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Wednesday, March 9, 2011

If you fail to compete with your close competitor marry it: A case Study

#Q1. How do you define the strategy, “if you fail to compete with your close competitor marry it”? Comment in the context of competition between India and China.
India and China are two of the world’s most ancient surviving civilizations.  The Chinese built the 4000-mile Great Wall some 2000 years ago, about the time of the birth of Jesus Christ.  As an awesome marvel of engineering, most of the wall still stands intact, the only man-made object visible from the outer space.  They invented bureaucracy even earlier, thousands of years before Max Weber brought it eloquently to the attention of the western world.  The Terracotta Army built by Emperor Qin in the 3rd century BC is in almost perfect state of preservation to this day.  Some of the greatest inventions that we live by even today came from China, including the gun powder – the most infamous of them all, the paper, paper money, printing, viaducts, dams, clocks, the compass, astronomical observatories, and countless other inventions .
            Indian contributions to algebra, textile, chemistry, medicine, metallurgy, and astronomy in the Ancient and Medieval periods are legion. Sophisticated agricultural practices, architecture, and sewage systems were developed by the engineers in the Indus Valley civilizations of Harrappa and Mohanjadaro. The wisdom of the Buddha flowed from India to China, while Confucius’ precepts of compassion, humility, and right conduct by merciful rulers influenced the behavior of emperor Ashoka in the 3 rd century B.C. who inscribed on his commemorative pillars, Satya amar jayte (Truth alone shall triumph).           
            India became a free country through peaceful transition of sovereignty from Britain in 1947.  China had a proletarian revolution in 1949 led by Mao Zedong.  Both democratic India and Communist China embarked upon ambitious science, technology, and economic development programs through centralized planning.  Both emphasized self-reliance through local initiatives, restricting the flow of foreign capital and technology for nearly three decades.  During this time, the Peoples Republic of China (PRC) controlled its economy and protected it from outside influences far more than did India.  For at least 10-15 years since the revolution in 1949, the only source of foreign capital and technology for China was its ideological partner, the Soviet Union. That relationship began to crack in 1962 because of the USSR’s reluctance to transfer nuclear technology to the Peoples Republic.  China continued its isolation and suffered serious stagnation for 20 or so more years, until after Mao’s death in 1976.
            During this period India also strictly regulated its economy, allowing only partial and highly restricted entry of foreign capital and technology.  The Indian economy began to open its door a bit more widely by the middle of the 1980s, at about the same time as did China.  By this time, the global economy had already taken hold of the national economies in North America, Europe, and the Pacific Rim.  Post-Independence era regulations proved a mixed blessing for India.  It missed 20 years of the information technology revolution that was sweeping the world and driving the global economy – remember how the IBM and Coca-Cola were kicked out of India in the middle of 1970s.  The private sector stagnated under those regulations.  The protected government sector thrived despite its magnificent mismanagement.  India’s industrial development suffered.  While these negative trends were the legacy of regulations, government policy of self-reliance helped built robust networks of techno-economic institutions and individuals that were ready to march forward when the global economy did finally reach India.  Through regulations India was also able to protect its local industries and markets from unbridled speculation and exploitation by multinational corporations.  Let me return to China for a minute.
            Deng Xiaoping took command of China in 1979, three years after Mao’s death.  With a massive shift of public policy, Deng opened the Chinese economy to foreign capital, technology, and competition.  The scene that I witnessed in China when I went there for the first time in 1980 was a totally different scene than what is going on there today.  Despite the open door policy, economic modernization remained laggard during the entire decade of the 1980s. Things began to change rapidly in the next decade.  Since then, the Chinese economy has been growing at about 9-10% per year, surpassing any other country for a sustained growth at such a high rate.  In terms of GDP per capita, modern China is the world’s 4th largest economy, and is likely to overtake Japan within the next 5-10 years.  It is one of the world’s largest exporters of consumer items through retailers like Wal-Mart, Carrefour, Target, and Tesco.  Even garlic in the United States is being imported from China.  The American Wal-Mart is probably the biggest buyer of consumer goods made in China.  “It bought $19 billion worth of Chinese goods in 2004, amounting to some 15% of China’s total exports to America in that year.
            India has finally left behind its “Hindu growth rate” of 3% to hit an annual growth rate of 8+%.  Its technological capability is strong.  It is the most preferred destination of IT outsourcing, now moving away from being the world’s call center to being a vital feeder to the global knowledge industry.  India’s economic base is vast – 4th largest in the world in terms of purchasing power parity and 12th largest in terms of per capita GDP.  It is projected to become one of the five largest economies in the world by 2050 along with China and Brazil.  Its markets are huge, with the current consumer class estimated to be around 350 million, about the size of the entire European Community. 
            India-China trade is currently running at $20 billion from only $1.8 billion in 1989-90. A substantial share of India’s mobile-phone market is run by Hutchison Telecommunications of China.  Huawei Technologies has a software center in Bangalore that employs 1,150 Indian and 50 Chinese engineers. I understand that most of the Diwali lanterns for 2006 celebrations came from China.  The Chinese computer giant Lenovo has recently established its global marketing hub in Bangalore to be run and managed by Indians.  China imports iron ore and other minerals from India.  From the Indian side, an estimated 150 companies are currently doing business in China. The trend, nonetheless, is definitely pointing in the direction of increasing bilateral trade and technology agreements.  
            It’s high time to India to compare their strength and weakness with China and make the strategy accordingly. China is always doing very good in the hardware manufacturing side and India always good in software R&D and marketing side. So India must join hand with China in her strength positions and vise versa. This will lead the win win situation to both countries and can become two economical giant Asian nations in the near future.

Friday, March 4, 2011

What is leadership?


It is very difficult to qualitative define leadership. It is easier to give examples of leaders than to define leadership.  Leadership involves various dimensions and attributes. It requires vision, courage, understanding, determination, decisiveness, sense of timing, capacity to act, ability to inspire, etc. A leader is often judged by his mettle in a crisis. For example, Winston Churchill during the London Blitz, John F Kennedy during the Cuban missile crisis, Indra Gandhi in the 1971 Bangladesh war, marget Thatcher during miner’s strike, Mikhail Gorbachev’s break with communism and the cold war. In these turning points, leadership made a crucial difference in the modern history. It is same in case of leadership in organizations.
            As an effective human being, a leader should have identity, authenticity, open mindedness, independence, responsibility, communication, reasoning and problem solving abilities, concern for others, rest for life energy, maturity, courage (guts), strong sense of obligation, clarity of mind and expression, integrity, etc. Leadership is highly complex and elusive trait.  The above description does not clearly define what leadership is. A leader is one who has followers; is too simple a definition. Leadership is often defined as the art of influencing others ( people) to strive willing; to do what the leader wants them to do ( often to do the mutually compatible objectives) with zeal and confidence . It is encouraging and inspiring individuals and teams to give their best to achieve a desired result. Leaders work with and through people to accomplish goals.  It is psychological process of providing guidance for followers. Leadership is one of the most effective tools of management and organizational effectiveness depends on the quality of leadership. To lead is to guide, conduct, direct and proceed. Earlier we have seen that the management is defined as the management is defined as the process of getting things done through the efforts of other people. Both the definitions overlap and since managers get all sorts things done through the efforts of other people. Both the definitions overlap the since managers get all sorts done through the efforts of other people, they must lead. In other words, by definition all managers are leaders.

Sunday, February 27, 2011

Job Satisfaction: Theory into Practice

Employee satisfaction and retention have always been important issues for physicians. After all, high levels of absenteeism and staff turnover can affect your bottom line, as temps, recruitment and retraining take their toll. But few practices (in fact, few organizations) have made job satisfaction a top priority, perhaps because they have failed to understand the significant opportunity that lies in front of them. Satisfied employees tend to be more productive, creative and committed to their employers, and recent studies have shown a direct correlation between staff satisfaction and patient satisfaction.1 Family physicians who can create work environments that attract, motivate and retain hard-working individuals will be better positioned to succeed in a competitive health care environment that demands quality and cost-efficiency. What's more, physicians may even discover that by creating a positive workplace for their employees, they've increased their own job satisfaction as well.
Herzberg's theory
In the late 1950s, Frederick Herzberg, considered by many to be a pioneer in motivation theory, interviewed a group of employees to find out what made them satisfied and dissatisfied on the job. He asked the employees essentially two sets of questions:
1.                      Think of a time when you felt especially good about your job. Why did you       feel that way?
2.                      Think of a time when you felt especially bad about your job. Why did you          feel that way?
From these interviews Herzberg went on to develop his theory that there are two dimensions to job satisfaction: motivation and "hygiene" Hygiene issues, according to Herzberg, cannot motivate employees but can minimize dissatisfaction, if handled properly. In other words, they can only dissatisfy if they are absent or mishandled. Hygiene topics include company policies, supervision, salary, interpersonal relations and working conditions. They are issues related to the employee's environment. Motivators, on the other hand, create satisfaction by fulfilling individuals' needs for meaning and personal growth. They are issues such as achievement, recognition, the work itself, responsibility and advancement. Once the hygiene areas are addressed, said Herzberg, the motivators will promote job satisfaction and encourage production.

Applying the theory
To apply Herzberg's theory to real-world practice, let's begin with the hygiene issues. Although hygiene issues are not the source of satisfaction, these issues must be dealt with first to create an environment in which employee satisfaction and motivation are even possible.
Company and administrative policies. An organization's policies can be a great source of frustration for employees if the policies are unclear or unnecessary or if not everyone is required to follow them. Although employees will never feel a great sense of motivation or satisfaction due to your policies, you can decrease dissatisfaction in this area by making sure your policies are fair and apply equally to all. Also, make printed copies of your policies-and-procedures manual easily accessible to all members of your staff. If you do not have a written manual, create one, soliciting staff input along the way. If you already have a manual, consider updating it (again, with staff input). You might also compare your policies to those of similar practices and ask yourself whether particular policies are unreasonably strict or whether some penalties are too harsh.
Supervision. To decrease dissatisfaction in this area, you must begin by making wise decisions when you appoint someone to the role of supervisor. Be aware that good employees do not always make good supervisors. The role of supervisor is extremely difficult. It requires leadership skills and the ability to treat all employees fairly. You should teach your supervisors to use positive feedback whenever possible and should establish a set means of employee evaluation and feedback so that no one feels singled out.
Salary. The old adage "you get what you pay for" tends to be true when it comes to staff members. Salary is not a motivator for employees, but they do want to be paid fairly. If individuals believe they are not compensated well, they will be unhappy working for you. Consult salary surveys or even your local help-wanted ads to see whether the salaries and benefits you're offering are comparable to those of other offices in your area. In addition, make sure you have clear policies related to salaries, raises and bonuses.
Interpersonal relations. Remember that part of the satisfaction of being employed is the social contact it brings, so allow employees a reasonable amount of time for socialization (e.g., over lunch, during breaks, between patients). This will help them develop a sense of camaraderie and teamwork. At the same time, you should crack down on rudeness, inappropriate behavior and offensive comments. If an individual continues to be disruptive, take charge of the situation, perhaps by dismissing him or her from the practice.
Working conditions. The environment in which people work has a tremendous effect on their level of pride for themselves and for the work they are doing. Do everything you can to keep your equipment and facilities up to date. Even a nice chair can make a world of difference to an individual's psyche. Also, if possible, avoid overcrowding and allow each employee his or her own personal space, whether it be a desk, a locker, or even just a drawer. If you've placed your employees in close quarters with little or no personal space, don't be surprised that there is tension among them.
Before you move on to the motivators, remember that you cannot neglect the hygiene factors discussed above. To do so would be asking for trouble in more than one way. First, your employees would be generally unhappy, and this would be apparent to your patients. Second, your hardworking employees, who can find jobs elsewhere, would leave, while your mediocre employees would stay and compromise your practice's success. So deal with hygiene issues first, then move on to the motivators:
Work itself. Perhaps most important to employee motivation is helping individuals believe that the work they are doing is important and that their tasks are meaningful. Emphasize that their contributions to the practice result in positive outcomes and good health care for your patients. Share stories of success about how an employee's actions made a real difference in the life of a patient, or in making a process better. Make a big deal out of meaningful tasks that may have become ordinary, such as new-baby visits. Of course employees may not find all their tasks interesting or rewarding, but you should show the employee how those tasks are essential to the overall processes that make the practice succeed. You may find certain tasks that are truly unnecessary and can be eliminated or streamlined, resulting in greater efficiency and satisfaction.
Achievement. One premise inherent in Herzberg's theory is that most individuals sincerely want to do a good job. To help them, make sure you've placed them in positions that use their talents and are not set up for failure. Set clear, achievable goals and standards for each position, and make sure employees know what those goals and standards are. Individuals should also receive regular, timely feedback on how they are doing and should feel they are being adequately challenged in their jobs. Be careful, however, not to overload individuals with challenges that are too difficult or impossible, as that can be paralyzing.
Recognition. Individuals at all levels of the organization want to be recognized for their achievements on the job. Their successes don't have to be monumental before they deserve recognition, but your praise should be sincere. If you notice employees doing something well, take the time to acknowledge their good work immediately. Publicly thank them for handling a situation particularly well. Write them a kind note of praise. Or give them a bonus, if appropriate. You may even want to establish a formal recognition program, such as "employee of the month."
Responsibility. Employees will be more motivated to do their jobs well if they have ownership of their work. This requires giving employees enough freedom and power to carry out their tasks so that they feel they "own" the result. As individuals mature in their jobs, provide opportunities for added responsibility. Be careful, however, that you do not simply add more work. Instead, find ways to add challenging and meaningful work, perhaps giving the employee greater freedom and authority as well.
Advancement. Reward loyalty and performance with advancement. If you do not have an open position to which to promote a valuable employee, consider giving him or her a new title that reflects the level of work he or she has achieved. When feasible, support employees by allowing them to pursue further education, which will make them more valuable to your practice and more fulfilled professionally. Motivators, such as recognition and achievement, make workers more productive, creative and committed.
The trickle-down effect
While there is no one right way to manage people, all of whom have different needs, backgrounds and expectations; Herzberg's theory offers a reasonable starting point. By creating an environment that promotes job satisfaction, you are developing employees who are motivated, productive and fulfilled. This, in turn, will contribute to higher quality patient care and patient satisfaction.

Job satisfaction: six factors


Employee survey studies show that employees are more satisfied when they have challenging opportunities at work. This includes chances to participate in interesting projects, jobs with a satisfying degree of challenge, and opportunities for increased responsibility. Important: this is not simply "promotional opportunity." As organizations have become flatter, promotions can be rare. People have found challenge through projects, team leadership, special assignments - as well as promotions.

  • Promote from within when possible.
  • Reward promising employees with roles on interesting projects.
  • Divide jobs into levels of increasing leadership and responsibility.
It may be possible to create job titles that demonstrate increasing levels of expertise which are not limited by availability of positions. They simply demonstrate achievement.


When negative stress is continuously high, job satisfaction is low. Jobs are more stressful if they interfere with employees' personal lives or are a continuing source of worry or concern.

  • Promote a balance of work and personal lives. Make sure that senior managers model this behavior.
  • Distribute work evenly (fairly) within work teams.
  • Review work procedures to remove unnecessary "red tape" or bureaucracy.
  • Manage the number of interruptions employees have to endure while trying to do their jobs.
  • Some organizations utilize exercise or "fun" breaks at work.


Data from employee satisfaction surveys has shown employees are more satisfied when their managers are good leaders. This includes motivating employees to do a good job, striving for excellence, or just taking action.

  • Make sure your managers are well trained. Leadership combines attitudes and behavior. It can be learned.
  • People respond to managers that they can trust and who inspire them to achieve meaningful goals.

Work Standards

Again, our NBRI employee survey data points out that employees are more satisfied when their entire workgroup takes pride in the quality of its work.

  • Encourage communication between employees and customers. Quality gains importance when employees see its impact on customers.
  • Develop meaningful measures of quality. Celebrate achievements in quality.
Trap: Be cautious of slick, "packaged" campaigns that are perceived as superficial and patronizing.

Fair Rewards

Employees are more satisfied when they feel they are rewarded fairly for the work they do. Consider employee responsibilities, the effort they have put forth, the work they have done well, and the demands of their jobs.

  • Make sure rewards are for genuine contributions to the organization.
  • Be consistent in your reward policies.
  • If your wages are competitive, make sure employees know this.
  • Rewards can include a variety of benefits and perks other than money.
As an added benefit, employees who are rewarded fairly, experience less stress.

Adequate Authority

Employees are more satisfied when they have adequate freedom and authority to do their jobs.

When reasonable:
  • Let employees make decisions.
  • Allow employees to have input on decisions that will affect them.
  • Establish work goals, but let employees determine how they will achieve those goals. Later reviews may identify innovative "best practices."
  • Ask, "If there were just one or two decisions that you could make, which ones would make the biggest difference in your job?"

Friday, February 25, 2011

Corporate Governance: An Introduction

The history of incorporation of company has come from 13th century but present types of statutory provision of incorporation have come only from 17th century from UK. From the beginning to 1990s the corporation came running under managing model by which the world has faced so many corporate scandals. Large corporate failures have often stimulated debate about corporate governance, leading to regulatory action and other reforms. In the UK the collapse of the Maxwell publishing group at the end of the 1980s stimulated the Cadbury code of 1992, and cases through the 1990s such as Poly Peck, BCCI and recently Marconi stimulated a series of further enquiries and recommendations. Widespread distress among banks in Korea in 1997 was viewed as not only macroeconomic in origin but as also reflecting governance weaknesses. Large failures of both financial and non-financial institutions in Japan have also led to regulatory responses and to legal changes. Finally, the cases of Enron, World Com and Tyco have initiated major debate and legislation in the USA.

        All mentioned failures were cause of ‘managing’ model beyond the ‘governing’ If we see the traditional managing model , the CEOs held real power and have picked directors who served at their pleasure.     But 1990 onwards, company does not want to depend on managers. While the paid team of manager could not drive the company, as not being & owner they dose not have the feeling of loosing they always been ready to desert the company and goes elsewhere with handsome remuneration. Instead of that the new concept has been introduced as corporate governance in which the first step company’s governance the system is rethinking the role of directors.
Now in the world there are so many efforts going on to enhance corporate governance but the OECD (Organization of Economic Co-operation and Development) has been able to governance the world through benchmark guiding principles of corporate governance. The principles are being applied in OECD members and non member countries and the international agencies like World Bank, IMF, and IFC and so on are evaluating the national corporate governance mechanism at par of the OECD principles. So the OECD principles of corporate governance are being must important and have developed 6 steps of discipline as principles as bellow:
I. Ensure effective corporate governance framework:
This is based on the new principles of OECD added from 2004. This new principles has focused on the basis to the framework to ensure corporate governance. It requires adequate legal framework. The legal aspect of the corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities. The corporate governance framework should be developed with a view to its impact on overall economic performance, market integrity and the incentives it creates for market participants and the promotion of transparent and efficient markets. The legal and regulatory requirements that affect corporate governance practices should be consistent with the rule of law, transparent and enforceability. The division of responsibilities among different authorities should be clearly articulated and ensure that the public interest is served. Supervisory, regulatory and enforcement authorities should have the authority, integrity and resources to fulfill their duties in a professional and objective manner. Moreover, their rulings should be timely, transparent and fully explained.

II. Rights of shareholders:

          As a second steps it has dealt on the rights of shareholders. Shareholders are the owners of the company. They control the company by appointing the board of directors to act as their representatives. Shareholders are eligible to make decisions on any of significant corporate changes. Therefore, the company should encourage shareholders to exercise their rights. Basic shareholders rights are rights to:
          1) Buy, sell, or transfer shares
          2) Share in the profit of the company
          3) Obtain relevant and adequate information on the company in a timely manner and on a regular basis
          4) Participate and vote in the shareholder meetings to elect or remove members of the board, appoint the external auditor, and make decisions on any transactions that affect the company such as dividends payment, amendments to the company’s articles of association or the company’s bylaws, capital increases or decreases, and the approval of extraordinary transactions, etc.

                        III. Equitable Treatment of Shareholders:
Just and equal treatment is important to the shareholders. All shareholders, including those with management positions, non-executive shareholders and foreign shareholders should be treated in an equal way. Minority shareholders whose rights have been violated should be redressed. An important factor of shareholders who invest in a company is that they can trust that the company’s board of directors and management use their money appropriately. The board of directors should ensure that all shareholders rights are protected and that they all get fair treatment. The board of directors should ensure that all processes and procedures for shareholders meetings allow equitable treatment of all shareholders. There should be a clear procedure to allow minority shareholders to nominate candidates for director positions. Shareholders who cannot vote in person should be allowed to vote by proxy. The board should set procedures to prevent the use of inside information for abusive self dealing such as insider trading or related party transactions. All directors and executives should be requested to disclose to the board whether they and their related parties have any interest in any transaction or matter directly affecting the company. Directors and executives who have such interests should not participate in the decision making process on such issues.

IV. Role of Stakeholders
Stakeholders of a company should be treated fairly in accordance with their legal rights as specified in relevant laws. The board of directors should provide a mechanism to promote cooperation between the company and its stakeholders in order to create wealth, financial stability and sustainability of the firm. Stakeholders in corporate governance include, but are not limited to, customers, employees, suppliers, shareholders, investors, creditors, the community the company operates in, society, the government, competitors, external auditors, etc. The board of directors should set a clear policy on fair treatment for each and every stakeholder. The rights of stakeholders that are established by law or through mutual agreements are to be respected. Any actions that can be considered in violation of stakeholders’ legal rights should be prohibited. In order for stakeholders to participate effectively, all relevant information should be disclosed to them. There should be an effective way for stakeholders to communicate to the board any concerns about illegal or unethical practices, incorrect financial reporting, insufficient internal control, etc. The rights of any person who communicates such concerns should be protected. The board of directors should set clear policies on environmental and social issues.
V. Disclosure and Transparency
The board of directors should ensure that all important information relevant to the company, both financial and non-financial, is disclosed correctly, accurately, on a timely basis and transparently through easy-to-access channels that are fair and trustworthy. Important company information includes financial reports and non-financial information specified in the regulations of the Securities and Exchange Commission (SEC) and other relevant information such as the summary of the tasks of the board of directors and its committees during the year, corporate governance policy, environmental and social policies and the company’s compliance with the above-mentioned policies, etc. The quality of a company’s financial reports is vital for shareholders and outsiders to make investment decisions. The board of directors should be confident that all information presented in the financial reports is correct, in accordance with generally accepted accounting principles and standards, and has been audited by an independent external auditor. The chairman of the board and the managing director (MD or CEO) are in the best position to be spokespeople for the company. In addition, the board of directors should designate a person or a department to perform the “investor relations” function to communicate with outsiders such as shareholders, institutional investors, individual investors, analysts, the related government agencies, etc.

VI. Responsibilities of the Board
Ultimately corporate peace and prosperity upon the role and responsibility of the board. The board of directors plays an important role in corporate governance for the best interest of the company. The board is accountable to shareholders and independent of management. The board of directors should have leadership, vision, and independence in making decisions for the best interest of the company and all shareholders. The board should clearly separate its roles and responsibilities from those of management and monitor the company’s operations to ensure all activities are conducted in accordance with relevant laws and ethical standards. The structure of the board should consist of directors with various qualifications, which are skills, experience, and expertise that are useful to the company. Directors should commit to their responsibilities and put all efforts to create a strong board of directors. The director’s nomination process should be transparent, without any influence of controlling shareholders or management, and be credible to outsiders. For efficiency and effectiveness, the board of directors should set committees to study and screen special tasks on behalf of the board, especially issues that need unbiased opinions. Committees should have a clear scope of their work, roles and responsibilities as well as the working procedures such as meetings and reporting to the board. All directors should understand their roles and responsibilities and the nature of the company’s business. They should be ready to express their ideas independently and always update themselves.

 In Nepal the corporate governance thought has stimulated from the support of Asian Development Bank and World Bank from 2002.The world Bank has assess then company law provision and commented on the legal and regulatory mechanism. Recently new Nepalese Company Act 2006 and the Banking and Financial Institution Act 2006 has came into force and has contained sufficient provision towards corporate governance but all the actor’s function has not been accepted well and having some others discrepancies and ambiguity on the acts which can hope of descending as good in future.

Tuesday, February 15, 2011

Case Study : While dealing with equally empowered senior managers!

#1. Do you think you need to follow different strategy while dealing with equally empowered senior managers? How would you deal with stagnant team the one in this case?

If I have been appointed as consultant, I will I would prefer to do following things first:

  1. Clarify what problem is? What the problem is not?
  2. I identify any commons goals, values, assumptions.
  3. I will doing experiments until I can find approach that’s gets through effectively.
  4. I will keep conversations with Division chiefs and other staffs on issues, not personalities.
  5. I will prefer to use simple wording to explain my position. And will practice my positions in advance until I know it well and can say effectively.
  6. I will rehearse positive interaction before the meeting.
  7. I will always keep my attitude positive
  8. I will be clear myself, what I want /need from the other person. I will distinguish between two.
  9. I will carefully watch out for old attitudes that are interfering with my current efforts.
  10. I will make sure my body and verbal language are in agreement.
  11. I will always try not to be side tracked into irrelevant arguments.
  12. In case of difficult issue I will try to address in private.
  13. I never take their dislike ness in personally.
  14. I know walls also have mouth and ears; I will not discuss them with other people.
  15. I will set limit on what I will put up with and stick to it.

With all above mentioned techniques, I try to reach consensus through Collaboration approach. As read carefully the biggest problem in this organization is:

  1. Lack of communication between division heads and staffs.
  2. Every division knows their job better, but never tried to what is going in other divisions.
  3. All division do not have common goal, which is very essential to understand each other.
  4. I found there are ego/personality clashes, which is very bad for the organization interest.

I will suggest following Solutions as consultant:

1. Director and Dy Director must take lead making daily or weekly meeting with the division heads. So that each division heads must know each other and share the experiences of their division and future planning with each others.
2. Every division head must conduct at weekly meeting with all staffs member of their division and share the plans and programs of the division and concern issues of the division rose in departmental meeting.
3. Standard Operating Procedure (SOP) of department must drafted and implemented for the clear responsibility, accountability and working procedure.
4. Director and Dy Director must be responsible for implementing and monitoring SOP in all divisions.
5. Resource allocation and developmental opportunities must equally distribute to all division, according to the needs and with proper justification.
6. Monitoring and feedback system must adopted strongly according To the SOP.
7. Grievances handing of the organization staff must be on time, so that the morale and productivity are not affected.
8. Director and Dy director must be the role models for whole department.

Do you think that avoiding is an appropriate strategy for the divisional heads to solve their difference? Explain.

I do not thing avoiding is good strategy for the divisional heads to solve their differences. Avoiding is just not paying attention to the conflict and not taking any action to resolve it. It encourages impunity in the organization and slowly it will ruin the morale and productivity of the department. Even in this case of study division heads tried to best to solve this problem just ignoring or avoiding it, but they could get positive result. At last problem reached to Director and his Deputy level. So usually this approach tends to worsen the conflict over time.

Saturday, February 12, 2011

Introduction to Gender differences

Gender differences are mostly determined by social behaviors. Men and women are different; therefore, they are treated differently by society. The gaps become more apparent as we grow up, in the way children are raised today. Later, boys and girls start to think and speak differently, because of the influence of the environment. Finally, the impact of society shapes the behavior of individuals, widening the gap between both sexes.
            The gender differences start to appear early in the way the children are raised. Those can be as simple as dressing girls in pink as opposed to boys wearing blue. The parents teach girls to be nice and gentle, when boys are taught to be tough and never to cry. The differences deepen, when as teenagers, girls try to be the most popular among friends, using their appearance to attract attention. Boys want to be popular too. But they do not try to be nice to each other or mingle with other boys. They try to imitate adults. To be popular, they need to show leadership and toughness. They get involved in contact sports and anything that shapes their endurance. Parents and school are the most influential tools in shaping young lives in which differences between genders broaden in time.

            One of the differences existing between genders and created by society is the way men and women speak. From the youngest age, the girls are taught to “temper what they say so as not to sound too aggressive” (Tannen, Women and men talking on the job, 442). Because of that, their self confidence is not as strong as men. Girls do not think of themselves as strong leaders, simply because they are taught to think this way. In contrary, men are taught to speak their mind, not to be shy and fight the obstacles. They think of themselves as born leaders, therefore, they are more prepared to speak firmly, which gives an “impression of confidence” (Tannen, 445). That firm and confident way of speaking give men the advantage over women in the current business world.

            Men and women behave differently, because society demands it. The effects of that are easy to observe in the current and aggressive business world. Women tend to “phrase their ideas as suggestions rather then orders” (Tannen, 444). They do not want to be perceived as bossy, because they want to be likable. They use their feelings in every aspect of life, whereas men can easily separate feelings from business. The impression of power and superiority is highly admirable among men. They are expected to “give orders” (Tannen, 445) and push others around. As oppose to women, they do not need to be likable. Such a behavior would be perceived as weakness, a lack of leadership. The society and stereotypes demand from men to be strong and aggressive. The demand of society toward men and women are different, which create two different ways of behavior.

It is claimed that differences between genders are the result of surrounding society. From an early age, boys and girls are treated differently by their parents. The influence of the environment can also be observed in the way boys and girls think and speak when they become teenagers. As they become adults, the impact of society on the behavioral differences becomes vivid and result in widening the gap between both genders.

Wednesday, February 9, 2011

What we understand by Country Risk Analysis?

Country risk analysis (CRA) attempts to identify imbalances that increase the risk of a shortfall in the expected return of a cross-border investment. This paper describes the general process used to create risk measures and discusses some of the weaknesses of this process. It then examines the degree of association of six measures and analyzes the ability of these measures to predict returns for a manufacturing investment. The paper concludes that company analysts may improve the performance of risk measures available from commercial services by adjusting risk measurement to fit the company's specific type of foreign direct investment.
All business transactions involve some degree of risk. When business transactions occur across international borders, they carry additional risks not present in domestic transactions. These additional risks, called country risks, typically include risks arising from a variety of national differences in economic structures, policies, socio-political institutions, geography, and currencies. Country risk analysis (CRA) attempts to identify the potential for these risks to decrease the expected return of a cross-border investment.
Risk" implies that an analyst can identify a well-defined event drawn from a large sample of observations. A large sample contains enough observations to develop a statistical function amenable to probability analysis. An event that lacks these requirements moves toward uncertainty on the continuum between pure risk and pure uncertainty. For example, the probability of death from an auto accident classifies as a risk; the probability of death from a nuclear meltdown falls into uncertainty, given a lack of nuclear meltdown observations. Many of the individual events investigated by country risk analysis fall closer to uncertainties than well-defined statistical risks. This forces analysts to construct risk measures from theoretical or judgmental, rather than probabilistic, foundations.
Uncertainty makes CRA more similar to a soft art than a hard science. Analysts deal with the soft nature of CRA in different ways, which can result in widely varying views of the risk level of a country. For this reason, users of risk measures developed from commercial country-risk services must understand analysts' construction methods if they wish to analyze a company investment risk appropriately. As demonstrated in the sections below, company analysts should be able to improve upon outside measures by adapting risk systems to their specific company investments.
Theory vs. Practice
Country risk analysis rests on the fundamental premise that growing imbalances in economic, social, or political factors increase the risk of a shortfall in the expected return on an investment. Imbalances in a specific risk factor map to one or more risk categories. Mapping all the factors at the appropriate level of influence creates an overall assessment of investment risk. The mapping structure differs for each type of investment, so an imbalance in a given factor produces different risks for different investments.
This fundamental premise provides a simple theoretical underpinning to CRA. Unfortunately, no comprehensive country risk theory exists to guide the mapping process.  In practice, most country-risk services create risk measures using an eclectic mix of economic or sociopolitical indicators based on selection criteria arising from their analysts' experiences and judgment. The services usually combine a variety of factors representing actual and potential imbalances into a comprehensive risk assessment that applies to a broad investment category. Most CRA literature emphasizes a number of common points, then slips into a detailed discussion of ways the respective authors enumerate risk for various investments. The best authors emphasize the necessity to adapt their analyses for a specific investment decision given the judgmental nature of their methods.
Country Risk Categories and Measurements
Analysts have tended to separate country risk into the six main categories of risk shown below. Many of these categories overlap each other, given the interrelationship of the domestic economy with the political system and with the international community. Even though many risk analysts may not agree completely with this list, these six concepts tend to show up in risk ratings from most services.
I. Economic Risk
II. Transfer Risk
III. Exchange Rate Risk
IV. Location or Neighborhood Risk
V. Sovereign Risk
VI. Political Risk
Economic Risk is the significant change in the economic structure or growth rate that produces a major change in the expected return of an investment. Risk arises from the potential for detrimental changes in fundamental economic policy goals (fiscal, monetary, international, or wealth distribution or creation) or a significant change in a country's comparative advantage (e.g., resource depletion, industry decline, demographic shift, etc.). Economic risk often overlaps with political risk in some measurement systems since both deals with policy.
Economic risk measures include traditional measures of fiscal and monetary policy, such as the size and composition of government expenditures, tax policy, the government's debt situation, and monetary policy and financial maturity. For longer-term investments, measures focus on long-run growth factors, the degree of openness of the economy, and institutional factors that might affect wealth creation.

Transfer Risk is the risk arising from a decision by a foreign government to restrict capital movements. Restrictions could make it difficult to repatriate profits, dividends, or capital. Because a government can change capital-movement rules at any time, transfer risk applies to all types of investments. It usually is analyzed as a function of a country's ability to earn foreign currency, with the implication that difficulty earning foreign currency increases the probability that some form of capital controls can emerge. Quantifying the risk remains difficult because the decision to restrict capital may be a purely political response to another problem. For example, Malaysia's decision to impose capital controls and fix the exchange rate in the midst of the Asian currency crisis was a political solution to an exchange-rate problem. Quantitative measures typically used to assess transfer risk provided little guidance to predict Malaysia's actions.

Transfer risk measures typically include the ratio of debt service payments to exports or to exports plus net foreign direct investment, the amount and structure of foreign debt relative to income, foreign currency reserves divided by various import categories, and measures related to the current account status. Trends in these quantitative measures reveal potential imbalances that could lead a country to restrict certain types of capital flows. For example, a growing current account deficit as a percent of GDP implies an ever-greater need for foreign exchange to cover that deficit. The risk of a transfer problem increases if no offsetting changes develop in the capital account.
Exchange Risk is an unexpected adverse movement in the exchange rate. Exchange risk includes an unexpected change in currency regime such as a change from a fixed to a floating exchange rate. Economic theory guides exchange rate risk analysis over longer periods of time (more than one to two years). Short-term pressures, while influenced by economic fundamentals, tend to be driven by currency trading momentum best assessed by currency traders. In the short run, risk for many currencies can be eliminated at an acceptable cost through various hedging mechanisms and futures arrangements. Currency hedging becomes impractical over the life of the plant or similar direct investment, so exchange risk rises unless natural hedges (alignment of revenues and costs in the same currency) can be developed.
Many of the quantitative measures used to identify transfer risk also identify exchange rate risk since a sharp depreciation of the currency can reduce some of the imbalances that lead to increased transfer risk. A country's exchange rate policy may help isolate exchange risk. Managed floats, where the government attempts to control the currency in a narrow trading range, tend to possess higher risk than fixed or currency board systems. Floating exchange rate systems generally sustain the lowest risk of producing an unexpected adverse exchange movement. The degree of over- or under-valuation of a currency also can help isolate exchange rate risk.
Location or Neighborhood Risk includes spillover effects caused by problems in a region, in a country's trading partner, or in countries with similar perceived characteristics. While similar country characteristics may suggest susceptibility to contagion (Latin countries in the 1980s, the Asian contagion in 1997-1998), this category provides analysts with one of the more difficult risk assessment problems.
Geographic position provides the simplest measure of location risk. Trading partners, international trading alliances (such as Mercosur, NAFTA, and EU), size, borders, and distance from economically or politically important countries or regions can also help define location risk.
Sovereign Risk concerns whether a government will be unwilling or unable to meet its loan obligations, or is likely to renege on loans it guarantees. Sovereign risk can relate to transfer risk in that a government may run out of foreign exchange due to unfavorable developments in its balance of payments. It also relates to political risk in that a government may decide not to honor its commitments for political reasons. The CRA literature designates sovereign risk as a separate category because a private lender faces a unique risk in dealing with a sovereign government. Should the government decide not to meet its obligations, the private lender realistically cannot sue the foreign government without its permission.
Sovereign-risk measures of a government's ability to pay are similar to transfer-risk measures. Measures of willingness to pay require an assessment of the history of a government's repayment performance, an analysis of the potential costs to the borrowing government of debt repudiation, and a study of the potential for debt rescheduling by consortiums of private lenders or international institutions. The international setting may further complicate sovereign risk. In a recent example, IMF guarantees to Brazil in late 1998 were designed to stop the spread of an international financial crisis. Had Brazil's imbalances developed before the Asian and Russian financial crises, Brazil probably would not have received the same level of support, and sovereign risk would have been higher.
Political Risk concerns risk of a change in political institutions stemming from a change in government control, social fabric, or other no economic factor. This category covers the potential for internal and external conflicts, expropriation risk and traditional political analysis. Risk assessment requires analysis of many factors, including the relationships of various groups in a country, the decision-making process in the government, and the history of the country. Insurance exists for some political risks, obtainable from a number of government agencies (such as the Overseas Private Investment Corporation in the United States) and international organizations (such as the World Bank's Multilateral Investment Guarantee Agency).
Few quantitative measures exist to help assess political risk. Measurement approaches range from various classification methods (such as type of political structure, range and diversity of ethnic structure, civil or external strife incidents), to surveys or analyses by political experts. Most services tend to use country experts who grade or rank multiple socio-political factors and produce a written analysis to accompany their grades or scales. Company analysts may also develop political risk estimates for their business through discussions with local country agents or visits to other companies operating similar businesses in the country. In many risk systems, analysts reduce political risk to some type of index or relative measure. Unfortunately, little theoretical guidance exists to help quantify political risk, so many "systems" prove difficult to replicate over time as various socio-political events ascend or decline in importance in the view of the individual analyst.
Country risk analysis in the 197Os and 1980s tended to focus on the risk a private lender such as a bank incurred when it made a hard currency loan to a sovereign government outside its home country. Risks were segmented to identify potential shortfalls in either the foreign currency value of the investment or in the investor's home currency (returns hold up in local currency, but decline when measured in the investor's own currency). Quantitative risk analysis generally focused on factors related to a country's ability to earn foreign currency to repay the debt. Qualitative analysis attempted to ascertain a country's willingness to repay the debt. This type of analysis tended to focus on the sovereign, transfer, and short-term exchange rate risk categories. With minor adjustments, this analytical approach also was used to assess risk in short-term investments in foreign private financial assets.
A multinational enterprise (MNE) that builds a plant in a foreign country faces different risks than a bank lending to a foreign government. The MNE must consider a longer time horizon and risks from a much broader spectrum of country characteristics. Some categories pertinent to a plant investment contain a much higher degree of risk simply because the MNE remains exposed to risk for a much longer period of time.

Tuesday, February 8, 2011

Managerial Accounting

With the continuing development of business processes, whether the change in various manufacturing processes, or the automation of most business activities, the cost accounting procedures that companies use to calculate for the unit cost of an individual product, service or activity have also become outdated. From a managerial accounting perspective, the changes in the economy, in industries and individual firms alike, must be supported by the firm's accounting and control infrastructure (Bromwich & Bhimani 1994). Accounting is, after all, a financial model of business. When changes occur in the business, accounting should change to reflect them. Managers of companies that fail to make appropriate modifications in their accounting systems will find they have inaccurate product/service/activity cost figures and lack data for making decisions. They may lose their competitive edge because they do not have the necessary information for operating in the constantly changing business environment. Systems for accounting for costs date back several centuries. Cheatham & Cheatham pointed out that cost systems were of greater concern to early merchants and craftsmen than what is now called financial accounting (1993). When there were no income taxes or regulatory government agencies to demand the preparation of financial statements, all accounting were managerial accounting -- accounting done for management to meet its information needs. One basic difficulty in costing is that an individual product, service or activity does not drive all the company expenses. Even within a factory, there are many questionable costs, not directly driven by the type, number or volume of products. In addition, there are costs that are driven by substantial material vendors and customers. This paper presents suggestions on how to go about calculating the unit cost of an individual product, service or activity, in par with the marked changes in the field of management accounting to maximise the benefits that effective costing has to offer.

At the turn of the twentieth century, the most important dimension of management control was cost control. Innovations in management accounting such as activity-based costing, capacity cost management, balanced scorecard, and target costing have emerged and, to a limited extent, they have affected the design of management accounting systems in many enterprises (Gosselin 1997; Guilding, Cravens & Tayles 2000). In all cost accounting activities that help shape management accounting decisions made by the company, identification of the components of the cost being calculated should be listed to account for all that matters to the computation. In production, such cost items as manpower, raw materials, electricity, transport, rent, water, machinery, equipment, tools, etc. should be included in the computation, in order to come up with the cost as close as the amount of resources that the firm has spent. In the management area, manpower and the entrepreneur’s salary form part of costing, as well as other costs expended for making the business run. Most companies view cost per unit as ‘labour per unit’. This can be very deceptive when each unit consumes its share of overhead, maintenance, machine wear, raw material, etc. In selling and finance, cost items as publicity, promotion, commissions, interests, etc. should form part of the costing activity. In all these business aspects, there are two kinds of mistakes that could be made in accounting costs: cost measures that should be ignored have been included; or, ignoring costs that should be included. As a rule, costs that will not vary as a result of a decision should be ignored; and all costs that will vary as a result of a decision should be included.
The advent of technology in the manufacturing industry, the recently formulated taxation policies, surfacing novel lines of expertise, new business processes, growing number of participants in the supply chain and the ever-changing rules, improved accounting systems and regulations of global trade are some of the more immediate additions that should be considered in the computation of the unit cost of an individual product, service or activity. Atrill & McLaney 1997 also observed that changes have taken place in the industry between the time the system was developed and the 1990s: (1) from direct labour-intensive and direct labour-paced to capital-intensive and machine-paced production; (2) from a low level of overheads to a high level overheads relative to direct costs; and (3) from a relatively uncompetitive to a highly competitive international market. Fixed and variable costs are affected by these marked developments in the business field, and it is only through an initial correct identification of the fixed and variable costs that a calculation of the said cost per unit of each of its products, services and activities commence.

            Job costing, as an integral part of the cost accounting system, should include the preparation of source documents (materials used to accumulate the costs for an individual job) such as the job cost sheet, entering of the information in a journal (book of initial entry) and the determination of overhead rates. According to Khan (2000), the simplest way to calculate a predetermined overhead cost is to divide the estimated overhead for, say an entire year, by an appropriate base, such as direct material hours, direct labor hours, etc. While the method is simple, there is a problem with it in that if the agency budget constitutes an unusually large (or small) fraction of the total budget, it may overestimate (or underestimate) the overhead allocation. Also, when money is frequently transferred between funds, it may misrepresent the overhead allocation by the amount of the transfer. The alternative is to remove the effects of interfund transfers before the method can be used. This costing facet should then be integrated in the computation of the cost per unit of a product, in order to more closely have an estimate of how an individual product, service or activity made use of a particular job in the firm. As there is a marked increase in the specialisation of jobs and a different rate apply to them, it is important that they, too, be included in job costing, noting the difference between the them and standard work performed for a product, a service or an activity, and taking them into consideration when making costing decisions. In process costing, an equally vital aspect of cost accounting, the weighted average method or the first-in first out (FIFO) approach can be used to determine number of equivalent units in an inventory. Once the number of equivalent units in an inventory is known, the computation of the cost of total equivalent units as well as the cost per equivalent unit for a department can ensue, more known as the cost analysis schedule. The procedures for calculating these costs are quite simple: the former is obtained by simply adding all the costs in an inventory, whereas the latter is obtained by dividing the total cost by the number of equivalent units (Khan 2000). This costing phase should also be integrated in unit costing, as the product, service or activity is, in one way or another, involved in various business processes. The drawback to including process costing in calculating for unit cost is that it complicates the whole process of unit cot computation, since a separate set of schedules will have to be prepared for each business department and the corresponding work in process will have to be reconciled in the final account. As various high technology processes have cropped up over time, adjustments for previous process costing computations should be made. As computation of the cots per unit depends on the nature of the business that one is engaged in, there are different items that need to be considered in its calculation. As such, the process costs and job costs are two integral parts of the computation.

Management accounting systems are designed to supply information to internal decision makers of a given organization, to facilitate their decision making, to motivate their actions and behaviour in a desirable direction, and to promote the efficiency of the organisation (Riahi-Belkaoui 1992). The cost accounting system of a firm largely helps shape the decisions made by management accountants. An exposure to either a proliferation of courses in the computer, quantitative, and behavioural sciences, or to an integrated multidisciplinary approach would be supportive to advocating up-to-date cost accounting procedures to cope up with the demands of the ever-changing business environment. As Walker (1999: 18) claimed that “In fact there is no single correct cost figure”. Product costs are always calculated from the financial transaction data of the cost centres of the organization. Several methods exist, and each company uses a method of its own. It should therefore be noted that a host of possible cost accounting systems can be designed from the various combinations of the already existing cost accounting systems, although not all of the alternatives are compatible. Selecting one part from each category should provide a basis for developing an operational definition of a specific cost accounting system.

            During the past decade cost accounting has come under vigorous attack on the grounds that traditional approaches to allocating costs are fraught with considerable arbitrariness and contain substantial errors which can lead to misguided decisions dealing with such matters as pricing, outsourcing, capacity planning, and profitability analysis for various product lines and other segments of business activity. The above suggestions for cost per unit calculations would be useful for decision-making processes to be made by the administration as a whole or the accounting department in itself. Recognising that there are limitations to such method, it is best that cost accounting systems be combined with one or the other in order to produce the most fitting for the organisa