Module 1 & 2
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MASEEI (AGBS Chd)
Transcript of Module 1 & 2
AMITY GLOBALBUSINESS SCHOOL
The Logic of Business Has Not Changed
Evolution of human needs…
Transaction to Selling to Marketing
And now from Marketing to Relationships and Partnerships!
The emergence of institutions of business…
The ability to customise solutions…
Increased complexity and competitiveness…
Enhanced coupling of national economies with each other…
Technology…… Movement of goods and people…. Movement of Information!
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Some Issues That Have Emerged
To be competitive globally even if you may be acting locally
To adapt to compressed life cycles…
To harvest and use business intelligence…
To remain proactive…
A concern for the environment……
A concern for the society…..
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The changes in the dynamics of business and the challenges that have emerged are not always
manageable by all business organizations internally
In most cases, it is appreciated that it not only may not be possible but it may also not be worthwhile to try!
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You are brilliant cook!! And You are getting married!!!
Why Outsource??!??!!
What would you choose…….
Cook yourself for a 1000 people and impress them…
Or engage a catering outfit????
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So…. Organizations have begun “outsourcing”
that either
they are unable to do……
or in some cases they have chosen to do but not
themselves
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What Could be the Reasons??
SMEs may not have managerial resources and over 95% businesses in India are SMEs
Outsourcing for cost cutting
Outsourcing for risk reduction
Outsourcing to focus on core and critical activities
Even in case of many large organizations, the outsourcing decision is an integral part of measures to increase competitiveness and achieve advantage
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The Top Three Reasons
Cost
Focus
Access to global expertise
Please refer to the reading assignment sent on Feb 3
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Outsourcing
The strategic use of outside resources
to perform activities traditionally handled by
internal staff and resources
A management strategy by which an organization outsources major, non-core functions to
specialized, efficient service providers
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Core Vs Non Core FunctionsCore Functions: The functions the company was created to doNon Core Functions: Those functions that are “peripheral” in nature and a company “has to do” to ensure success in the marketTry to differentiate between core and non core functions for the following examples:
AirtelFordMicrosoftA factory in Industrial area Mohali manufacturing auto componentsAGBS Chandigarh
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The Need for Customer Solution Orientation
Customer Solution orientation is a business moving its focus from the products to the customer
The increased customer centricity has made it mandatory for every organization to customer solutions providers
But most still offer bundles of standardized products or services solutionsThis trend is driven by both the customers and the suppliers, as well as by more general social and industrial changes
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The Big 8 (Till 1987)
Arthur AndersenArthur Young & Co.Coopers & Lybrand (until 1973 Cooper Brothers in the UK and Lybrand, Ross Bros., & Montgomery in the US)
Ernst & Whinney (until 1979 Ernst & Ernst in the US and Whinney Murray in the UK)
Deloitte Haskins & Sells (until 1978 Haskins & Sells in the US and Deloitte & Co. in the UK)
Peat Marwick Mitchell (later Peat Marwick, then KPMG)
Price WaterhouseTouche Ross
Source: Wikipedia
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The Big 6 (1989 – 1998)
Big 8 became the Big 6 in 1989 when Ernst &
Whinney merged with Arthur Young to
form Ernst & Young in June, and Deloitte,
Haskins & Sells merged with Touche Ross to
form Deloitte & Touche in August
Source: Wikipedia
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Consulting Vs. CounselingWe know consulting….. “To Consult”….. Whom….. Someone who we think can give advise that will work!
Consultancy can be about strategy, processes, hardware, software….
Counseling is….. “Professional guidance in resolving personal conflicts and emotional problems”
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According to dictionary.com….
Counsel
Advice, opinion or instruction
given in directing the
judgment or conduct of
another
ConsultationThe act of consulting or conference
A meeting for deliberation, discussion or a decision
Does it (it should) tell you that counseling is done to improve the productivity or
morale of the human resources
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Performance Counseling
The process of improving employee performance and
productivity by providing the employee with feedback
regarding areas where he or she is doing well and areas that
may require improvement
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The Definition Should Tell You….
Performance counseling & personal counseling are different…..
Performance counseling is a “step” in a “process” to keep the human resources fine tuned and performing optimally
Performance counseling is based on systematic performance evaluation and not on subjective assessments
It is then obvious that to be able to use performance counseling, companies need to have systematic HR policies & practices…… Think of some….
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Accountability in ConsultingActivity–Based Consulting
No business need for the consulting interventionNo assessment of performance issuesNo specific, measurable objectives for implementation and business impactNo effort to prepare stakeholders/participants to achieve resultsNo effort to prepare the work environment to support implementation
Result-Based ConsultingIntervention linked to specific business needsAssessment of performance effectivenessSpecific objectives for implementation and business impactResults/expectations communicated to stakeholders/participantsEnvironment prepared to support implementation
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Accountability in ConsultingActivity–Based Consulting
No efforts to build partnerships with key managers
No measurement of results or cost benefit analysis
Planning and reporting on consulting intervention is focused on input
Result-Based Consulting
Partnerships established with key managers and clients
Measurement of results and cost-benefit analysis
Planning and reporting on consulting interventions are focused on output
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Consulting ProposalsIf we are talking of writing proposals, we can assume that we are NOT talking of how a Deloitte or a McKinsey would write proposals
Before proposals, let us discuss the application of SPANCO model in consulting….
How do I as a consultant identify, suspects, qualify the prospects, how do I approach them, do you negotiate, how are consulting deals closed, how do you maintain an ongoing relationship?
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Writing Consulting ProposalsFor Institutions/Organizations
They will give you the format
They will provide background info
They will expect a well “researched” proposal
Deliverables, Timelines and Costing are key
For SMEs/Individuals
Every proposal will be tailor made, so no pre determined formats“Explain” and “clarify”Don’t sound patronising!Deliverables & costing are obviously imp. but…Stress ROI! Most don’t, but make effort to show ROI or how you can provide value
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Business Problem Solving – The Process1. Define and Identify the Problem
2. Analyze the Problem
3. Identifying Possible Solutions
4. Selecting the Best Solutions
5. Evaluating Solutions
6. Develop an Action Plan
7. Implement the Solution
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But When Does a Problem Become So?
A problem becomes known when a discrepancy is observed between the way things are and the way things ought to be. Problems can be identified through:
Comparative/benchmarking studies
Performance reporting - assessment of current performance against goals and objectives
SWOT Analysis – assessment of strengths, weaknesses, opportunities, and threats
Complaints
Surveys
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Step 1 – Define & Identify the Problem Go beyond the obvious, try to differentiate between problems and their “noticed effects”
“Jumping to Conclusions” Vs. “Digging for Facts”
“Hard Data”….. Sales data, financial statements, profitability data etc…. Hard facts…
“Soft Data” …… Feelings, hearsay, grapevine, opinions, conflicts, behaviour etc….
Recall all you studied in Research Methods, Market Research etc…. And use the relevant tools.
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Step 1 – Define & Identify the Problem Once the hard and soft data is in hand, sit with the client and brainstorm till you are able to:
A. Develop a Problem Statement: A statement that clearly describes the current condition your group wishes to change
B. State the Goal: Stating the goals achieves congruence between your thought processes and the client’s. So effort is focussed
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But it is Not That Simple!!!
Analytical Thinking
in Addition to
Domain Knowledge
Will be Needed!
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What is Scientific Thinking?
1. Talk to him, discuss with the teacher and find out what could be wrong and ask him to practice more.
2. Take him to an astrologer and make him wear the gem the astrologer suggests.
3. Take him to a temple, get “Jhaad Phoonk” done and to be doubly sure….. Maybe sacrifice a goat.
My Son is Unable to Score in His Maths Exams….. What do I do?
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The Scientific Approach to Thinking
Problem
Hypothesis
FactsAnalysis
Solution
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Step 1 – Ask YourselfIs the problem stated objectively using facts?
Is the scope of the problem limited enough for you to handle?
Will all who read it understand the same meaning of the problem?
Has the "desired state" been described in measurable terms?
Do you have a target date identified?
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Step 1 – Caution!Listen to the client!
You may be right, but the customer is never wrong!
His business philosophy may not match yours but please remember….. “It is not your business!”
In meetings, be very careful how you present the “identified problems”…… You may have to make key people look bad!!
Make sure that you know who the boss is! In many Indian SMEs, it may not be obvious!
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Successful Completion of Step 1
is 90%
of the Work Done!
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Step 2 – Analyze the Problem
In your syllabus, this is written as, “-Finding Leading to Solution Development and Implementation”!!!
Please don’t assume!
Meet people up and down stream
Talk to people at all levels. Ask a lot of questions….
Formal meetings Vs. Informal meetings…..
More research may be (in fact will be) needed!
Once you have results of your result, repeat all the talking and asking questions!!
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Step 2 – Analyze the Problem… Ask…When was the problem first “recognised” or “felt”?
What are the causes of the problem?
What are the effects of the problem?
What are the symptoms of the problem?
How was the client dealing with the problem?
What were the clients limitations in dealing with the problem?
Did the client make any “error of judgment”?
How much freedom have you been given to solve the problem?
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Step 2 – Analyze the Problem… Thoughts…
Usually, in India at least hiring a consultant by an SME is a step taken late… Too late most of the times!!
They probably knew it, but were reluctant to change!
If the problem arose due to a lack of vision, they will find it difficult to see it when you present it to them too!
Can your “systematic”, “rational”, “cut and dried” solution be an answer to questions which involve a very large number of variables that cannot be predicted or controlled?
And what about intuition, gut instinct, risk taking, out of the box thinking? Can you do that with some one else’s business?
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Step 3: Identifying Possible Solutions
Find “optional solutions” than “the solution”
Shortlist solutions and arrive at a list of two or three most optimum solutions or the one that seems best….
Shortlist or finalize in close consultations with the client
The client should be on board the final stages of decision making so that the client understands the logic clearly and “owns the decision”
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Ask Before Finalizing a Solution….
Is the solution workable in relation to the problem?
Are there any limits that the solution presents?
When looking at the advantages and disadvantages, which are there more of?
Does the chosen idea live up to the standards of the decision criteria?
Are the facts and information gathered consistent with the proposed solution?
Will the solution cost stay within the client’s budget?
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Step 4: Develop an Action Plan
An action plan is a chart that lists the tasks that need to be done and identifies who will be responsible for each, when and what action is necessary, where to start, and how.
Divide the Solution Into Sequential Tasks
Develop Contingency Plans
List requirements, their sourcing and costing
Develop a Timeline
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Step 5: Implement the Solution
Are you presenting solutions only or implementing them too?
Control is the key. Develop monitoring systems and keep an eye on deviations.
Be flexible and keep strategy “responsive”
Keep the client in the loop at every stage
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Three Methods
Cost Based
Demand Based
Competition Based
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Issues in Pricing
Demand-BasedCost-Based
Com
petit
ion-
Bas
ed
PROBLEMS: 1. Costs difficult to trace 2. Labor more difficult to price than materials 3. Costs may not equal value
PROBLEMS: 1. Small firms may charge too little to be viable 2. Heterogeneity of services limits comparability 3. Prices may not reflect customer value
PROBLEMS: 1. Monetary price must be adjusted to reflect the value of non-monetary costs 2. Information on service costs less available to customers, hence price may not be a central factor
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What is “Value” for Your Client?
“Value is Low Price” “Value is EverythingI Want in a Service”
“Value is the Quality I Get for the Price I Pay”
“Value is All thatI Get for All that I Give”
Discounting Odd Pricing Penetration Pricing
Prestige Pricing Skimming Pricing
Value Pricing Market Segmentation Pricing
Price Framing Price Bundling Complementary Pricing Results-based Pricing
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As Consultancy Services are essentially
“services”, the principles of pricing
services will apply here
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Three Common Pricing Methods
Per Hour: Usually new or IT guys tend to prefer this…
Project Pricing: This method involves quoting a total figure for the whole budget and then arriving at a mutually agreed pattern of payments. Usually research projects, strategy based consultancy involving big clients etc…
Retainership: You are paid regularly and the client demands your services as and when a need arises…. CAs, Financial Planners, Media Consultants…..
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Calculating Your Hourly Rate
Profit + Labour Costs + Overhead = Daily Fee Revenue
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How Much Should I be Earning???
Decide upon a target in come per year…. Let us say Rs. 10 Lac
A typical consulting year will have around 300 workable days….. Subtract festivals, matches, vacations…. 250
So…….. You should be earning 1000000/250…………... Rs. 4000 a day!!!!
And that if that is what your consultancy earns, obviously, what is “yours” will be not more than 3 to 5 lac!! Why???
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Contingency PricingA client complained that he couldn’t afford a consultant’s hourly fee. ‘Instead of doing the job on a time and material basis, I’m willing to do it for a contingency fee,’ responded the consultant.‘What is contingency fee?’ asked the client.‘It’s very simple. If I don’t deliver what I promised, I’ll be left with no money at all,’ explained the consultant‘What if you do deliver what you promised?’ persisted the client.‘Then you’ll be left with no money at all,’ said the consultant.
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As Consultants You Will Do….
Consulting
Training
Research
What talents and skills will an MBA need to be good at these?
How can we develop such skills and talents?
What can an MBA student do to develop such skills and talents if the college is not doing anything that can help?
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Most Times You Will Be Doing…
Data Collection & Analysis
Documentation of the outcomes
Knowledge Transfer or Implementation
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What Will it take to be a Consultant?
Conceptual knowledge
Knowledge and exposure to analytical tools & approaches
Knowledge of various business scenarios
Knowledge of elements of the internal and external environment
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Skills…
People Skills
Scientific Thinking
Problem Solving
Diplomatic Nature
Marketing Skills
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