Kotler's Marketing 4.0: Moving from Traditional to Digital - Industry 4.0 Marketing Management

Highlighted Material

Purchasing Power Shifts from Individual to Social

Purchase Decision Making becomes Social instead of being exclusively Individual

In the world connected by internet and ubiquitous mobile phones, people are coming to know more of the opinion of their Friends, Family members, FaceBook Fans, and Twitter followers. They are caring more about the opinions expressed by this F-community. They also share their opinions and contribute to the massive pool of information. Many times the pool created by F-community is different from the image that companies and their brands tend to project. Customers believe and confirm to the social community opinion and disregard sponsored messages and information. Most personal purchase decisions now become social decisions.

Book

Marketing 4.0: Moving from Traditional to Digital

Philip Kotler, Hermawan Kartajaya, Iwan Setiawan
John Wiley & Sons, 05-Dec-2016 - Business & Economics - 208 pages

Marketing has changed forever—this is what comes next

Marketing 4.0: Moving from Traditional to Digital is the much-needed handbook for next-generation marketing. Written by the world's leading marketing authorities, this book helps you navigate the increasingly connected world and changing consumer landscape to reach more customers, more effectively. Today's customers have less time and attention to devote to your brand—and they are surrounded by alternatives every step of the way. You need to stand up, get their attention, and deliver the message they want to hear. This book examines the marketplace's shifting power dynamics, the paradoxes wrought by connectivity, and the increasing sub-culture splintering that will shape tomorrow's consumer; this foundation shows why Marketing 4.0 is becoming imperative for productivity, and this book shows you how to apply it to your brand today.

Marketing 4.0 takes advantage of the shifting consumer mood to reach more customers and engage them more fully than ever before. Exploit the changes that are tripping up traditional approaches, and make them an integral part of your methodology. This book gives you the world-class insight you need to make it happen.

Discover the new rules of marketing
Stand out and create WOW moments
Build a loyal and vocal customer base
Learn who will shape the future of customer choice

Every few years brings a "new" marketing movement, but experienced marketers know that this time its different; it's not just the rules that have changed, it's the customers themselves. Marketing 4.0 provides a solid framework based on a real-world vision of the consumer as they are today, and as they will be tomorrow. Marketing 4.0 gives you the edge you need to reach them more effectively than ever before.


TABLE OF CONTENTS
Acknowledgments xiii

Prologue: From Marketing 3.0 to Marketing 4.0 xv

About the Authors xix

Part I FUNDAMENTAL TRENDS SHAPING MARKETING

1 Power Shifts to the Connected Customers

From Exclusive to Inclusive

From Vertical to Horizontal

From Individual to Social

Purchase Decision Making becomes Social instead of being exclusively Individual

In the world connected by internet and ubiquitous mobile phones, people are coming to know more of the opinion of their Friends, Family members, FaceBook Fans, and Twitter followers. They are caring more about the opinions expressed by this F-community. They also share their opinions and contribute to the massive pool of information. Many times the pool created by F-community is different from the image that companies and their brands tend to project. Customers believe and confirm to the social community opinion and disregard sponsored messages and information. Most personal purchase decisions now become social decisions.

Summary: Horizontal, Inclusive, and Social

2 The Paradoxes of Marketing to Connected Customers 

Breaking the Myths of Connectivity 20

Summary: Marketing amid Paradoxes 28

3 The Influential Digital Subcultures 

Youth: Acquiring the Mind Share 32

Women: Growing the Market Share 35

Netizens: Expanding the Heart Share 37

Summary: Youth, Women, and Netizens 40

4 Marketing 4.0 in the Digital Economy 

Moving from Traditional to Digital Marketing 47

Integrating Traditional and Digital Marketing 52

Summary: Redefining Marketing in the Digital Economy 53

Part II NEW FRAMEWORKS FOR MARKETING IN THE DIGITAL ECONOMY

5 The New Customer Path 

Understanding How People Buy: From Four A’s to Five A’s 60

Driving from Awareness to Advocacy: The O Zone (O3) 66

Summary: Aware, Appeal, Ask, Act, and Advocate 69

6 Marketing Productivity Metrics 

Introducing PAR and BAR 74

Decomposing PAR and BAR 75

Driving Up Productivity 80

Summary: Purchase Action Ratio and Brand Advocacy Ratio 90

7 Industry Archetypes and Best Practices 91

Four Major Industry Archetypes 94

Four Marketing Best Practices 100

Summary: Learning from Different Industries 104

Part III TACTICAL MARKETING APPLICATIONS IN THE DIGITAL ECONOMY

8 Human-Centric Marketing for Brand Attraction 107

Understanding Humans Using Digital Anthropology 110

Building the Six Attributes of Human-Centric Brands 113

Summary: When Brands Become Humans 118

9 Content Marketing for Brand Curiosity 119

Content Is the New Ad, #Hashtag Is the New Tagline 121

Step-by-Step Content Marketing 124

Summary: Creating Conversations with Content 134

10 Omnichannel Marketing for Brand Commitment 137

The Rise of Omnichannel Marketing 139

Step-by-Step Omnichannel Marketing 145

Summary: Integrating the Best of Online and Offline Channels 149

11 Engagement Marketing for Brand Affinity 151

Enhancing Digital Experiences with Mobile Apps 153

Providing Solutions with Social CRM 156

Driving Desired Behavior with Gamification 160

Summary: Mobile Apps, Social CRM, and Gamification 165

Epilogue: Getting to WOW! 167

What Is a “WOW”? 167

Enjoy, Experience, Engage: WOW! 168

Are You Ready to WOW? 169

Index 171

https://books.google.co.in/books/about/Marketing_4_0.html?id=jN9mDQAAQBAJ

https://www.wiley.com/en-us/Marketing+4+0%3A+Moving+from+Traditional+to+Digital-p-9781119341208

What Is The Future Of Digital Marketing?

https://www.forbes.com/sites/forbesagencycouncil/2018/03/28/what-is-the-future-of-digital-marketing

Chapter: Marketing 4.0: Enhancing Consumer-Brand Engagement through Big Data Analysis

Ana Isabel Jiménez-Zarco (Open University of Catalonia, Spain), Asher Rospigliosi (Brighton University, UK), María Pilar Martínez-Ruiz (University of Castilla la Mancha, Spain) and Alicia Izquierdo-Yusta (University of Burgos, Spain)

Source Title: Socio-Economic Perspectives on Consumer Engagement and Buying Behavior

Copyright: © 2017 |Pages: 24

Abstract

Marketing evolves in parallel with technology. Growing research is focusing on Marketing 4.0: the marketing of big data. Firstly, a depth knowledge about the evolution of marketing, an analysis of how a range of technology –not only the Internet and social media- can be used to design marketing strategies that enhance the brand-consumer relationship. Taking into account how consumers' behavior has been changing since the beginning of this century, this chapter seeks to review Marketing 4.0 concepts, analyzing how big data can be used to enhance the consumer-brand relationship.

https://www.igi-global.com/chapter/marketing-40/176001


From Marketing 1.0 To Marketing 4.0 – The Evolution of the Marketing Concept in the Context of the 21ST Century
in International conference KNOWLEDGE-BASED ORGANIZATION 24(2) · June 2018
Mircea Fuciu, Luigi Dumitrescu
Lucian Blaga University of Sibiu
Luigi Dumitrescu
Abstract
The evolution of the society and that of the information and communication technologies of the last decades have brought great changes in the business world and in the way, companies relate and view the consumers. In this context of the everchanging world of the 21st Century, we must see how the concept of marketing has evolved in the last century and how these shifts must be applied in today’s world. Our paper presents a brief the evolution of the marketing concept from the first ideas of marketing in the beginning of the last century and up to our days, we underline the shifts that have occurred in an interconnected world from an exclusive to an inclusive approach, from individual to social actions etc. We also point out the need to change and adapt the marketing strategy to deliver value to consumers, employees, to business partners and vision to shareholders. We consider that delving further into these aspects will bring forth further knowledge and allow the companies and academics to understand better the changes that will come in the years to come.

https://www.researchgate.net/publication/        326292993_From_Marketing_10_To_Marketing_40_-_The_Evolution_of_the_Marketing_Concept_in_the_Context_of_the_21ST_Century

Pay for Performance

Human Resource Management Revision Article Series
Pay for Performance existed from the piece rate systems and it exists now also in various forms as incentive pay, merit pay and bonuses.

Does PFP Work?

Bernardin concludes the discussion with the statement that PFP systems can be effective if they are tailored to particular work situations and strategies and contribute to high-probability estimates by employees concerning their effort and their performance and their performance and desired outcomes. Vroom's model of motivation and goal setting theories have a great deal of predictive power in the area of PFP systems

A well designed PFP system should lead to a higher degree of individual or group motivation and result in productivity improvement and lower costs.

But the increased production can come with certain disutilities. The quality may come down and it may increase costs of inspection. It could lead to unsafe and unhealthy behaviors.

The pay differences may not be accepted as fair and may lead to some conflict.

PFP Systems are effective when;

1. Employees value tangible outcomes like money and prizes.
2. The reward or outcome is preferred to other possible rewards.
3. The performane of the employees measurable.
4. Employee is capable of controlling the rate of output and has the capability of increasing the absolute output.
5. Employee is also aware that he can increase the output through his actions.
6. Employee is also aware that he will get increased reward by increasing output.
7. The performance rewarded is compatible with the goals of the organization

PFP Systems and Plans

Individual Plans

Merit pay

Incentive pay

Sales incentive plans


Performance Bonuses

performance bonuses are one-time payments based on performance. The bonus does not add to the base pay and as it is paid at one time, it would give the feeling of a large sum and may have different motivation effect than merit pay plans that pay periodically.

Group Incentive Plans

Profit sharing

Gain sharing

- Scanlon plan
- Rucker plan
- IMPROSHARE
- Winsharing

Employee Stock Option Plans

Managerial and Executive Incentive Pay


Payments for Entrepreneurial Talent

There is good amount of promotional activity for entrepeneurship and some employees may be interested in taking up their own ventures. Companies are coming out with innovative schemes to support such aspirations of employees. At IBM, employees can submit business plans for IBM risk capital. Employees can negotiate a share of the profits.


Performance Review Aligns Employees To Individual Goals

Often called pay-for-performance (P4P), the concept is to build a culture of top performers by aligning goals, performance, and rewards across an entire organization: Head HR, Skillsoft
http://www.businessworld.in/article/Performance-Review-Aligns-Employees-To-Individual-Goals-/26-02-2019-167583/


Updated 27 Feb 2019, 14 December 2011

Value Engineering - Recent Developments

Value Engineering - Research - Dissertations and Papers



Implementation of Value Engineering for Construction Efficiency
Mukti Weni Harini, Erizal and Meiske Widyarti
Asian Journal of Applied Sciences (ISSN: 2321 – 0893)
Volume 06 – Issue 02, April 2018

Article first posted on 25 April 2015

Take a system-wide view as part of Value Engineering and identify s the weak link in
a chain of components. If the weak link is performing at the desired level, other
components in the product might be over engineered. Examine the design of the other components for reducing the cost.

On the other hand, improving the characteristics of the weak link could increase the overall performance of the system and may give a higher performance system at a lower cost.
http://argoconsulting.com/content/wp-content/uploads/2015/03/Argo_ValueEngineering_FINAL-March-20151.pdf

Integrated Construction Value Engineering
http://managementsolutionsllc.com/articles/integrated-value-engineering-delivering-value-across-the-project-lifecycle/


Value Engineering Risk Analysis
http://www.wsdot.wa.gov/publications/fulltext/CEVP/VERA.pdf


Value Engineering of Divan
http://www.ijirset.com/upload/2014/october/24_Application.pdf

Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

July - August - September - October - November - December

Updated on 24 March 2019,  25 April 2015

Operations Management - Important Points for Quick Revision

Introduction to the Field  of Operations Management

The goal of operations management is wealth creation.
It is done by supplying quality goods and services effectively and efficiently

The essence of operations management: creating great value to the customer while reducing the cost of delivering the good or service.

In the context of this book, "operations" refers to the processes that are used to transform the resources employed by a firm into products and services desired by the customers. "Supply" refers to how materials and services are moved to and from the transformation processes of the firm.

While marketing uncovers needs of people in general and uncovers needs of people at a particular point and books orders for the goods and services, it is the operations function of a business firm that develops goods and services and produces and delivers them to customers at the place where they desire the delivery.

The historical roots of the development of OM are traced from scientific management through the moving assembly line, the Hawthorne studies, and on to today's current manufacturing topics including supply chain management and e-commerce. 

In operations management, three categories of decisions are taken.

Strategic (long-term) decisions

Tactical (intermediate-term) decisions

Operational planning and control (short-term) decisions

Strategic issues include what product (sevice) shall we make? How will we make the product? (technology decision) Where do we locate the facility or facilities? How much capacity do we build? Intermediate decisions can be thought of as annual plans, material purchase policies, staff levels adjustments and working capital support requirements for inventory financing. Operations decisions are daily machine dispatching decisions.

Operations Strategy and Competitiveness

Operations strategy involves decisions that related to the specifications and design of the product or service, design of a production process and the infrastructure needed to support the process, the role of inventory in the process, and locating the process. Operations strategy decision are part of corporate planning process that coordinates the goals of operations with those of marketing and that of larger organization.

Strategic operation decisions have to win the customer approval in absolute sense and they have to win in the competitive scenario, that means they have to win the customer approval in a relative sense (their offer must be superior to the target market customers relative to the offers of competitors).

Quality (which includes product benefits and features, reliability, durability) price and ease of purchase and servicing are the three operations related categories that customers use to evaluate before purchasing.

Project Management

Managing projects require planning, directing and controlling resources.

Projects begin with a statement of work, which can be a written description of the objectives. Breaking the work into smaller and smaller pieces that defines the system in detail is at the center of project management. Milestones or critical steps in the project might be completion of the design or production of a prototype. Maintaining control over projects requires the use of charts to show the scope of the entire project as well as the steps completed at a particular time. Other reports for detailed presentations of projects are used.  Work Breakdown Structure (WBS) shows projects in terms of tasks, subtasks, work packages and activities. A project is complete when all the tasks are completed.

CPM and PERT are  tools to assist the manager in meeting these objectives.

Product Design

Designing a product or service or buying the design or getting the design in case of contract manufacturer is what brings into existence a business entity in the first place and then onwards expansion occurs as new product units (Finished goods SKUs),  business lines and SBUs.

In the concept development, the product architecture is specified taking into consideration the new customer needs as identified by the marketing function. The product architecture converts the functional requirements of the product into product's components and subassemblies  that will provide the functions as a group. The product architecture is subjected to market evaluation and project evaluation. If  it passes this gate, approval is given for making a development sample of the product without detailed engineering. This product is subjected to technical testing and marketing testing and once again project evaluation is done. If it clears this second gate of customer acceptance of the development sample, detailed engineering is approved. Based on the detailed engineering, prototypes are made. Another round of technical and market evaluations are conducted. Clearing of this gate would result in approval for pilot plant. The pilot plan would produce the actual production output and a test marketing is now done for a final demand assessment. This final demand assessment is the basis for capacity decisions of the commercial plant.

the generic process of new product development as

Planning,

Concept development,

System level design,

Design detail,

Testing and refinement, and

Production ramp-up

Process Analysis

Analyzing a process allows some important questions to be answered, such as: What is the production rate?  How much does the process cost? What is the process capability? etc.  The purpose of the analysis needs to be clarified first to select an analysis technique.

Processes can be either single-stage or multiple-stage. For multiple-stage processes buffers or storage areas exist between manufacturing activities. Key manufacturing issues arising from multiple-stage operations include buffering, blocking, starving, and bottlenecks.

Process Metrics

Measuring process performance is an important activity. Companies can be compared to others in a benchmarking process.

The most common process metric is utilization. Utilization is the ratio of the time that a resource is actually being used relative to the time it is available for use.

Productivity is the ratio of output to input. It is also popularly used to assess a firm's performance. Efficiency is defined as the ratio of the actual output to a standard output.

Run time is the time required to produce a batch of parts. Setup time, and operation time along with throughput time and throughput rate are also important metrics.

Process velocity (also known as throughput ratio) is the ratio of the total throughput time to the value added time.

Ways to improve process metrics like reduce throughput time are part of this chapter.

Manufacturing Process Selection and Design

Process selection refers to the strategic decisions of selecting the kind of production process to have in a manufacturing plant.

production processes into four.

Conversion processes: They convert naturally available materials, called as minerals or ores into useful metals and materials in general shapes from which many different forms can be produced.

Fabrication Processes: Fabrication processes convert generally available processes materials into useful forms. Ex.:Making components required for an automobile using sheets as the raw materials and presses as the equipment.

Assembly Processes: Assemble various components into a useful product, machine or equipment.

Testing Processes: They are essential in production processes to assure that the processes output is up to the given specification. Testing may be done by the operator himself, another production operator in the subsequent stage or stages and specially designated inspector and many times also by the customer.

Process flow designs focus on the specific processes that raw materials, parts, and subassemblies follow as they move through the plant. Charts and drawings aid in process flow design.

Simulation in design

Simulation is now being used to help the design process. This is becoming increasingly important and widespread as computing power increases. Some of the visualizations used in design work can require very powerful computers. However, they can give an insight into how a potential process or product might work in practice which cannot be gained in any other way.

Marketing Strategy for New Industry Products

Marketing Management Revision Article Series

Pioneer in a Product - Issues

When a product is new in the industry life cycle, the firm starting the production and sale is the pioneer. Normally the growth is slow in the introduction of phase of a new industry product as the technical problems with the product are to corrected, production capacities have to be built up based on market acceptance and growth, distribution capacity is to be built up from scratch when distributors have no familiarity with the product, and customer may have reluctance to change his old behavior. If the product is an expensive high technology one, only small number of buyers can afford it.

Companies have choice to be a pioneer or a follower. A pioneer has to initiate every thing connected with the product. A follower has the benefit using various firms that helped the pioneer for his venture. Also he has the opportunity of studying the pioneer’s product and market response to it. He can examine the distribution channels used by the pioneer and gauge their effectiveness and he can evaluate various marketing strategies employed by the pioneer. Thus an early follower has some extra knowledge about the product and the market.

Is there any Advantage to the

Pioneer?

Some studies indicate that the market pioneer if it can capture the leadership position gains the most advantages. Some studies dispute the finding that pioneers have sustained their leadership.  Robertson and Gatignon give the opinion that an alert pioneer-leader can pursue various strategies to prevent later market entrants from wresting away leadership. Being a pioneer has an advantage that can be capitalized. The pioneer has to dynamically compete in the market place to exploit his pioneering advantage. He needs to have a grand plan for life-cycle of marketing of the product and launch strategy has to be the first step in that grand plan.

The pioneer may start from a specific product-market segment his launch but must have plans to cover the larger part of the market over a period of time by launching appropriate product variations and covering more market segments.

The competitive Cycle – The Pioneer’s Challenge

Initially, the pioneer is the sole supplier with 100% production capacity and market share.

In the second stage, there is competitive penetration as competitors build capacities and enter market.

In the growth phase, capacity tends to be overbuilt and any cyclical downtrends will impact margins for all. After some time share stability may happen.

Then a commodity competition stage will come where returns are average.

The final stage will be a decline for the industry and firms withdraw from the industry. The pioneer needs to steer through all the stages of the industry life cycle.

Pricing and Promotion Strategies for

Pioneers

Pioneer has the alternative of Skimming pricing or Penetration pricing.

Skimming is entering the market layer by layer in the order of value exchange. Initially buyers who are willing to pay a high price are serviced. This strategy is feasible if market is unaware of the product and special efforts are to be done by firms to make the potential buyers aware of the product.

Pioneer will do rapid skimming if the potential competition is imminent. In this strategy he will spend substantial amount on promotion to enlarge the sale quickly. If the potential competition is not imminent, the pioneer can undertake slow skimming. He can expand sales slowly by limiting promotion expenditure.

Penetration is entering a large market with a lower price. It is done for price sensitive products. Rapid penetration is preferred when the market is unaware of the product. The pioneer spends a good deal on launch and advertising. A slow penetration approach is used when market is aware of the product, but potential competition is limited.

Thus price and promotion are the two alternative dimensions which the pioneer has to use in his strategy.

The Marketing Firepower

The Marketing Firepower as a concept was discussed by Kotler in competitive dynamics chapter. But it is relevant to new product marketing strategy. The marketing strategist has to understand the marketing firepower that he has and has to use it appropriately in appropriate target segments, in proper media against proper competitors in proper products. So in marketing battles, right firepower has to be used in right places, against appropriate opponents.

Price discounts: Are you selling a comparable product at a lower price.

Cheaper goods: Are you offering economy goods with lesser number of features. The strategy will succeed when there is significant number of buyers in need of lower priced product.

Prestige goods: Are you launching a higher quality product with more features.

Product proliferation: Are you planning to offer a greater product variety.

Product innovation: Are you offering an improve product.

Service innovation: Improvement in service offered to the buyers.

Distribution innovation: a new distribution outlet that offers additional convenience to buyers.

Process innovations: Is your enterprise based on a process innovation that gives better quality or lower cost?

Advertising innovation: Do you have innovative communications strategy that reaches and motivates larger number of potential customers resulting in higher sales.

You have to develop the marketing fire power that allows you to succeed in the market. Enter the market with adequate marketing firepower to succeed.

References

Kotler, Philip (1997), Marketing Management, 9^th Ed., Prentice Hall, New Jersey.

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News Item - Amazon cuts Kindle Price

Amazom.com has trimmed $40 off the price of its Kindle e-reader. The price cut means the entry level Kindle with a six inch display is now available at $259. It is still higher by $60 when compared to the entry level model offered by Sony Corporation, the principal rival. Amazon accounts for 60% of the US market and Sony has 35% of the market.

The forecast is that three million e-book readers will be sold in US during 2009. According to Amazon, for books available in both digital and physical editions, the company sells 48 kindle editions for every 100 physical copies of the book.

What is to be noted in this news item is the price cuts that pioneer companies have to provide as market expands and competitors emerge. New product marketers have to continuously support value engineering work in their companies and take decisions regarding price cuts made possible by value engineering.

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Migration from Knol
All management knols are being collected in http://nraomtr.blogspot.com/ .
Marketing articles are available under the label http://nraomtr.blogspot.com/search/label/Marketing%20Management
Article on differentiating and positioning http://nraomtr.blogspot.com/2011/11/marketing-strategy-differentiating-and.html

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Article originally posted in
http://knol.google.com/k/ marketing-strategy-for-new-industry-products
Knol number 117

Updates on  3 March 2019,  4 March 2015,  4 June 014, 3 Dec 2011

Recommended reading on 3 March 

14 Principles of Management - Henri Fayol

Principles of Management Revision/Review Articles - List

1, Division of Work


The object of division of work is to produce more and better work with the same effort. The worker always on the same part, the manager concerned always with the same matters, acquire an ability, sureness, and accuracy which increase their output. Each change of work brings in its train an adaptation which reduces output.

2. Authority and Responsibility

Authority is the right to give orders and the power to exact obedience. Distinction must be made between a manager’s official authority deriving from office and personal authority, compounded of intelligence, experience, moral worth, ability to lead, past services, etc. In the make up of a good head personal authority is the indispensable complement of official authority.

3. Discipline

Discipline is in essence obedience, application, energy, behaviour, and outward marks of respect observed in accordance with the standing agreements between the firm and its employees, whether these agreements have been freely debated or accepted without prior discussion, whether they be written or implicit, whether they derive from the wish of the parties to them or from rules and customs, it is these agreements which determine the formalities of discipline.

4. Unity of Command

For any action whatsoever an employee should receive order from, one superior  only.

5. Unity of Direction

This principle is expressed as: one head and one plan for a group of activities having the same objective.

6.Subordination of Individual Interest to General Interest

This principle calls to mind the fact that in a business the interest of one employee or group of employees should not prevail over that of the concern, that the interest of the home should come before that of its members and that the interest of the State should have pride of place over that of one citizen or group of citizens.

7.Remuneration of Personnel

Remuneration of personnel is the price of services rendered. It should be fair and, as far as is possible, afford satisfaction both to personnel and firm (employee and employer).

8, Centralization

Centralization belongs to the natural .Order; this  turns on the fact that in every organism, animal
or social, sensations converge towards the brain or directive part, and from the brain or directive part orders are sent out which set all parts of the organism in movement. Centralization is is always present to a greater or less extent in organizations. The question of centralization or decentralization, is a simple question of proportion, it is a matter of finding the optimum degree for the particular concern. In small firms, where the manager’s orders go directly to subordinates there is absolute centralization; in large concerns, where a long scalar chain is interposed between manager and lower grades, orders and counter-information too, have to go through a series of intermediaries. Each employee, intentionally or unintentionally, puts something of himself into the transmission and execution of orders and of information received too.  What appropriate share of initiative may be left to intermediaries depends on the personal character of the manager, on his moral worth, on the reliability of his subordinates, and also on the condition of the business. The degree of centralization must vary according to different cases. The objective to pursue is the optimum utilization of all faculties of the personnel.

9. Scalar Chain

The scalar chain is the chain of superiors ranging from the ultimate authority to the lowest ranks. The line of authority is the route followed — via every link in the chain — by all communications which start from or go to the ultimate authority. This path is dictated both by the need for some transmission and by the principle of unity of command

10. Order

The formula is known in the case of material things “A place for everything and everything in its place.” The formula is the same for human order “ A place for everyone and everyone in his place.”

11, Equity

Justice is putting into execution established conventions, but conventions cannot foresee
everything, they need to be interpreted or their inadequacy supplemented. For the personnel to be encouraged to carry out its duties with all the devotion and loyalty of which it is capable it must be treated with kindliness, and equity results from the combination of kindliness and justice. Equity
excludes neither forcefulness nor sternness and the application of it requires much good sense, experience and good nature.

12.Stability of Tenure of Personnel
Time is required for an employee to get used to new work and succeed in doing it well, always assuming that he possesses the requisite abilities. If when he has got used to it, or before then, he is removed, he will not have had time to render worthwhile service.

13. Initiative

Thinking out a plan and ensuring its success is one of the keenest satisfactions for an intelligent man to experience. It is also one of the most powerful stimulants of human endeavour. This power of thinking out and executing is what is called initiative, and freedom to propose and to execute
belongs too, each in its way, to initiative. At all levels of the organizational ladder zeal and energy on the part of employees are augmented by initiative.

14. Esprit de Corps

“Union is strength.” Business heads would do well to ponder on this proverb. Harmony, union among the personnel of a concern, is great strength in that concern. Effort, then, should be made by managers to establish it.