third assignment

MOHANDAS COLLEGE OF ENGINEERING AND TECHNOLOGY

MASTER OF COMPUTER APPLICATIONS

Principles of Management

Assignment -3(i)

Max. Marks: 30                                                                                                           10-09-2012

Date of Submission:    28-09-2012

GROUP I

1.        What do you mean by 360 degree appraisal?                                                                                  (5)

2.        Explain the relevance of vestibules.                                                                                                   (5)

3.        State the relevance of Manpower inventory.                                                                                  (5)

4.        Distinguish between Job description and Job specification with an example.                          (5)              

5.        How does Personnel department function as a link to other functional departments?      (5)              

6.        How do mathematical models help in the process of planning and forecasting?                    (5)

GROUP II

1.     Explain the performance appraisal process.                                                                        (5)

2.     Explain the role of HR function in a global I.T. firm.                                                           (5)

3.     Illustrate the selection process. Why it is called a negative process?                    (5)

4.     Define MBO in planning.                                                                                           (5)

5.     What is meant by manpower forecasting?                                                              (5)

6.     Write in brief about Promotion and its policies.                                                     (5)

forecasting

What is Forecasting? Meaning
Forecasting is a process of predicting or estimating the future based on past and present data. Forecasting provides information about the potential future events and their consequences for the organization.
It increases the confidence of the management to make important decisions.
 Forecasting is the basis of premising/planning.
 Forecasting uses many statistical techniques. Therefore, it is also called as Statistical Analysis.
Features of Forecasting
1.      Forecasting in concerned with future events.
2.      It shows the probability of happening of future events.
3.      It analysis past and present data.
4.      It uses statistical tools and techniques.
5.      It uses personal observations.

Importance of Forecasting
1.      Promotion of Organization

Organization wan s to achieve objectives
How? Performing some activities
Which activities? Based on expected outcome.
Expected outcome is related to future, so forecasting is needed to achieve objectives.
So a successful promoter forecast what will happen.
2.      Key to planning
Forecasting provides relevant and reliable information about the past and present events and the likely future events. This is necessary for sound planning. It is the basis for making planning premises.
Example: A steel pipe manufacturer find that gradually PVC pipes are coming in to market , with cheaper rate and they will replace steel pipes, so they take suitable action to overcome this problem. ie. Diversify their business by going into manufacturing of PVC pipes.
3.      Success in Organization
Each organization is characterized by risks. Risk is based on future happenings ie. Uncertain / unpredictable things.
Forecasting reduce uncertainty by providing clues about what will happen in the future.
Manager acts like a navigator. He cannot control sea tides, but he can take this ship at the right path if he knows them in advance.
4.      Confidence to managers
It gives confidence to the managers for making important decisions.

Limitations of Forecasting
Time and cost factor
The collection and analysis of data about the past, present and future involves a lot of time and money. Therefore, managers have to balance the cost of forecasting with its benefits. Many small firms don't do forecasting because of the high cost.
Not absolute truth
Forecasting can only estimate the future events. It cannot guarantee that these events will take place in the future. Long-term forecasts will be less accurate as compared to short-term forecast.
Based on Assumptions
Forecasting is based on certain assumptions. If these assumptions are wrong, the forecasting will be wrong. Forecasting is based on past events. However, history may not repeat itself at all times. There are various factors which determine the occurrence of an event. The behavior of these factors may change/unpredictable.
Eg: If the government increases taxes on certain commodities, their substitutes will be in high demand. The changes in tax structure cannot be forecast in all cases.
War between two countries can change the total business situations.
Managers judgment
Forecasting requires proper judgment and skills on the part of managers. Forecasts may go wrong due to bad judgment and skills on the part of some of the managers. Therefore, forecasts are subject to human error.

Steps in Forecasting

Procedure, stages or general steps involved in forecasting are given below:-

•        Analysing and understanding the problem : The manager must first identify the real problem for which the forecast is to be made. This will help the manager to fix the scope of forecasting.
•        Developing sound foundation : The management can develop a sound foundation, for the future after considering available information, experience, type of business, and the rate of development.
•        Collecting and analyzing data : Data collection is time consuming. Only relevant data must be kept. Many statistical tools can be used to analyze the data.
•        Estimating future events : The future events are estimated by using trend analysis. Trend analysis makes provision for some errors.
•        Comparing results : The actual results are compared with the estimated results. If the actual results tally with the estimated results, there is nothing to worry. In case of any major difference between the actual and the estimates, it is necessary to find out the reasons for poor performance.
•        Follow up action : The forecasting process can be continuously improved and refined on the basis of past experience. Areas of weaknesses can be improved for the future forecasting. There must be regular feedback on past forecasting.

types of planning

Types of planning/ Methods of Planning
1.    Corporate planning and Functional planning
Corporate planning
Planning at top level, which covers entire organizational activities.
Determine long term objectives of organization and generate plans to achieve these objectives.
Functional planning
            Planning for departments.
            Marketing plan for marketing department.
2.    Strategic planning and Operational planning
Strategic planning
It is the process of determination of basic long term objectives of an enterprise, the adoption of course of action and allocation of resources to achieve these goals.
Operational planning/ Tactical planning
It is the process of deciding the most effective use of resources allocated and to develop a control mechanism to assure effective implementation of the actions so that organizational objectives are achieved.
3.      Long term planning and Short term planning
               Short term planning
It involves deciding what your goals are for the short term (usually within the next year). These short term goals may include restructuring, hiring or short term profit targets.

Long Term Planning
It  may involve an outlook for the future (in the next 5 to 10 years). This may involve a capital funding goal or company expansion goals.
4.      Proactive planning and Reactive planning
Proactive planning
It involves designing suitable courses of action in anticipation of likely changes in the relevant environment. Use broad planning approaches, broad environmental scanning, reserve some resources to be used for the future.
They do not wait for environment to change, but take actions in advance of change.
Reliance industries and Hindustan Liver adopted this approach and their growth rate has been much faster than others.
Reactive planning
Organizations response comes after the environmental changes have taken place.
After changes takes place organization starts planning.
Organization looses opportunities to those who adopt proactive approach
5.      Formal and Informal Planning
               Formal Planning
               Well structured
               Large organizations create separate corporate planning cell with MBAs, Engineers etc
               Continuously monitor external environment.
               Informal planning
               Not well structured
               Smaller organizations , no separate cell, part of managers activities.
               No systematic evaluation of external environment.

planning

Planning

The process of setting goals, developing strategies, and outlining tasks and schedules to accomplish the goals.
Planning is the process of deciding in advance what is to be done, where, how and by whom it is to be done. Planning as a process involves anticipation of future course of events and deciding the best course of action. Thus, it is basically a process of ‘thinking before doing’.

Nature Of Planning

The nature of planning can be highlighted by studying its characteristics.

They are as follows:

a)     Planning is a mental activity(use ur mind)

Planning is not a simple process. It is an intellectual exercise and involves thinking and forethought (anticipate) on the part of the manager.

(b)Planning is goal-oriented

Every plan specifies the goals to be attained in the future and the steps necessary to reach them.

 A  manager cannot do any planning, unless the goals are known.

(c) Planning is forward looking

 It is futuristic in nature since it is performed to accomplish some objectives in future.

      (d) Planning pervade(sets up) all managerial activity

Planning is the basic function of managers at all levels.

(e) Planning is the primary function

Planning logically precedes the execution of all other managerial functions.

(f) Planning is based on facts

             It is based on objectives, facts(data) and considered forecasts. Thus planning is not a guess work.

(g)Planning is flexible

Planning is a dynamic process capable of adjustments in accordance with the needs and requirements of the situations. Thus planning has to be flexible and cannot be rigid.

(i)               Planning is essentially decision making

 Planning is a choice activity as the planning process involves finding the alternatives and the selection of the best. Thus decision making is the cardinal part of planning.

Significance of Planning

The importance and usefulness of planning can be understood with reference to the following benefits.

(a)Minimizes uncertainty.

The future is generally uncertain and things are likely to change with the passage of time.

Planning helps in minimizing the uncertainties of the future as it anticipates future events.

(b)Emphasis on objectives

The first step in planning is to fix the objectives. When the objectives are clearly fixed, the execution of plans will be facilitated towards these objectives.

(c)Promotes coordination.

 Planning helps to promote the coordinated effort on account of pre-determined goals.

(d)Facilitates control.

 Planning and control are inseparable in the sense that unplanned actions cannot be controlled. Control is nothing but making sure that activities conform to the plans.

(e)Improves competitive strength.

Planning enables an enterprise to discover new opportunities, which give it a competitive edge.

(f)Economical operation. Since planning involves a lot of mental exercise, it helps in proper utilization of resources and elimination of unnecessary activities. This, in turn, leads to economy (saving)in operation.

(g)Encourages innovation.

 Planning is basically the deciding function of management. Many new ideas come to the mind of a manager when he is planning. This creates an innovative and foresighted attitude among the managers.

(h)Tackling complexities of modern business.

With modern business becoming more and more complex, planning helps in getting a clear idea about what is to be done, when it is to be done, where it is to be done and how it is to be done.

stages of control and strategic and operational control

Stages of control
Feed forward, Concurrent control, Feedback control.

Management can implement controls before an activity commences, while the activity is going on, or after the activity has been completed. The first type is called feed forward control, the second is concurrent control, and the last is feedback control.
What is Feed forward Control?
The most desirable type of control feed forward control – prevents anticipated problems because it takes place in advance of the actual activity. Its future directed. An example of feed forward control is the scheduled aircraft maintenance programs done by the major airlines. These programs are designed to detect, and  prevent structural damage that might lead to an airline disaster.
The key to feed forward control, therefore is taking managerial action before problem occurs. Feed forward controls allow management to prevent problems rather than having to cure them later.
 Unfortunately these controls require timely and accurate information that is often difficult to develop. As a result managers frequently have to use one of the other two types of control.
When Is Concurrent control used?    
Concurrent Control: Control that takes place while an activity is in progress.
Concurrent control, as its name implies, takes place while an activity is in progress. When control is enacted while the work is being performed management can correct problems before they become too costly.
The best known form of concurrent control is direct supervision. When a manager directly oversees the actions of an employee, the manager can concurrently monitor the employee’s actions and correct problems as they occur.
MSOffice example
Why is feedback Control so popular?
Feedback control: Control that takes place after an action.
The most popular type of control relies on feedback. The control takes place after the action.
The major drawback of this type of control is that by the time the manager has the information the damage has already been done. For example, financial statements are an example of feedbacks controls. If, for instance the income statement shows that sales revenues are declining the decline has already occurred. So at this point, the manager’s only option is to try to determine why sales decreased and to correct the situation.
Feedback has two advantages over feed forward and concurrent control. First feedback providers managers with meaningful information on the effectiveness of their planning effort. Feedback that indicates little variance between standard and actual performance is evidence that planning was generally on target. If the deviation is great a manager can use that information to make new plans more effective. Second, feedback control can enhance employee’s motivation. People want information on how well they have performed. Feedback control provides that information.
Types of control
Strategy control and Operational control
1. Basic question
Strategic control- are we moving in right direction?
Operational control- how we are performing
2. Aim
Strategic control-Proactive
Operational control- allocation and use of organizational resources
3. Main concern
Strategic control- steering the future direction of organization
Operational control- action control
4. Focus
Strategic control- External environment
Operational control – Internal Organization
5. Time horizon
Strategic control- long term
Operational control – short term
6. Exercise of control
Strategic control- top management
Operational control – middle management
7. Main techniques
Strategic control- environmental scanning, information gathering, questioning and review
Operational control – budgets, schedule, MBO

control techniques

10 Types of Traditional Control Techniques

The ten types of traditional techniques of controlling are discussed below :-

1. Direct Supervision and Observation

'Direct Supervision and Observation' is the oldest technique of controlling. The supervisor himself observes the employees and their work. This brings him in direct contact with the workers. So, many problems are solved during supervision. The supervisor gets first hand information, and he has better understanding with the workers. This technique is most suitable for a small-sized business.



2. Financial Statements

All business organisations prepare Profit and Loss Account. It gives a summary of the income and expenses for a specified period. They also prepare Balance Sheet, which shows the financial position of the organisation at the end of the specified period. Financial statements are used to control the organisation. The figures of the current year can be compared with the previous year's figures. They can also be compared with the figures of other similar organisations.
Ratio analysis can be used to find out and analyse the financial statements. Ratio analysis helps to understand the profitability, liquidity and solvency position of the business.

3. Budgetary Control

A budget is a planning and controlling device. Budgetary control is a technique of managerial control through budgets. It is the essence of financial control. Budgetary control is done for all aspects of a business such as income, expenditure, production, capital and revenue. Budgetary control is done by the budget committee.

4. Break Even Analysis

Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g. When an organisation sells 50K cars it will break even. It means that, any sale below this point will cause losses and any sale above this point will earn profits. The Break-even analysis acts as a control device. It helps to find out the company's performance. So the company can take collective action to improve its performance in the future. Break-even analysis is a simple control tool.

5. Return on Investment (ROI)

Investment consists of fixed assets and working capital used in business. Profit on the investment is a reward for risk taking. If the ROI is high then the financial performance of a business is good and vice-versa.
ROI is a tool to improve financial performance. It helps the business to compare its present performance with that of previous years' performance. It helps to conduct inter-firm comparisons. It also shows the areas where corrective actions are needed.

6. Management by Objectives (MBO)

MBO facilitates planning and control. It must fulfill following requirements :-
Objectives for individuals are jointly fixed by the superior and the subordinate.
Periodic evaluation and regular feedback to evaluate individual performance.
Achievement of objectives brings rewards to individuals.
7. Management Audit

Management Audit is an evaluation of the management as a whole. It critically examines the full management process, i.e. planning, organising, directing, and controlling. It finds out the efficiency of the management. To check the efficiency of the management, the company's plans, objectives, policies, procedures, personnel relations and systems of control are examined very carefully. Management auditing is conducted by a team of experts. They collect data from past records, members of management, clients and employees. The data is analysed and conclusions are drawn about managerial performance and efficiency.

8. Management Information System (MIS)

In order to control the organisation properly the management needs accurate information. They need information about the internal working of the organisation and also about the external environment. Information is collected continuously to identify problems and find out solutions. MIS collects data, processes it and provides it to the managers. MIS may be manual or computerised. With MIS, managers can delegate authority to subordinates without losing control.

9. PERT and CPM Techniques

Programme Evaluation and Review Technique (PERT) and Critical Path Method (CPM) techniques were developed in USA in the late 50's. Any programme consists of various activities and sub-activities. Successful completion of any activity depends upon doing the work in a given sequence and in a given time.
CPM / PERT can be used to minimise the total time or the total cost required to perform the total operations.
Importance is given to identifying the critical activities. Critical activities are those which have to be completed on time otherwise the full project will be delayed.
So, in these techniques, the job is divided into various activities / sub-activities. From these activities, the critical activities are identified. More importance is given to completion of these critical activities. So, by controlling the time of the critical activities, the total time and cost of the job are minimised.

10. Self-Control

Self-Control means self-directed control. A person is given freedom to set his own targets, evaluate his own performance and take corrective measures as and when required. Self-control is especially required for top level managers because they do not like external control.
The subordinates must be encouraged to use self-control because it is not good for the superior to control each and everything. However, self-control does not mean no control by the superiors. The superiors must control the important activities of the subordinates.

Behavioral theories of organization

Behavioral theories of organization

What is Organizational Behavior?

 Specialized field of study concerned with understanding and analyzing the human behavior in organization

Model for organizational behavior

1.       Cognitive Frame work

2.       Behavouristic Framework

3.       Social learning framework

Cognitive approach

It emphasizes the positive aspects of human behavior and uses concepts such as expectancy, demand, and intention.  Cognition can be simply defined as the act of knowing an item of information.  In cognitive framework, cognitions precede behavior (goal directed behavior) and constitute input into the person’s thinking, perception, problem solving, and information processing.

It means that a person desires a goal and also knows the behavior that will lead to achievement of the goals.

Behavouristic Framework

Pavlov’s  Stimulus – Response( S-R ) model states that Stimulus elicit(bring out) response- Physical reflexes

Stimulus means external factor affecting you and it may change the response of human

Example: discount on a product (stimulus) may change the consumers buying habit(response)

B.F Skinner- Consequences to a response can explain most behavior than a eliciting stimuli.(R-S) .

Behavior is a function of consequences.

 Employees learn by observing the consequences of their actions.

Social learning framework

Behavior can be explained in terms of a continuous reciprocal interaction of cognitive, behavioral and environmental determinants.

Behavior is learned from environment through process of observation learning. Children observe people around them , behave in that way, influenced by parents, Television, friends, political and social environments.

COMMITTEE

Committee

It is a group of people in an organization for making or recommending decisions.

Making decision done by Executive committee

Recommending decision done by Advisory committee.

Minimum 2 persons in a committee, no maximum limit, but if > 7 no intercommunication possible between committee members..

One vote for each member in a committee.

Types of Committees in an organization

1.      Finance committee

2.      Budget committee

3.      Purchase committee

4.      Welfare committee

Group Behavior in a Committee

Y a committee?

A committee is created to solve the problems which cannot be solved by individuals.

Committee does it through meetings. It is a group behavior, as here in meeting members communicate face to face.

Components constituting group behavior in a committee

1.      Chairman members relationship

A committee has its own authority and responsibility. All members have equal authority

 ie. One man one vote.

But the chairman of a committee has more authority, he can cast a vote to break the deadlock and arrive at decision. He convenes the meeting, deliberations and discussions held under his guidance and control. He is responsible to integrate ideas of the committee members.

2.      Participation

A person is put in a committee to contribute something through attending the meetings held.

3.      Group pressure

Integrating ideas of group is greater than individual contributions.

4.      Decision process

5.      Decision making in a committee happens through process of committee deliberations

Reasons for using committee

1.      Pooling of knowledge and experience

2.      Facility of coordination

3.      Representation of interest groups

People from different groups should have their own say in the functioning of organizations.

Example: Self financing college fees regulation committee meeting will be attended by a member from each self financing college to say their opinion.

4.      Fear of too  much authority in a single person

5.      Motivation through participation

To be involved and committed to a decision make employee motivated.

Problems of committee

1.      High cost

Need Lot of time and money

2.      Slow decision

3.      Indecisions

Some time because of lack of time for deliberations meeting can be adjourned without taking a decision.

How to make a committee effective

1.      Appropriate size of committee

2.      Selection of members – based on their personal characteristics

3.      Well defined authority and scope- clearly specify what the committee can do(advise or make decision)

4.      Nature of subject matter- ---policy matters we need committee, routine functions an individual can do it no need of committee

5.      Effective chairman

TYPES OF AUTHORITY

In an organization, there are three types of authority.

·        Line authority gives a manager the right to direct the work of his or her employees and make many decisions without consulting others. Line managers are always in charge of essential activities such as sales, and they are authorized to issue orders to subordinates down the chain of command.

·        Staff authority supports line authority by advising, servicing, and assisting, but this type of authority is typically limited. For example, the assistant to the department head has staff authority because he or she acts as an extension of that authority. These assistants can give advice and suggestions, but they don't have to be obeyed. The department head may also give the assistant the authority to act, such as the right to sign off on expense reports or memos. In such cases, the directives are given under the line authority of the boss.

·        Functional authority is authority delegated to an individual or department over specific activities undertaken by personnel in other departments. Staff managers may have functional authority, meaning that they can issue orders down the chain of command within the very narrow limits of their authority. For example, supervisors in a manufacturing plant may find that their immediate bosses have line authority over them, but that someone in corporate headquarters may also have line authority over some of their activities or decisions.

Functional Authority is given to a line or staff manager to do a specific job. When the job is completed, the authority is taken back.

For e.g. The normal job of the Marketing manager is to sell the products of the company. The Managing Director (MD) may give him authority to conduct a New Year Party for the full company. This authority is called Functional Authority. So, functional authority is given to a manager to do a specific job. This job is not his normal job. When he is doing this new job, he may or may not do his normal job. The manager already has a line or staff authority to do his normal job. Thus, Functional authority is an additional authority given to him to do the new job. When this new job is completed, the functional authority is taken away, and he has to go back to his normal job.

Functional Authority is different from Line Authority because line authority is given only for one particular department. For e.g. A Production manager is given line authority only for the production department. However, Functional Authority may be given for a particular department or for the full organisation. For e.g. In the first example, the Marketing manager is given functional authority to conduct a new year party for the full organisation. So, Functional Authority is not restricted to a particular department.

Functional authority is also different from staff authority. This is because the manager that has staff authority cannot do anything. He can only give advice and service. However, the manager that has functional authority can do something. Here, functional authority is similar to line authority. In fact, it is a type of limited line authority.

Features of Functional Authority

The characteristics or features of functional authority are:-

Functional authority is given to a manager to perform a specific function.

The manager may be a line manager or a staff manager. But mostly functional authority is given to a staff manager.

It is not limited to a particular department. It may even cover the full organisation.

It is an additional authority. It is given to a manager in addition to his normal (line or staff) authority.

It is removed when the work is completed.

Advantages of Functional Authority

The importance or merits or advantages of functional authority are:-

The specific function is given to another manager. So, the line manager can concentrate on his regular job.

The specific function is performed by an expert. So, it will be done efficiently.

The service of the staff managers will be utilised fully for the benefit of the organisation.

It is suitable for large organisations.

The authority and responsibility is well-defined.

CORPORATE STRATEGY

CORPORATE STRATEGY

Corporate strategy

The overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals.

 Corporate strategy is often stated explicitly in a "mission statement".

Corporate Strategy

Issues include:

• Scope of Business-----What Business you are in??

Product scope. How specialized should the firm be in terms of the range of products

it supplies? Coca-Cola (soft drinks), SAB Miller (beer), Gap (fashion retailing), and

Swiss Reliance (reinsurance) are specialized companies: they are engaged in a single

industry sector. General Electric, Samsung, and Bertelsmann are diversified

companies: each spans a number of different industries.

Geographical scope. What is the optimal geographical spread of activities for the

firm? In the restaurant business, Clyde’s owns 12 restaurants in the Washington DC

areas, Popeye’s Chicken and Biscuits operates throughout the US, McDonald’s

operates in 121 different countries.

Vertical scope. What range of vertically linked activities should the firm encompass?

Walt Disney Company is a vertically integrated company: it produces its own movies,

distributes them itself to cinemas and through its own TV networks (ABC and

Disney Channel), and uses the movies’ characters in its retail stores and theme parks.

Nike is much more vertically specialized: it engages in design and marketing but

outsources many activities in its value chain, including manufacturing, distribution,

and retailing.

• Resource deployment----How you are going to use your resources??
• Competitive advantage----What are your competitive advantages??
• Coordination of Production, Marketing, Personnel etc.----

Corporate planning

Corporate planning represents a formal, structured approach to achieving objectives and to implementing the corporate strategy of an organization.

It is the process of drawing up detailed action plans to achieve an organization's goals and objectives, taking into account the resources of the organization and the environment within which it operates.

Methods of developing Corporate Strategy

1.            Boston   matrix

Market Share and Market Growth

To understand the Boston Matrix, you need to understand how market share and market growth interrelate.

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. The higher your market share, the higher the proportion of the market you control.

 Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, meaning that it’s relatively easy for businesses to grow their profits, even if their market share remains stable.

Understanding the Matrix

The Boston Matrix categorizes opportunities into four groups, shown on axes of Market Growth and Market Share:

These groups are explained below:

Dogs: Low Market Share / Low Market Growth
In these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. You won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit. And because market growth is low, it's going to take a lot of hard work to improve the situation.

Cash Cows:
High Market Share / Low Market Growth
Here, you're well-established, so it's easier to get attention and exploit new opportunities. However it's only worth expending a certain amount of effort, because the market isn't growing, and your opportunities are limited.

Stars:
High Market Share / High Market Growth
Here you're well-established, and growth is exciting! There should be some strong opportunities here, and you should work hard to realize them.

Question Marks (Problem Child):
Low Market Share / High Market Growth
These are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there.

2.            SWOT Analysis/TOWS Matrix

The SWOT analysis allows managers to develop a strategic plan by examining organizational strengths and weaknesses in terms of the opportunities and threats presented by its environmental elements. Subsequent strategies and tactical decisions can produce a competitive advantage.

A SWOT Analysis examines the companies:

• Strengths...Internal
• Weaknesses...Internal
• Opportunites...External
• Threats...External
• 
  
  

By developing a SWOT analysis, a company can determine what its distinctive competencies are. This will help determine what the organization should be in business for, what its mission should be.

3.            Product life cycle
Four Stages to the Product Life Cycle:

1. Introduction
2. Growth
3. Maturity
4. Decline

INTRODUCTION

Failure rate for new products can range from 60%-90%, depending on the industry. A product does not have to be an entirely new product, can be a new model (car).

Marketing Mix(MM) considerations

Need to build channels of distribution/selective distribution
Dealers offered promotional assistance to support the product...PUSH strategy.
Develop primary demand/pioneering information, communications should stress the benefits of the product to the consumer, as opposed to the brand name of the particular product, since there will be little competition at this stage and you need to educate consumers of the product's benefits.
Price skimming...set a high price in order to recover developmental costs as soon as possible.
Price penetration...set a low price in order to avoid encouraging competitors to enter the market, also helps increase demand and therefore allows the company to take advantage of economies of scale.
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GROWTH

Need to encourage strong brand loyalty, competitors are entering the market place. Profits begin to decline late in the growth stage.
May need to pursue further segmentation.

MM considerations

May need to perform some type of product modification to correct weak or omitted attributes in the product.
Need to build brand loyalty (selective demand), communications should stress the brand of the product, since consumers are more aware of the products benefits and there is more competition, must differentiate your offering from your competitors.
May begin to move toward intensive distribution-the product is more accepted, therefore intermediaries are more inclined to risk accepting the product.
Price dealing/cutting or meeting competition, especially if previously adopted a price skimming strategy.

MATURITY

Sales curve peaks-severe competition, consumers are now experienced specialists.

MM Considerations

A product may be rejuvenated through a change in the packaging, new models or aesthetic changes.
Advertising focuses on differentiating a brand, sales promotion aimed at customer (PULL) and reseller (PUSH).
Move to more intense distribution
Price dealing/cutting or meeting competition
Provides company with a large, loyal group of stable customers. Generally cash cows that can support other products.
Strategies during maturity include:

DECLINE

Sales fall off rapidly. Can be caused by new technology or a social trend.
Can justify continuing with the product as long as it contributes to profits or enhances the effectiveness of the product mix.
Need to decide to eliminate or reposition to extend its life.

MM Considerations

Some competition drop out
Need to time and execute properly the introduction, alteration and termination of a product.

first series marks