October 26, 2016

Marketing Warfare - Confronting The Competition in the Market Place

Marketing Management Revision Article Series

Marketing Warfare - Based on the Art of War by Tsuntzu

Paul Hoyt


Defensive Warfare


Principles given by Al Ries and Jack Trout, Marketing Warfare, McGraw Hill, 1986

1.  Only the market leader should consider playing defense.

2. The best defensive strategy in marketing is to attack yourself.

3. Strong competitive moves should always be blocked.

Don't spend all your resources in defense. Spend only what is necessary to defend and keep the rest for reserve. Only add more as the intensity of the attack increases.

The goal of defensive warfare is marketing peace.

Offensive Marketing Warfare


Principles given by Al Ries and Jack Trout, Marketing Warfare, McGraw Hill, 1986

1. The main consideration is the strength of the leader's position (it is actually an understanding of the market strength, resources, competencies and capabilities of the leader).

A company want to launch an offensive attack on a leader has to assess the strength of the leader's position in the market.

2. Find a weakness in the leader's strength and attack that point (It means, a weakness which can be attacked successfully by the offensive company).

3. Launch the attack on as narrow front as possible.

Narrow front means attack an individual product.

Remember that odds favor the defender.
Find weakness in leader's largest selling products.
Good offensive ideas are extremely difficult to find. Be prepared to do a lot research to the weakness you can exploit.
You can afford to spend more on an offensive attack because you know the market is there for you to get a share.

Flanking Marketing Warfare


Principles given by Al Ries and Jack Trout, Marketing Warfare, McGraw Hill, 1986

1. A good flanking move must be made into an uncontested area (in the same generic product).

2. Tactical surprise ought to be an important element of the plan.

3. The pursuit is just as critical as the attack itself.

In a flanking move, after you taste success, you have to reinforce it. The best time to build a strong position is in the beginning period of a new product. Flanking is always done with a new product category which is the company is introducing. Hence, if it is successful, more resources must be spent on it to build a strong position. A flanking attack is to earn market share.

Flanking Alternatives

Product category
Low price - no frills product
High price niche product
Small size product - small screen, pocket size
Large size product - Big screen
New distribution channel
New product from - ex: liquid in place of solid, new colors symbolising different things,
Diet products in food items

Guerilla Marketing Warfare

Al Ries and Jack Trout, Marketing Warfare, McGraw Hill, 1986

The enemy advances, we retreat. The enemy camps, we harass. The enemy tires, we attack. The enemy retreats, we pursue.  Mao Tse-Tsung.

Trouble a leader, survive, injure a leader, survive, defeat a leader, win.

Guerillas need to have a survival plan. If they survive they can fight the battle once again on a different day. The cost incurred in defeating a guerilla is very high for the opponent.

Al Ries and Jack Trout give the following as principles of guerilla warfare in marketing.

1. Find a segment of the market small enough to defend.

There has to be market from which you can earn revenues. Guerilla marketers may have a diffuse market which the leaders cannot even identify.

2. No matter how successful you become, never act like the leader.

Don't declare victory early. Guerilla strategy and tactics are essentially opposite of what's right for Fortune 500 companies.

3. Be prepared to bug out at a moment's notice.

Whenever you venture into the main visible markets, get out at the first instance of trouble. Conserve your resources.


Al Ries and Jack Trout, Marketing Warfare, McGraw Hill, 1986

Al Ries, Jack Trout, "MARKETING WARFARE", Journal of Consumer Marketing, Vol. 3 Iss: 4, 1986, pp.77 - 82

October 23, 2016

The Emergence of Chief Growth Officer

World Class Operations Management

In the global market, world class companies have to deliver performance (customer satisfaction and company profit) that is more than the performance of their strongest competitors. Company has to concentrate on  the efficiency and effectiveness of operations, but also needs to manage the culture for future performance. World Class Operations Management (WCOM) is a significant concept for simultaneous improvement of effectiveness, efficiency and culture.

Traditional manufacturers have not achieved  a balance between efficiency and effectiveness. F.W. Taylor pointed out that, managers and business owners of his time (1885 to 1915) have not developed any understanding of the use of machines and manpower. Therefore, the factory operations were inefficient. He developed methods for improving efficiency and published Scientific Management and Shop Management. Industrial Engineering was started in engineering institutions due to the strong advocacy of Taylor that there is big scope and opportunity for implementing scientific management in engineering organizations by industrial engineers. Larry Miles developed value engineering after world war II. He strongly mentioned that performance (effectiveness) oriented work is only taken care of value (efficiency) oriented work is neglected in the organizations

WCOM (World Class Operations Management): Why You Need More Than Lean

Carlo Baroncelli (https://www.efeso.com/ ), Noela Ballerio
Springer, 19-Apr-2016 - 277 pages

This book deals with World Class Operations Management (WCOM), detailing its principles, methods and organisation, and the results that this approach can bring about. Utilising real-world case studies illustrated by companies that have adopted this model (interviews with Saint-Gobain, L’Oréal, Tetra Pak, Bemis, and Bel Executives), it describes common patterns drawn from decades of hands-on experience, so as to present a theoretical approach together with the concrete application of its principles.

WCOM, adopted by several multinational companies, is one of the more innovative management practises, as it integrates the best Continuous Improvement approaches (Lean, Total Productive Management, World Class Manufacturing) as well as the most innovative approaches in human dynamics like Change Leadership, Performance Behavior, Shingo Model, to name a few.

Maximising reader insights into the successful implementation of such an approach, and explaining not only its potentialities, but also its implementation dynamics, the critical points and the ways it can be integrated into different situations, this book is also about how to create a culture of excellence that is sustainable over a long period of time and delivers consistent (or ever-improving) results.

Operational Excellence: A Concise Guide to Basic Concepts and Their Application

Gilad Issar, Liat Ramati Navon
Springer, 14-Jan-2016 - 194 pages

As industrial companies are placing a higher focus on operations, this book comes at the right time with a compilation of basic concepts of Operational Excellence and their application.

Operational excellence allows companies to recover from reductions in gross margins and low profitability, which largely occur due to a rise in agile competition and the short life span of new technologies. This book helps managers and consulting academicians as a ready reference for cross-industry implementation of operational excellence.

October 20, 2016

Technology Life Cycle - Employment and Income

Core Competencies - Concept - The Present Status

Bain & Co. Note

Idea of Core competence
Sep 15th 2008

Strategic Management and Core Competencies: Theory and Application

Anders Drejer
Greenwood Publishing Group, 2002 - Business & Economics - 224 pages

Managers and management scholars alike need operational models and concepts for dealing with core competencies within strategic management. This book provides tools for the practitioner as well as fundamental theoretical concepts to enable scholars to further build upon Drejer's work. His main argument is that understanding core competencies is key to explaining why some firms enjoy a competitive advantage over others. Drejer proposes models and means with which managers can proactively identify, design, and develop their firm's core competencies in strategic alignment.

More than merely a how-to book, this work places an equal emphasis on the concepts behind competence-based strategy. The author offers the reader multiple perspectives on the background of competence-based strategy, the relationship between strategic management and the development of core competencies, and the application of competence-based strategy to praxis. He provides the tools necessary to identify, analyze, and develop the competencies of a firm, and in so doing performs a valuable service for practitioners and researchers.


October 19, 2016

Importance of Manufacturing, Construction and Engineering in World Economies

Japan Economy

Industries by GDP value-added 2012.
Based on the exchange rate on April 13, 2013.

Industry GDP value-added $ billions 2012 % of total GDP

Other service activities 1,238 23.5%
Manufacturing 947                         18.0%
Real Estate 697 13.2%
Wholesale and retail trade 660 12.5%
Transport and communication 358 6.8%
Public administration 329 6.2%
Construction 327                           6.2%
Finance and insurance 306 5.8%
Electricity, gas and water supply 179 3.4%
Government service activities 41 0.7%
Mining 3 0.05%
Total 5,268 100%


German Economy

The service sector contributes around 70% of the total GDP, industry 29.1%, and agriculture 0.9%. Exports account for 41% of national output.

October 12, 2016

GE's Management New Management Initiatives

GE is a company that is used to reinventing itself by implementing new management methods and techniques periodically. It has implemented a strategic focus on simplification over the last several years. The company builds complex products. Employees and customers were noting that the company itself had become too complex: Customer outcomes were slowing as processes grew burdensome. Simplification is now an integrated part of GE’s strategy, encompassing lean management, speed and competitiveness, commercial intensity, and digital capability.

First, GE is asking leaders to implement lean management: remove layers, increase spans of control, and reduce the number of checks and approvals needed to get things done. Wherever there is complexity and duplication, shared activity and services is being advocated. The company is implementing new digital technologies that simplify work and make employees more productive wherever possible.

Second, GE has developed a  program called FastWorks.  FastWorks involves a new way of working that begins with an intensified focus on—and understanding of—customer needs. Experimenting and iterating quickly to create solutions that add value or create value are hallmarks of the approach. FastWorks is being used throughout GE to help teams move faster, bring GE closer to customers, and to maintain a high level of customer input and involvement across the product lifecycle.

Third, GE is promoting belief, and behavioral changes to help leaders and employees reduce complexity and to create a new culture within GE. The culture of simplification is coming to life through a set of new “GE Beliefs,” which are focused on delivering fast, better solutions to customers. The GE Beliefs, created through a crowdsourcing process within GE, are:

Customers determine our success
Stay lean to go fast
Learn and adapt to win
Empower and inspire each other
Deliver results in an uncertain world

The GE Beliefs play are  used to change how GE recruits, how it manages and leads, and how its people are evaluated and developed.

Fourth, GE has recently redesigned its performance management process, with an emphasis on agility, continuous discussions, and customer outcomes. Today,  managers emphasize priorities, helping employees continuously adapt and channel their efforts to the most important customer needs. The old world told people to “do more with less.” Today, GE tells its people to “do fewer things better.”   The focus on simplification is helping employees to focus as well as helping the company to operate faster, compete more vigorously, reduce costs, and improve quality. For GE, simplification is now part of its new culture, as the new behavior is giving positive results. Culture is the result of behavior that leads to positive outcomes.


Organizational Health - Introduction - Measurement and Management

The concept of organizational health

The concept of organizational health was first put forward in 1969 by Matthew Miles (Miles, 1969: 376). The relations between the students, teachers and managers in school were defined and observed through a simulation.

Miles suggested a model for organization health analysis of schools, and defined the healthy
organization as follows. “Healthy organization is one that does not survive only in the environment it exists, but also constantly develops in the long term, improves its coping and surviving skills.” (Miles, 1969: 378).

In general, organization health is expressed as the capabilities possessed by an organization to adapt to its environment successfully, create cooperation between its members and achieve its targets.

According to another definition; it is such an organization that supports organizational success, environment, employees’ welfare and happiness with its authority structure, values system, norms, reward and sanction systems.

The Organization Health Dimensions Developed by Miles

According to the model brought forward by Miles, dimensions of the organization health may be summarized as follows (Hoy&Feldman, 1987: 30).

The Task Needs Dimension
1. Objective-Focus: The objectives are easily understandable, acceptable and achievable by the
organization members.

2. Communication Adequacy: An in-organization communication system preventing misunderstandings is available. Thus, the employees access correct information and increase organization efficiency.

3. Optimal Power Uniformity: Distribution of the power within the organization is relatively uniform. They always think that those at lower levels can influence those at the immediate upper level.

• Survival Needs Dimension
4. Effective Use of Resources: Task distribution within the organization is done in the most effective way - neither less nor more than as required. There is a coherence between the demands and needs.

5. Organizational Commitment: The employees like the organization and want to stay there. They are
influenced by the organization, and they make efforts for unity of the organization.

6. Morale: There is employee welfare and team satisfaction in the organization in general.

• Growth and Development Needs Dimension
7. Innovativeness: The organization develops new procedures, sets new targets and constantly develops.
8. Autonomy: It is proactiveness in the organization. It shows several independent characteristics to the outer factors.
9. Adaptation: The organization has the skill of making the necessary changes in itself for growth and
10. Problem Solving Competency: The problems are solved with minimum energy expenditure. Problem solving
mechanism is constantly supported and strengthened.

Organization Health Dimensions Developed by Hoy

Hoy and Feldman examined organization health in seven dimensions. These seven dimensions are as follows (Hoy&Feldman, 1987).

1. Organizational Integrity: The organization’s ensuring integrity in its programs through its capability of adaptation to its environment.
2. Influence of the Organization Manager: The organization managers can influence decisions of the senior system they are subordinate to. The ability to convince their decision organs, having reputation and not being blocked by the hierarchic impediments are important factors of the organization managers.
3. Respect: This involves the friendly, supportive, overt and sincere behaviors exhibited by the organization managers to the employees. Such behaviors are important for increase of performances of the employees.
4. Work Order: This involves behaviors of the organization manager relating to various tasks and achievements. Expectations from the employees, performance standards and polices are clearly expressed by the organization manager.
5. Resource Support: This involves availability of sufficient machinery and equipment in the organizations, and procurement of additional resources when requested.
6. Morale: This is the sum of friendship, openness between the organization members, and the senses of excitement and confidence they feel about the work they do. The employees treat each other tolerantly, they help each other, feel proud of the organization they work in, and completing the works make them happy.
7. Importance of the work: This is about the organizations’ efforts for increasing work excellence. Work is started by setting high but achievable targets for the employees, and production activities are carried out in a serious and orderly fashion.

It is possible to group these dimensions as organization health dimensions at the institutional, managerial and technical level. Accordingly, Institutional Level consists of institutional integrity dimension, Managerial Level consists of the dimensions of work order, respect, influence of the organization manager and resource support, and Technical Level consists of the levels of morale and importance of the work.

Measuring Organization Health

Likewise, people who take their health for granted till some trouble appears, in the organization management also, managers usually do not measure organization health until they encounter a crisis. However, in order to achieve and sustain organizational health, a healthy organization structure should be formed beginning from establishment of the organization, measures should be taken against the problems that may occur, and organization health should be measured periodically. The measuring health of the organizations may reveal some weaknesses, but it may also give some clues to prepare improvement plans based on the obtained results. The organization’s being healthy or unhealthy is an evidence for need of change and innovation. But we need to determe what causes the unhealthy organization structure. Briefly, measurements set the conceptual basics in identification and solution of the problems. The strengths and weaknesses of the organization as well as the opportunities and threats it has are revealed through measurement of organization health.

Characteristics of Healthy and Unhealthy Organizations

It is required to know the characteristics of healthy and unhealthy organization so as to derive the desired benefit from organizational health. In the light of these characteristics, the organization should be analyzed, the revealed data should be interpreted, and solution of the problems leading to the unhealthy structure should be ensured.

                         Table : Characteristics of Healthy and Unhealthy Organizations

Healthy Organizations                                 Unhealthy Organizations
Open to innovation and improvement         Not open to innovation and improvement

Its long term effectiveness is high               Its long term effectiveness is low

Employees are ensured to participate          Employees apply the decisions made by top management
in the decisions
Organizational commitment is developed   Organizational commitment is not developed

Responsible to the environment and employees      Not responsible to the environment and employees

Proactive, takes preventive measures              Reactive, corrective actions are taken

Work stress is low                                        Work stress is high

Work satisfaction and workplace peace       Work satisfaction and workplace peace is low
is high
Importance is attached to employees               Importance is not attached to employees

Number of absences and quits is little            Number of absences and quits is big

Communication between the individuals       Communication between the individuals and top              and top management is strong                        management is weak
Worker safety is present,                               Worker safety is not present, work accidents are
work accidents are scarcely encountered      frequently encountered

Employees work with high motivation          Employees work with low motivation
and exhibit high performance                        and exhibit low performance

Unfavorable internal and external                 Unfavorable internal and external environmental
environmental conditions cannot                   conditions can damage the organization
damage the organization
Team spirit is developed, employees act         Team spirit is not developed,        
with the sense of “us”                                       employees act towards their personal interests

Employees feel themselves safe in the organization     Employees do not feel themselves safe in the organization
Information flow is robust and timely            Robust and timely information flow is unavailable
Strategies are put into practice successfully    Incapable to put strategies into practice
An open, trust-focused and encouraging organization culture is present     A closed, retributive and unfair organization culture is present
Problems are solved by digging                       Evidences of the problem are addressed, the                   into their causes                                                core cause cannot be identified
The organization is efficient and effective       The organization is not efficient and effective
Source: Karagüzel, 2012: 21 (Turkish paper)

What to do to enhance Organization Health

As in the human organism, healthy structure is hereditary in most of the organizations (Aguire et al., 2005:1).

According to Miles, the following five approaches are very important for increasing the organization health (Miles, 1969: 376):

• Supporting personal development
• Placing importance on communication
• Strengthening information flow
• Establishing an open-to-change organization culture
• Specialist support

The above content is based on:

The Relation Between Organizational Health and Organizational Commitment

Asst. Prof. Dr. Aydan Yüceler, Asst. Prof. Dr. ú. Didem Kaya
Necmettin Erbakan University, Faculty of Health Sciences, Konya, Turkey

Dr. Burcu Doøanalp
Selcuk University, Faculty of Economics and Administrative Sciences, Konya, Turkey

Mediterranean Journal of Social Sciences
 MCSER Publishing, Rome-Italy 
Vol 4 No 10
October 2013, pp. 781-788 

Aguire, D. M., L. W. Howell, D. B. Kletter ve G. L. Neilson (2005), A Global Check- Up: Diagnosing The Health of Today’s Organizations,
Organizational DNA Research Report. 

Hoy, W. K., ve Feldman, J. A. (1987), Organizational Health: The Concept and Its Measure, Journal of Research and Development in Education,
20, Summer. 

Miles, M. B. (1969), Planned Change and Organizational Health: Figure and Ground, in F. D. Carver & T. J. Sergiovanni (Eds.) Organizations and Human Behavior: Focus on Schools, New York, McGraw Hill

McKinsey on Organizational Health

McKinsey consultants have given importance to Organizational Health concept in recent days in their consultancy practice.

Organizational health: The ultimate competitive advantage
By Scott Keller and Colin Price
McKinsey Quarterly June 2011 

Organizational Health Index

Organizational health matters more than you might expect.
Leadership in context
By Michael Bazigos, Chris Gagnon, and Bill Schaninger
McKinsey Quarterly January 2016

October 11, 2016

Agility of a Business Organization and Its Performance - McKinsey & Other Top Management Consultants

Definition of Organizational agility

Organizational agility is the capacity to identify and capture opportunities more quickly than rivals do. (Donald Sull, Don Sull is professor of management practice at the London Business School and author of The Upside of Turbulence, which introduced the concept of operational, portfolio, and strategic agility)  In the article Competing through organizational agility
McKinsey Quarterly, December 2009,  http://www.mckinsey.com/business-functions/organization/our-insights/competing-through-organizational-agility

Organizational agility is invaluable.

The Agility Factor

A few large companies in every industry show consistently superior profitability relative to their peers, and they all have one thing in common: a highly developed capacity to adapt their business to change.
by Thomas Williams, Christopher G. Worley, and Edward E. Lawler III
(Thomas Williams is a senior executive advisor with Booz & Company. Based in Ridgway, Colo., he specializes in strategy, organization, and management systems for energy and industrial companies.)

Defining organizational agility

Aaron De Smet: Agility is the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment.

Why agility Pays


The 10 Dimensions Of Business Agility

Enabling Bottom-Up Decisions In A World Of Rapid Change
September 9, 2013
(Access forrester database)

Traits of truly agile businesses

Exploring the best practices leading companies adopt to drive business agility.

Leadership imperatives for an agile business
Learn how the traits of effective leadership can create a more agile business.

The Agile Organization: How to Build an Innovative, Sustainable and Resilient Business

Linda Holbeche
Kogan Page Publishers, 03-Jun-2015 - Business & Economics - 288 pages

Given today's context of tough change, organizations need to be able to innovate as well as develop and implement strategy quickly and efficiently. The key to this is agility - a set of capabilities that can help organizations to rapidly adapt to changing circumstances. At the same time, resilience is also essential if benefits are going to endure over the longer term and if employees are to be kept on board. The Agile Organization focuses on how to build both agility and resilience at individual, team and organizational levels. It draws on a wealth of research, including the lived experience and learning of managers and HR and organization development (OD) professionals to show how it is possible to 'square the circle', becoming more sustainably agile while also enhancing employee engagement and resilience. The Agile Organization showcases the latest thinking - new organizational models, ground-breaking themes and case studies - that illustrate how organizations are addressing the challenge of developing organizational agility. Packed with helpful checklists and practice pointers, this book is a 'go to' guide for senior leaders and managers, HR and OD specialists who want to help bring about organizational transformation and create the new resiliently agile 'business as usual'.

Agility is a prerequisite for all organizations to survive.


Building Agile Enterprises



Innovation And Strategic Agility In A Time Of Recession

July 28, 2009 By Jurjan Huisman

October 10, 2016

Entrepreneurial Finance

Strategic Entrepreneurial Finance: From Value Creation to Realization

Darek Klonowski
Routledge, 27-Nov-2014 - Business & Economics - 420 pages

Entrepreneurial finance is a discipline that studies financial resource mobilization, resource allocation, risk moderation, optimization in financial contracting, value creation, and value monetization within the context of entrepreneurship. However, without proper strategic consideration the discipline is incomplete. This book examines how the activity of entrepreneurial finance can be enhanced via a concentration on value creation and through improved strategic decision-making.

The most unique feature of the book is its focus on value creation. For entrepreneurs, value creation is not a one-off activity, but rather a continuous cycle of incremental improvements across a wide range of business activities. Entrepreneurial value creation is described in four comprehensive stages: value creation, value measurement, value enhancement, and value realization, referred to as the C-MER model. This book focuses on what creates value rather than merely presenting value creation in a straight accounting framework.

At the same time, deliberate and tactical planning and implementation ensure that the firm does not ignore the components necessary for it to survive and flourish.Vigorous strategic deliberations maximize the entrepreneurial firm’s chances of making the right business decisions for the future, enable the firm to manage its available financial and non-financial resources in the most optimal manner, ensure that the necessary capital is secured to progress the development of the firm to its desired development level, and build value.

While financial considerations are important, the field of strategic entrepreneurial finance represents a fusion of three disciplines: strategic management, financial management, and entrepreneurship. This orientation represents a natural evolution of scholarship to combine specific domains and paradigms of naturally connected business disciplines and reflects the need to simultaneously examine business topics from different perspectives which may better encapsulate actual entrepreneurial practices.


Corporate Global Profits

Report McKinsey Global Institute September 2015
The new global competition for corporate profits
By Richard Dobbs, Tim Koller, Sree Ramaswamy, Jonathan Woetzel, James Manyika, Rohit Krishnan, and Nicolo Andreula


The Theory of the Growth of the Firm

Theory Developed Edith Penrose

Firms are collections of productive resources that are organized in an administrative framework which partly determines the amount and type of services that the resources yield. As they go
along with their productive operations, firms - or, more precisely, the management team - obtain increased knowledge of the services that may be obtained from resource. The results of such learning processes is, first, the expansion of the firm’s “productive opportunity set” (the opportunities that the
firm’s management team can see and can take advantage of) and, second, the release of managerial excess resources that can be put to use in other, mostly related, business areas. Since the opportunity costs of excess resources are zero, there will be a strong internal incentive for such diversification which in turn causes the firm to grow - an idea that according to Penrose destroys the notion of
the firm’s optimum size

However, the managerial resources inherited from the past set a limit to the firm’s rate of growth - what has become known in the literature as “the Penrose effect” (Slater 1980). (In mergers and acquisitions we see the point. Firms with manageral slack, that is excess managerial resources do acquisitions).

 In Penrose (1959), this is rationalized by pointing to the difficulties of socializing new managers that are needed for the expansion of the firm.

Later models (Baumol 1962; Marris 1964) imposed the Penrose effect exogenously (Gander 1991), but eventually it became subordinated under supposedly more general theories of adjustment costs in the theory of investment of the firm (Treadway 1970). Given this, and using a dynamic control theory
approach, the Penrose effect arises naturally as the profit-maximizing firm calculates its optimal time-profile of outputs.

The resource-based analysis of (sustained) competitive advantages may be seen as starting out from two basic empirical generalizations, namely that 1) there are systematic differences across firms in the extent to which they control resources that are necessary for implementing strategies, and 2) that these differences are relatively stable. The basic structure of the RBP emerges when these two generalizations are combined with fundamental assumptions that are to a large extent derived from economics. Among these assumptions are that 3) differences in firms’ resource endowments cause
performance differences, and 4) that firms seek to increase their economic performance. The fundamentals of the resource-based analysis of the conditions for sustained competitive advantage are basically simple (Peteraf 1993).

Some argue that Penrose's theorizing leads us to what would in modern management studies be called “strategic human resource management” where the focus is on the development of the firm’s pool of talents with particular goals in mind.

Imposing the requirement of choosing the optimal trade-off between the gains from diversification and the costs of managing a diversified firm then allows one to derive the optimal/equilibrium degree of diversification of the firm.

If services are produced endogenously (and continuously) through various intra-firm learning processes involving increased knowledge of resources, “new combinations of resources” (1959: 85), and an expanding productive opportunity set, there is no equilibrium size. Moreover, because of the difficulties of managing new resources and services, and of assimilating new managers in the firm, firm growth is not smooth or “balanced” (as in Marris 1964; Slater 1980). On the contrary, growth rates in succeeding periods will typically be negatively serially correlated, so that high growth in one period is followed by low growth and vice versa. In fact, this is the true “Penrose effect”, and a first indication that even on this fundamental level, Penrose has been partly misrepresented in the literature.

“In the long run”, Penrose explains, ... the profitability, survival and growth of a firm does not depend so much on the efficiency with which it is able to organize the production of even a widely diversified range of products as it does on the ability of the firm to establish one or more wide and relatively impregnable ‘bases’ from which it can adapt and extend its operations in an
uncertain, changing and competitive world (1959: 137).

A firm is basically a collection of resources. Consequently, if we can assume that businessmen believe there is more to know about the
resources they are working with than they do know at any given time,
and that more knowledge would be likely to improve the efficiency
and profitability of their firm, then unknown and unused productive
services immediately become of considerable importance, not only
because the belief that they exist acts as an incentive to acquire new
knowledge, but also because they shape the scope and direction of the
search for knowledge (Penrose 1959: 77).

Thus, firm
development is essentially an evolutionary and cumulative process of “resource
learning” (Mahoney 1995), in which increased knowledge of the firm’s resources
both help create options for further expansion and increases absorptive capacity
(Cohen and Levinthal 1990), or, to use Penrose’s terminology an expanding
“productive opportunity”.

The firm’s productive opportunity, arguably the key concept of The Theory of
the Growth of the Firm (cf. also Fransman 1994: 744), is “... the productive
possibilities that its ‘entrepreneurs’’ see and can take advantage of. A theory of
the growth of the firm is essentially an examination of the changing productive
opportunity of firms” (1959: 31-32). Thus, the notion of productive opportunity
is quite a central notion in The Theory of the Growth of the Firm.

 Penrose notes that “... the decision to search for opportunities
is an enterprising decision requiring entrepreneurial intuition and imagination
and must precede the ‘economic’ decision to go ahead with the examination of
opportunities for expansion” (1959: 34).

Source: Paper by Foss

October 8, 2016

Competitor - Competitive Intelligence Analysis Techniques

You need to get objective or subjective information about your competitors and potential competitor that provides output created by the following analyses.  Your strategy is based on your view of competitor's likely actions in the future based on their current products, markets, R&D activities, capabilities, competences, resources and relationships.

SCP Framework ( Structure-Conduct-Performance)
ADL Matrix
Porter's Five Forces Analysis
Industry cost curves
Value Net
The Space Matrix
Inflection point analysis

50 Competitive Intelligence Analysis Techniques

Strategy for Growth in Mature Industries

Growing When Your Industry Doesn’t
Success and profits flow to companies with uniquely valuable market propositions — regardless of their sector.

by Kasturi Rangan and Evan Hirsh
strategy+business: Corporate Strategies and News Articles on Global Business, Management, Competition and Marketing
Published: April 28, 2014 / Summer 2014 / Issue 75

How to thrive in a slow-growth industry
LRed - Sunday 24th May 2015


October 7, 2016

Strategic Leadership

According to Hoskisson et al (2004) Strategic Leadership is:
“…the managerial ability to anticipate, envision, maintain flexibility, and empower others to create
strategic change as necessary”.

Rowe (2001) emphasises the need at the top of organisations of what he labels “Strategic Leadership”. He describes Strategic Leadership as the …ability to influence others to voluntarily make day to day decisions that enhance the long-term viability of the organisation while maintaining its short term financial stability.

Hoskisson, R., Hitt, M. and Ireland R. D. 2004. Strategic Leadership. In Competing for Advantage. South Western: Thompson.

Rowe, W. G. 2001. Creating Wealth in Organisations: The Role of Strategic Leadership. Academy of
Management Review, 2001, Volume 15, No. 1.

Leadership in Performance and Change
Department of Human Resource Management
Rand Afrikaans University
SA Journal of Human Resource Management, 2004, 2 (1), 26-36

By James Redmond, BBS, MBS, ACMA: Examiner - Professional 2 Strategy &

10 Principles of Strategic Leadership
How to develop and retain leaders who can guide your organization through times of fundamental change. See also "Find Your Strategic Leaders.”

by Jessica Leitch, David Lancefield, and Mark Dawson, PWC


Distribution Warehouse

A distribution warehouse is a building and a place where items for distribution are stored. It serves as storage for products form the manufacturer to the distributor before these products are distributed to various retail customers.

Who uses a distribution warehouse?

The Manufacturing Company. They use the warehouse in order to store the goods and the items that they have manufactured and are to be delivered to the distributors.
Third party distributors. These are the entities that the manufacturing company delivers their products to. These entities are the ones responsible for supplying a place with certain goods and products from the manufacturing company.
Retail stores. This refers to the stores that sell products in retail. The items they usually place inside the distribution warehouse are those items that they sell. They use the warehouse to store the stocks or inventory they have.

The Benefits of Having a Distribution Warehouse

Distribution centers or companies need to have a distribution warehouse if they want to avail of these benefits:

Time-savings. A distribution warehouse can really save distributors a lot of time when it comes to distributing all the items. The distribution warehouse with its warehouse storage system can give convenience since it makes the items and the products to be distributed more organized. It can save workers a lot of time and effort trying to distribute the products or in managing their products.

Money-savings. A distribution warehouse is the best solution to protect the goods or the products that distributors are trying to distribute to retail outlets. When you have a distribution warehouse, you are ensuring that all the goods are kept in good condition and retain their quality. This is because a distribution warehouse is built to achieve these things. They are usually built with the right temperature that can help distributors achieve their purpose in terms of preserving the quality and the condition of the products. This way, they can save a lot of money as they are going to prevent spoiled goods and damaged items.


Jobs in Distribution Warehouse

Store distribution manager
The store distribution manager analyses the supply chain, ensuring distribution centres can accommodate the volume of goods required by stores.

Customer distribution manager
The customer distribution manager is responsible for operating and developing the order distribution business, from warehouse to customer.

Transport operational coordinator
The transport operational coordinator is the lynchpin between the firm and its carriers, ensuring an efficient flow of goods.

Warehouse operations manager
The warehouse operations manager ensures efficiency within the distribution centre and responds to the needs of the supply chain.

Quality manager
The quality manager is responsible for quality control in the warehouse and efficiency of delivery to the customer.

Transport business developer
The transport business developer builds and maintains relationships between the firm  and its carriers whilst negotiating mutually beneficial transport scenarios.

Goods flow coordinator
The goods flow coordinator secures the highest product availability to the customer with the lowest possible supply chain costs.


Warehouse & Distribution Science - Free Text book

Warehouse & Distribution Science by J. Bartholdi and S. Hackman

You are also welcome to use any of these:

Supplementary materials
Warehouse software
Warehouse tours
Class projects
Order-picking by bucket brigade


Updated 10 October 2016

October 4, 2016

Corporate Culture and Leadership - Keys to Effective Strategy Execution - Review Notes

Based on Chapter of Thompson and Strickland

Assessing the Current Culture and Modifying it to Fit Strategy

The beliefs, goals, and practices called for in a strategy may be compatible with a firm’s culture or they may not. When they are not, a company usually finds it difficult to implement the strategy successfully. A close culture-strategy match that energizes People throughout the company to do their jobs in a strategy-supportive manner adds significantly to the power and effectiveness of strategy execution.

When a company’s culture is out of sync with what is needed for strategic success, the culture has to be changed as rapidly as can be managed. A sizable and prolonged strategy-culture conflict weakens and may even defeat managerial efforts to make the strategy work.

A strong culture and a tight culture-strategy alignment is a powerful lever for channeling behavior and for influencing employees do their jobs in a more strategy-supportive manner.

It is the strategy-maker’s responsibility to understand the company culture, and select a strategy compatible with the “sacred” or unchangeable parts of prevailing corporate culture. He also has to foresee how he is going to change the culture to support the strategy that he is proposing. During the strategy implementation, it is an important task, , once strategy is chosen, to change whatever facets of the corporate culture hinder effective execution.

Changing a company’s culture and aligning it with strategy are among the toughest management tasks--easier to talk about than do. Thompson and Stickland advocate that managers have to talk openly and forthrightly to all concerned about those aspects of the culture that have to be changed. The talk has to be followed swiftly by visible actions to modify the culture-actions that everyone will understand are intended to establish a new culture more in tune with the strategy.

What makes a spirit of high performance come alive is a complex network of practices, words, symbols, styles, values, and policies pulling together that produces extraordinary results with ordinary people.

Leading the Strategy Execution Process

1. Monitoring Progress, Finding out issues which are challenging the progress of strategic activities and coming up with solutions.
2. Putting constructive directing effort to achieve good results.
3. Keeping the organization focused on operating excellence - Effectiveness and Efficiency.
4. Supporting the development of stronger core competencies and competitive capabilities.
5. Displaying ethical integrity and leading social responsibility initiatives.
6. Implementing corrective actions to improve strategy execution and achieve the planned results.

1. Communication, Monitoring Progress, Finding out issues which are challenging the progress of strategic activities and coming up with solutions.

Develop a broad network of formal and informal sources of information
Talk with many people at all levels
Be an avid practitioner of MBWA  (Management by Walking Around)
Observe situation firsthand
Monitor operating results regularly
Get feedback from customers
Watch competitive reactions of rivals

2. Putting constructive directing effort to achieve good results.

Support people who are willing to champion
Innovative ideas and products
Better services
New technologies
Promote continuous adaptation to changing conditions

Encourage people to be creative and imaginative
Tolerate mavericks with creative ideas
Promote lots of tries and be willing to accept failures (most ideas don’t pan out)
Use all kinds of organizational forms to support experimentation (venture teams, task forces, “skunk works” and individual champions)
See that rewards for successful champions are large and visible

3. Keeping the organization focused on operating excellence - Effectiveness and Efficiency.
4. Supporting the development of stronger core competencies and competitive capabilities.

Responding to changes requires top management intervention to establish new organizational capabilities, resource strengths and competencies.

Senior managers must lead the effort because it involves planning to support current strategy as well as anticipated future strategy.

It involves significant investments in training, experimentation and trail and error attempts to produce components, products or services using the new knowledge and skills to develop the competence.

Capabilities reside in combined efforts across departments, requiring integration. New processes have to be authorised and created to provide the necessary intermediate or final products or services using the new capabilities.

5. Displaying ethical integrity and leading social responsibility initiatives.

Having “family friendly” employment practices
Operating a safe workplace
Taking special pains to protect the environment
Taking an active role in community affairs
Interacting with community officials to minimize impact of
Layoffs or
Hiring large numbers of new employees
Being a generous supporter of charitable causes and projects that benefit society

6. Implementing corrective actions to improve strategy execution and achieve the planned results.

Requires both reactive adjustments and proactive adjustments
Involves reshaping long-term direction, objectives, and strategy to unfolding events and promoting initiatives to align internal  activities and behavior with strategy

Organizational culture - a note

Strategy For Success Needs to be Supported by Culture - Research report by Booz and Company

Video presentations on corporate and company culture





Updated on  7 October 2016,   24 March 2016, 31.5.2012, 19 Dec 2011