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Turnaround Strategy

Turnaround Strategy
What is Turnaround Strategy Distress signals start flying around when a particular company, whether multinational, corporate or medium sized, is subjected to financial pressure and is at the brink of bankruptcy. What was happening all along? No body knows and nobody wants to be held responsible. The CEO has to bear the brunt and alas, extermination! Aim of Turn-around Strategy: The overall aim of a turn around strategy is to bring back a firm to normalcy which has been under distress in terms of acceptable levels of profitability, solvency, liquidity and cash flow. Turn around strategies should be very carefully formulated so as to stabilize the firm in distress, i.e., to bring the company out of the hole and then go for long term planning. Turn around can be in the form of operational efficiency management, financial restructuring, marketing management or savings in the form of cost reduction or liquidity in the form of asset reduction.  Facebook Marketing: A Step-by-Step to Your First 1000 Fans! Turn around to see what is around: We have seen so many such occurrences at the global level and micro level. Some companies rejuvenate like a phoenix bird from the ashes, some go haywire, and some dissolve into thin air. It all depends how well you handle the situation with either the help of an external expert consultant or you might want to go for joint venture or collaboration in order to save you skin from mounting interest payments or you right royally sell the company if somebody is ready to takeover. Either way you have to do something! “Turn around to see what is around”. Don’t see what you want to see See what has to be seen Change the CEO (He is the Ideal Victim!) Resurrect your employees’ confidence Cut down costs Look for Alternatives Lie low for Sometime(till the situation favors) Slowly capture the market by innovative Campaigns and ads Paint a new picture about your company Review your Mission and Vision statements Work on targets Bang on the right target customers and clients Strengthen your Channel of Distributors Go smooth with the bankers (You need them always!) Have confidence in yourself Crisis management is necessary Stress busters like yoga and meditation mandatory Evolve Strategies One step at a time (Slow and steady) Fear and Panic grips the organization in situations of crisis. So the first step would be to stay cool to assess the situation by calmly reviewing the damage with all the concerned people. The next step would be to stop the bleeding by cutting all unwanted costs, unnecessary overheads, and the final stage would be renaissance, recovery, renewal or by whatever name you want to call it, even if it means negative investment or profit. Proper Planning, Inventory Control, Strategic prepositions, Renewal of old strategies in accordance with the situation, Tightening finance controls, Defining the credit management limits, all these are precautionary measures which will hold you from falling into the danger of handling a crisis situation, as” recovery of damaged integrity is going to cost you more than ploughing back your profits....
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Costing and Profitability

Costing and Profitability
Costing and Profitability Analysis Relationship between Cost of Production and Sales Volume: The cost of production and volume of sales are the inter-dependent determinants of profit. The analysis of cost behavior in relation to the changing volume of sales and its impact on profit is very important to determine the break even level of a firm. The level at which total revenue equals total costs, is said to be the break even level where there is no-profit or no-loss. Sales beyond break-even volume bring in profits. Generally production is preceded by the process of demand forecasting, to decide on the volume of production, the produce of which will be absorbed by the market. Pricing and promotions come at a later stage. Costing is done to predict the costs of production and resultant profits at various levels of activity. Download this comprehensive power-point presentation on Break-Even Analysis. Cost Volume Profit or CVP Analysis: CVP analysis or Cost-Volume-Profit analysis helps a firm to study the interrelationship between these three factors and their effect on clean profit. The process also includes an analysis about the external factors that affect the volume of production, such as market demand, competitor threat and internal factors such as availability of infrastructure, capital and labor force. This CVP analysis is a boon to the managers to locate the bottlenecks that hinder the productivity and find a way out, by adjusting either the levels of activity or controlling the cost.   Picture Courtesy : The Power of Break-Even Analysis Pricing: Pricing is the most important factor that makes your product competitive. The costs of production can be classified into fixed costs, variable costs and semi variable costs. Fixed costs remain constant and tend to be unaffected by the changes in volume of output; whereas variable costs vary directly with the volume of output and semi-variable as the name implies are partly fixed and partly variable. Cost accountants of the modern era fully support variable costing for the purpose of cost accounting, listing its merits as follows: Variable costing talks about contribution margin, which is the excess of sales over variable costs. If this is going to be high, sufficient enough to cover the fixed costs, then profit is assured for the firm. It is a key factor to determine the percentage of profit. Variable costing assigns only those costs to a product that varies directly with the changing levels of production, which is helpful in making a distinction of profit made from sales and those resulting from changes in production and inventory. Segregating the costs into fixed and variable is done for the purpose of providing information to reflect cost-volume-profit relationships and to facilitate management decision-making and control. Some applications of variable costing that facilitates management decision making: Profit planning: By increasing the volume of sales or decreasing the selling price of the product. Performance evaluation of profit centres:Like, sales division, marketing department, product line etc., Decide on product priorities: In view of market potential and profit potential Make or Buy Decisions: Depending on the production capacity and sales demand. Budgeting: Flexible budgeting and cost control are possible by variable costing technique and the striking feature is the treatment given to fixed costs, where it is treated as a period cost and not apportioned among all the departments and products that enable the firm to understand the movement of profits in the same direction as that of the sales. Although considered to be a controversial technique and weighed against the conventional methods of costing such as absorption costing, it is believed that it is to stay and exist as the next step in the evolutionary method of cost accounting....
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Smart Objectives for Success

Smart Objectives for Success
Smart Objectives for Success An objective describes something which has to be accomplished and defines what organizations, functions, departments, teams and individuals are expected to achieve. Objectives may be operational or developmental. When the contribution is oriented towards the accomplishment of corporate objectives, in the light of the organization’s mission, core values and strategic plans, it is termed as operational; personal or learning objectives that involve the improvement of knowledge, skills and performance of individuals is termed as developmental.     Objectives must be SMART: S-scientific M-motivating A-achievable R-realistic T-time bound   Objectives that are mostly confined to the near future may be termed-short term objectives, which are accomplished in the stipulated time duration. Say, for example, 1000 units of pet bottles have to be produced in a week’s time. If the firm is focused on the overall production plan for the forthcoming year, then it is termed as long term objective. In a production environment, a firm has to initially go for an aggregate plan, where the production capacity of the plant is determined to make the project feasible. The firm has to make doubly sure, whether it is resourceful in terms of physical, financial and human aspects. The work centers are allotted with jobs in a mock trial to check man versus machine co-ordination and compatibility.     Pic Courtesy: Digital Information World Proper Planning: Objectives are achieved only when there is proper planning. The top management must take the pains to clearly explain the objectives to all the employees across different levels of organization to facilitate smooth functioning. When the employees understand what is expected of them, the performance gets oriented towards accomplishing the objectives; the employees get proper direction and focus. Delivering Happiness: A Path to Profits, Passion, and Purpose Think of this, what will happen to the sales volume, if the marketing manager does not properly educate his team about the targets to be achieved for that quarter? Definitely there will be a dip in the sales owing to the lethargic and irresponsible attitude of the manager. Ultimately, the organization stands to suffer a loss in terms of time and cost of recruiting a new person to head the marketing department. Right Person for the Right Job: Organizations have to be meticulous while choosing people for the post of managers. The chosen persons must be able to identify themselves with the organization and its objectives, so that they could be a source of inspiration for people down the line. Right people for the right job, at the right place and right time is the success mantra. Objectives have to be periodically revised in the light of changing economic, political and technological developments. How to Stop Worrying and Start Living If not the objectives might become obsolete and in due course you will get stranded amidst the roaring competition.  The process of business management aims at managing people and other resources to make a modest profit. How to achieve success in an open market? By clearly setting objectives that serve as tools of motivation and persuasion, a firm can evolve and contribute strategic inputs that make the objectives realistic and...
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Sustainable Model for Training and Development

Sustainable Model for Training and Development
How to create an effective and Sustainable Model for Training and Development? The term “change” is synonymous with competitiveness in modern world and thus corporate firms are in a position to evolve unique, sustainable and strategic training model for employees that will facilitate the following: On one hand the training process motivates the suitable employees to perform well and makes them perceive their role properly in order to accomplish the enterprise objectives. On the other hand the organisation keeps itself abreast by constantly updating and understanding the training needs through Assessment of the external environment and Expectations of the employees in terms of rewards whether intrinsic or extrinsic. Porter and Lawler Model: The Expectancy Motivation Model of Porter and Lawler serves as an inspiration for effective training. The stress is on The value placed on performance outcome by the individual. The degree to which the individual believes that his efforts will lead to attainment of these rewards. Psychological aspect of this model: Almost all individuals are motivated by money ( by the way, Who doesn’t want money!). But money alone does not serve the purpose of motivation. Job satisfaction is a relative term in that different people find different things or elements motivating them in their work environment leading to job satisfaction. It might be Challenge Good inter personal relationship Pay Perks Culture Excellent leader Pressure Stress and the like… Assessment of training need: The training needs must be assessed by the respective organisations considering the following aspects: To transform the individual from the capacity of learner to executor Instil in him confidence to do the job well Relate his job to rewards so that he will try to excel Give your employees scope for career advancement Incorporate technical and technological innovations as part of your training process Physical, emotional and social elements in the internal as well as the external environment must be taken into consideration while training the workforce. Physical– relates to the physical fitness needed to perform the technical skills Psychological– relates to keeping the morale of the employees high at all points and maintaining an amiable work atmosphere Social– relates to the friendly relationship that should exist between the trainer and the trainees and among the trainees. Usefulness of the model: This model lends its support to the training and development process through three steps or stages. Diagnosis stage- Need analysis Formulation stage- Programme planning Evaluation Diagnosis stage: The interplay of ability and role perception Training brings out EFFICIENT as well as DEFICIENT performers. That is one good thing and also making the employee understand the role he is about to play as part of the organisation. Training through learning is one aspect which imparts knowledge and training is considered to be effective if one’s behaviour is modified as per the expectations and demands of the job. Role perception can be misunderstood by some individuals when they might try to exercise undue authority or overlook their duties and responsibilities. Confinement of authority Superior-Subordinate appraisal procedures Clear HR policy formulations are needed to avoid confusion and chaos in role playing. Formulation stage: The effected change through learning is expected to be retained by the employees throughout the career span in the organisation followed by constant grooming. The stress is on the value of the activity to be learnt Giving feedback  on the progress of employees towards final training objectives Relate the learning activity to increasing, meaningful materials already studied outside the training programme. Evaluation stage: Training evaluation is particularly necessary when the organisation wants to encourage the competitive spirit amongst the trainers and evaluation is considered as a challenge by itself. If the training provided eliminates obstacles...
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TQM – Zero Defect Achievement

TQM – Zero Defect Achievement
Zero defect achievement – Striving towards perfection! What is TQM: Quality management is all about being proactive and concepts like total quality management and six sigma of recent origin reiterate the fact that hundred percent error free performance is possible the first time and every time. This is what is called as zero defect achievement which most of the companies at corporate level are headed for. The intention is to strive for perfection in work, the way an archer aims for the bull’s eye on a target. It is time for people to cast off their conservative and archaic business practices and think out of the box to enjoy a sustainable competitive advantage driven by quality. Zero defects seek top performance standards the first time and every time. Management scholars offer several suggestions to improve the zero defects programme: The idea of zero defects programme has to be communicated through out the organization right from the top to the bottom level including managers, supervisors and workers. This would harmonize the functions of line and staff. Prerequisites needed for the programme have to be determined and made available. The culture and climate of the firm should be conducive to accomplish the programme. Explain in simple terms about the functions to be accomplished. Design some solid system of recognition. Set up a time schedule as time lines are very important when it comes to product delivery. Spot all the bottlenecks and remove them. Training is absolutely essential– the skill set and mind set of the employees have to be attuned to the goals of the venture. Mock training and rehearsals are helpful. Standardization is the key to the success of this programme. Bench Marking: Total quality management is a process contributing towards quality and bench marking is a means to achieve high quality performance by setting some top notch industry performers as reference points or standards. It is a continuous systematic process employed by a business enterprise to develop business and working processes that integrate the best practices available in the industry. Bench marking is a crucial element in the process of quality management. Quality is one field of production, which reflects the ethical viewpoint and approach of business firms towards the society and other investors or stakeholders. Bench marking is a modus operandi used to: Identify and define customer requirements Plan and establish effective goals and objectives Develop time measures of productivity Become more competitive Determine industry’s best practice The initial step is to decide what is to be bench marked-the product, services, customers or business processes in various departments. The second phase of action is to identify and select your competitors who will set the necessary precedence. With that as reference, decide on your company’s strategies by making meaningful and valid comparisons. Judge the competitor strengths and weaknesses and compare them with that of your own to get a clear picture of your current performance levels and capabilities. This will give you a clear indication on the action plans to be developed and implemented in a phased manner by your organization. Quality management is likely to happen only when all the employees of the organization work as a team with unified principles. Quality demands deep commitment and responsibility from the members of organizations. It calls for intense training to imprint the perception of quality in the minds of...
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