s communications, and, in some cases, sounds (music), smells (perfume), and other sensory cues.
http://nraomtr.blogspot.in/2011/12/analysis-of-consumer-markets.html

83. Determining Competitors’ Objectives
 The company has to make efforts understand what drives each competitor’s behavior. Normal microeconomic assumption is that every firm attempts to maximize their profits. However, in actual practice, companies differ in the weights they put on short-term versus long-term. Hence, each firm pursues a mix of objectives, current profitability, market share growth, cash flow, technological leadership, service leadership etc. with different weights attached to them.
http://nraomtr.blogspot.in/2011/12/analyzing-competitors.html

84. Products are made with specific attributes by individual organizations. Hence, marketers  have to focus on a particular group of potential buyers for their product.  This focus is termed as targeting. Market segmentation is the effort to isolate groups of potential buyers having similar preferences for attributes of a product in the total market for the generic product.
http://nraomtr.blogspot.com/2011/12/market-segmentation-and-selection-of.html

85. But the first strategic choice for the leader is to take actions that expand the market for the product in general.  Market leaders make appropriate efforts to increase usage of their industry product. As market expansion is generally profitable to the market leader.
http://nraomtr.blogspot.com/2011/12/strategy-of-market-leader.html

86. Attack by a challenger has a greater probability of success when there customer dissatisfaction with the current leader. There is a gap in the market which the leader is not serving. Challengers have to identify the gap and then develop the product offering for it and then attack that target segment of the market.
http://nraomtr.blogspot.com/2011/12/marketing-strategies-for-challenger.html  (September 7, 2013)

87. Follower companies do not challenge the market leader. But market followers have to know how to hold on current customers and win a fair share of customers in the growing market. The follower firms have a certain advantages for its target market in terms of location, services offered or financing offered.
http://nraomtr.blogspot.in/2011/12/competitive-strategies-for-followers.html

88. Instead of settling scores,  leaders have to make gestures of reconciliation that heal wounds and involve all to get on with business. Revenge is not justice, it is not strategy either. Anger and blame are unproductive emotions that tie up energy in destroying rather than creating. Those whose main motivation is to settle scores and get payback — to obstruct rather than construct — are on the wrong side of history. Their legacy is not  magnificent building, but rubble. Taking revenge can destroy countries, companies, and relationships. Forgiveness can rebuild them.
http://nraombakc.blogspot.com/2013/09/leaders-must-foster-accountability-but.html