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8/8/2019 Business Reporting & Analysis,BBM(IB-5)
http://slidepdf.com/reader/full/business-reporting-analysisbbmib-5 1/128
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Introduction to Business
Reporting. ³ To manage a businesswell is to manage its
future; and to manage thefuture is to manageinformation´.
If you can¶t measure, youcan¶t manage´.
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Introduction to Business
Reporting. Present Market scenario:
Too many companies,
Too many products, Too many categories,
Too much of competition,
Business conditions volatile andunpredictable.
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Introduction to Business
Reporting. In view of this, management
needs to monitor larger business
environment.
By monitoring it, a company can
think of changing its businessstyle, business practices, if needbe.
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Importance of Information.
Management must learn about,
Changing consumer needs and
wants, Competitors initiatives,
New distribution channels,
New manufacturing processes,practices, systems.
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Importance of Information.
Management has devoted most of itsattention on,
Money, Materials,
Machines,
And, Men.
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Importance of Information.
Management has so farignored, critical resource
called, ³Information´.
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Importance of Information.
Issues related with information,
Information available is not of the
right kind. There is a lot of unwanted
information.
Information is suppressed. Information arrives too late.
Information is inaccurate.
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Management Information
System. Definition: ³It is a system
continuing and interacting structure
of people, equipment and proceduresto gather, sort, analyze, anddistribute pertinent, timely andaccurate information for the use of
decision makers to improve theirplanning, implementation andcontrol´.
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Environmental Appraisal
The environment of any organizationis ³the sum of all conditions,
events and influences thatsurround and affect it´
It is therefore crucial for anyorganization to understand the
environmental influences on itsbusiness.
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Characteristics of Environment.
It is complex.
It is dynamic.
It is multi-faceted.
It has a far-reaching impact.
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Various EnvironmentalComponents.
1) Market environment: Client¶s needs,preferences, perceptions, attitudes,values, buying behavior, satisfaction.
Product factors like demand, image,features, utility, design, life cycle, price,promotion, distribution, differentiationetc
Competitor factors like different types of competitors, nature of competition.
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Various EnvironmentalComponents.
Market environment:Competition will have most
immediate impact on consumergoods, FMCG in particular.
While on basic goods like steel,or capital goods like plant orequipment competition will havelesser impact.
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Various EnvironmentalComponents.
2) TechnologicalEnvironment:
Sources of technology.
Technological development,
R&D, cost of technology. Effects of technology onenvironment, human beings.
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Various EnvironmentalComponents.
2) Technological Environment:Technological changes shortens the ³product life cycles´.
Products become irrelevant fast.
E.g. color t.v. market,pharmaceutical products, consumer
durables etc. It also affects packaging, logistics
etc.
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Various EnvironmentalComponents.
3) Supplier environment:
Cost, availability, and continuity of
supply of raw material, components,parts.
Infrastructural support and ease of availability of the different factors of production.
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Various EnvironmentalComponents.
4) Economic environment:
The economic stage at which thecountry exists at a given point of time.
The economic structure adopted,capitalistic, socialistic or mixed.
Economic policies, industrial, fiscal. Per capita income, balance of
payments etc.
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Various EnvironmentalComponents.
4) Economic environment:
Major economic factors:
GDP
Income levels and distribution.
Business cycles/phases ( boom, recession,depression, recovery)
Price levels of goods ( inflation etc) Rate of interest on market borrowing.
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Various EnvironmentalComponents.
5) Regulatory environment:
Policies related licensing,
monopolies, FDI, Policies related to distribution and
pricing.
Policies related to sick industries,public sector, backward areas,consumer protection etc.
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Various EnvironmentalComponents. (Regulatory)
Government
Policy
Monetary
Policy
Fiscal
Policy
Physical
Policy
Bank
Rates
Credit
ControlsTaxes Subsidies
Investment
&
Production
Prices
&
Dist.
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Various EnvironmentalComponents.
6) Political environment:
The political system and its features,
ideological forces, coalitioncompulsions.
Political stability.
Political funding of elections. Government¶s role in business.
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Various EnvironmentalComponents.
6) Political environment: Politicalstability improves the businessenvironment.
Coalition govt. has its owncompulsions and limitations.
Progressive political philosophy canattract and boost business.
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Various EnvironmentalComponents.
7) Socio-cultural environment:
Demographics like population, itsdensity and distribution, agecomposition, inter state migration,income distribution etc.
Socio-cultural concerns like
environmental pollution,consumerism, corruption etc.
Family structure changes.
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Various EnvironmentalComponents.
Socio-cultural environment:Today most of the companies arefocusing their product & brands on
youth segment. Changes in the value system and
lifestyle greatly affect consumerbuying behavior.
Better exposure to information,consumers prefer MNC brands.
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Products and Cultures.
If company¶s fail to understandcultural implications, the chances
of their success is less.e.g. Cola drinks are taken with
snacks in the US, whereas they
are promoted as thirst quenchersin Asian markets.
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Products and cultures.
Orange juice is a breakfast drink inthe US, but the same product willhave to be promoted differently in
other countries if it is not a breakfastdrink.
In India tea or coffee is taken atbreakfast or anytime, but in Europecoffee is served after desserts.
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Products and cultures
Colors,Blue color is feminine in Holland
but regarded as masculine inSweden.
White is associated with sadness
inChina and Korea butconsidered peaceful in other
parts of the world.
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Products and cultures
Red is popular in communistcountries but many African
countries dislike red color.
Green is a favorite color in in the
Muslim world, but in Malaysia itis associated with illness.
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Products and cultures
Coca-cola which is referred asa global product ,realized that
in Japan it had to changeDiet- Coke to Coke-Lightwhen introduced, because
Japanese women do not liketo admit to dieting as it
implies sickness.
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Products and Cultures
Japanese consumers havestarted taking interest in
dishwashers, but have no roomin the kitchen.
To tackle this Mitsubishi and
Toto are making compactdesigns for this Japaneseproblem.
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Products and Cultures
Financial services are difficult tointroduce in Muslim countries ascharging interest is forbidden in the
religion. Japanese cosmetics companyShiseido was successful in the US only after the products were madeeasy-to-use like the Americanproducts.
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Various EnvironmentalComponents.
8) International environment:
Globalization process.
Global economic forces.
Global trade and commerce.
Global financial system.
Global markets and competitiveness.
Global communication
Global technology and quality systems.
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Business Analysis.
What needs to be
analyzed?
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Analysis of Industry andCompetition.
Why is it needed?
It is the basis of strategyformulation.
A firm can asses ³industryattractiveness.´
It can also asses its own strengths
compared to its other players.Helps a company to build its
competitive advantage.
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Analysis of Industry andCompetition.
Industry Attractiveness:
Different industries have different
opportunities, growth andprofitability.
Based on these factors a companycan make up its mind on theindustries it should enter.
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Analysis of Industry andCompetition.
Reasons for Analysis:
Understanding the environment
and its analysis.Helps in strategy formulation.
Industry attractiveness.
Helps organization in buildingcompetitive advantage.
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Analysis of Industry.
What needs to be analyzed?
Basic industry facts.
Industry environment.
Industry performance.
Industry practices.
Emerging trends in the industry.
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Competition Analysis.
Points of Analysis:
Firm¶s competitive position
within the industry.
5 forces shaping competition
in the industry.Profiling of each competitor.
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Competition Analysis.
5 Competitive Forces:
1)Industry Competitors:(Segment Rivalry)
Segment is unattractive if it alreadyhas many, aggressive competitors.
It is more unattractive if it is
declining.Result: price wars, advertising
wars, new product introductions.
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Competition Analysis.
2)Potential Entrants: (Threat of new entrants)
It means high entry barriers and lowexit barriers.
When both entry and exit barriers arelow firms can easily leave the industry.
If entry barriers are low and exitbarriers are high firms find it tough toget out of industry.
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Competition Analysis.
4)Buyers: (Bargaining power of buyers)
If buyers bargaining power is high,potential profitability can be low.
This happens when buyers becomemore concentrated.
Wal-Mart bargains very hard with itssuppliers.
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Competition Analysis.
5) Suppliers: (Threat of supplier¶sgrowing bargaining power.)
Asegment if unattractive, suppliersincrease price or reduce quantity.
Suppliers tend to become powerful, if they are organized or concentrated.
Supplier relations are thereforecrucial.
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Competition Analysis.
What to Analyze?
How are 5 forces shaping the
competition in the industry.History of competition in the
industry.
Rivalry and tussle for positionamong existing players.
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Competition Analysis.
Analysis of Competitionproper (Existing players)
Drawing up profiles of eachcompetitor.
Their size, capacity and
operation territory.Their products and services.
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Competition Analysis.
Their sales in each market, segmentand product line.
Their objectives, strategies andprograms.
Their strengths and weaknesses inproducts, costs, logistics, channel
management, sales force, marketingand sales promotion.
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Procedure of Business
Reporting.
Data is Everything«.
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Data Collection.
It is the heart of allreporting/research.
Researcher makes a plannedsearch for all relevant dataand gathers the entire datarequired for the assignment.
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Data Collection.
Sources of data:
1) Customer database: Is
the collection of comprehensive data aboutcustomers/prospects.
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Sources of Secondary data
2) Internet.
3) Yellow pages.
4) The Thomas register: Most powerful
industrial buying guide available inprint, CD form and also on the internet.
5) Industrial Product finder: Givesinformation about new industrialproducts, services.
6) Phone data service.( Tele data base.)
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Qualitative Research
Deals with qualitative aspects.
Used in exploratory research work.
Expresses and summarizes data non-
numerically. Tackles limited number of respondents.
Involves in-depth probe.
Involves no structured questioning.
Provides insights on marketing problems.
Final action cannot depend on findings.
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Quantitative research.
Deals with quantitative aspects.
Used more in conclusive research projects.
Expresses data numerically, quantitatively.
Tackles large number of respondents.
Involves limited probe with limitedquestions.
Provides insights on marketing problems. Final action can depend on its findings.
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Various Types of Reports.
Oral Report:
It is a presentation of information
through spoken words.Oral reports lack visual advantages.
There are no charts, no diagrams, nopictures in the presentation.
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Various Types of Reports.
Oral Report:
Oral presenter has to rely
only on volume and pauses.
Pace of presentation cannot
be controlled in oralpresentation.
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Oral Report:
Oral Report:
Presenter should know the audienceto whom he is reporting.
It should be properly planned.
Presenter should be clear about theobjectives of the report.
Information should be organized in alogical manner.
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Oral Report:
Oral Report:
Language suitability has to beconfirmed.
Reporting should be done in a simpleand continuing manner.
Visual aids should be used toincrease effectiveness.
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Oral Report:
Oral Report:
Hand outs of data may be
given to the audience.
Oral summary of written
report should cover all majorpoints.
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Written Reports.
Written reports are classified on afunctional basis.
Informational.
Examination.
Analytical or Problem solving.
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Written Reports.
Informational Reports:
Informational report is a factualreport on a particular subject.
It provides information but noanalysis.
It does not provide any conclusionstoo.
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Written Reports.
Examination Reports:
It provides facts on a particular
subject and also analyses thefacts.
Does not provide any
conclusions or recommendations.
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Written Reports.
Analytical Reports:
Analytical reports not only
presents and analyses data butalso draws conclusions andmakes recommendations if
required.It is the most comprehensive
report.
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Data Collection.
Data, is facts presented to theresearcher from the study¶senvironment.
Primary data, is data in its originalform, or first hand data
Secondary data, is the one which
has at one level of interpretationinserted between the event and itsrecording.
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Data Analysis.
Data analysis usually involvesreducing accumulated data to
a manageable size,developing summaries,looking for patterns, and
applying statisticaltechniques.
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Various Tools for DataAnalysis.
Management Methods:
Benchmarking:
Purpose:
To identify and fill gaps inperformance by putting in place bestpractice, thereby establishingsuperior performance.
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Various Tools for DataAnalysis.
When to use:
As a part of total quality
process when taking anindependent look atperformance by comparing itwith that of others.
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Various Tools for DataAnalysis.
How to use:
Internal Benchmarking:
This is the comparisonbetween functions,departments or a similar
organization as a means of improving performance.
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Various Tools for DataAnalysis.
Competitive Benchmarking:
This is a cross-comparison within oneindustry sector aimed at establishing
best practice through theidentification of gaps between yourown and your competitor¶sperformance.
Areas could be product, functional,departmental or entire company.
i l f
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Various Tools for DataAnalysis.
Comparative Benchmarking:
This is comparison across all
business sectors aimed atestablishing best practice
in all areas of operation.
i l f
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Various Tools for DataAnalysis.
Benefits of Benchmarking:
It helps in measurement, helps
to focus on the mission andto identify measures ortargets for key businessprocesses.
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SWOT Analysis.
S: Strengths.
W: Weaknesses.
O: Opportunities.
T: Threats
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Strength
It is an inherent capacitywhich an organization can
use to gain strategicadvantage.
E.g. superior r&d skills whichcan be used for new productdevelopment.
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Weakness
It is an inherent limitation orconstraint which creates
strategic disadvantage. E.g. over dependence on asingle product line, whichcould be risky in crisis.
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Opportunity
It is a favorable condition in theorganization¶s environment whichhelps it to consolidate and
strengthen its position.
E.g. growing demand for the
products or services that a companyprovides.
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Threat
It is unfavorable situation in theorganization¶s environment whichcreates risk for, or causes damage
to, the organization.
E.g. emergence of strong newcompetitors who are offering stiff
competition.
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SWOT Analysis
To carry out SWOT, one has toanswer the following questions.
STR ENGTHS:
What advantages do you have?
What are you good at?
What resources do you have?
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SWOT Analysis
Weaknesses:
What can you improve?
What are you bad at?
What should you avoid?
Opportunities:
What good opportunities you have?
What are the favorable trends youare seeing?
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SWOT Analysis
Threats:
What obstacles are you facing?
What is your competition doing? Are the relevant specifications for
your products, services changing?
Do you have resources problem? Can one of your weakness threaten
your business?
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BCG Matrix
BCG stands for Boston ConsultingGroup.
It provides a graphic representationfor an organization to examine thedifferent businesses on the basis of their relative market shares and
industry growth rates.
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BCG Matrix
Was developed by Bruce Henderson
in 1960.
Objective of BCG: Is to developbest product mix to maximize longterm earnings of company andproper allocation of resources among
these products.
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BCG Matrix
Product/SBU Differentiation:
Stars: Market leaders in a highgrowth market. Have a high marketshare and high market growth too.These are business units that growrapidly.
Strategy is to increase market share.
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BCG Matrix
Cash Cows: They produce a lot of cash for the company, have highmarket share but have a falling
growth rate.
If cash cows start losing marketshare the company has to pump
back money to maintain marketleadership.
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BCG Matrix
Dogs: Businesses with lowmarket share in a low growth
market.A
company should avoidand minimize no. of dogs.
Best strategy is to plan a
withdrawal or redefine thebusiness.
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BCG Matrix
Question Marks: These arebusinesses that operate in
high growth rate but have alow market share. It requiresa lot of money to keep up
with fast growing market.
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Deming Wheel.(PDCA)
Purpose:
A management concept suggestedby Deming to satisfy the qualityrequirements of the customers byusing the cycle:
Plan, Do, Check, Action.
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Deming Wheel.(PDCA)
When to use:
For the development of a
new product based on therequirements of the
customer.
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Deming Wheel.(PDCA)
How to use:
Develop teamwork between thecompany¶s various functions, i.e.product development,manufacturing, sales and marketresearch
Use PDCA.
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Deming Wheel.(PDCA)
DO:
When the cause of the
problem is detected, a qualityimprovement team will takethe responsibility for carrying
through the necessary stepsto solve the problem.
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Deming Wheel.(PDCA)
CHECK:
When proper steps have
been taken to solve theproblem, an investigation willtake place to check whether
the improvement process wassuccessful.
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Deming Wheel.(PDCA)
ACTION:
If the steps taken were
successful, the new and betterquality level should be accepted.
If steps taken were not
successful, then the PDCA cycleshould be repeated.
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Deming Wheel.(PDCA)
Benefits:
It will help to ensurethat the customer isalways fully satisfied.
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Gannt Charts.
Purpose: For planning the stepsnecessary to implement qualityimprovements.
When to use: When a team hasdecided upon a project and isplanning its implementation.
Gannt charts are useful for schedulingthe events necessary to complete theimprovement process.
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Gannt Charts.
How to use:
Break down the implementation planinto achievable tasks and activities.
Estimate how long each task willtake and then set a realisticcompletion date.
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Gannt Charts.
Break down the steps in a logicalsequence. Lines denote when a task is dueto start and end. The relationship over timebetween each task is immediately visible.
Assess each step individually, identifying, Any issue that stops you from completing a
started task.
Any department task that must completed
before another task has begun.
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Gannt Charts.
Benefits:
The visual representation of taskshelps identify the key issues andbrings into the open the stepsneeded for successful completion.
It also makes it easy to see when
deadlines slip and changes to theplan have to be made.
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Pareto Analysis.
Purpose: To separate the mostimportant causes of a problem fromthe many trivial.
Also to identify the most importantproblems for a team to work on.
It was first used by Wilfredo Pareto,
an Italian economist.
l i
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Pareto Analysis.
When to use: When a teamis analyzing data relating to a
problem to decide which arethe most important factors tobe tackled first to have the
most impact on the problem.
P A l i
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Pareto Analysis.
How to use: Pareto is alsocalled as 80:20 rule.
It means 80% of the problemsare caused by 20% of theactivities.
It is therefore important toconcentrate on these 20%activities.
P t A l i
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Pareto Analysis.
Steps involved are:
List the activities or causes in a tableand count the number of times each
occurs.Place these in descending order of
magnitude.
Calculate the total for the whole list.
Calculate the percentage of the totalthat each cause represents.
P t A l i
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Pareto Analysis.
Draw a Pareto diagram with thevertical axis showing the percentageand horizontal axis the activity or
cause.Cumulative curve can be drawn to
show cumulative percentages from
all causes.Interpret the results.
P t A l i
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Pareto Analysis.
Benefits:
When working in teams it can bedifficult to reach agreement whenpeople with different opinions wantto follow different courses of action.
Pareto analysis brings the facts to
the attention of all members of theteam to aid decision-making.
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Areas of Business
Reporting.Functional Reporting.
Research in various areas of
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Research in various areas of Marketing
Research on Consumer.
Research on Market/Demand.
Research on Product/Brand.
Research on Competition. Research on Distribution.
Research on Price.
Research on Advertising and Sales
promotion. Research on Sales methods.
C R h
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Consumer Research
What can be understood from it?
Consumer motivation research.
Drawing up of consumer profiles for products,categories and segments.
Consumer tastes and preferences and reactions. Shifts/changes in consumption patterns of
consumers.
CSI (Customer satisfaction index)
Customer dissatisfaction study.
Customers acceptance of innovations.
Study of influencers.
Market/Demand research
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Market/Demand research
What can be understood from it?
Market size study.
Market potential study.
Market profiles and characteristics.
Market segmentation study and analysis.
Market share analysis.
Sales forecasting.
Overall business trends.
P d t/B d R h
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Product/Brand Research
What is understood? Study on product lines, product design,
product features, product quality. Study of product usage. New product testing. New product concepts. Tracking of product, brand, its image and
competitive position.
Brand preferences across territories. Study on package design, material etc.
Di t ib ti h
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Distribution research
What is understood?
Study of different types of marketingintermediaries.
Dealer responsiveness to companyproducts and services.
Logistics and transportation.
Warehouse efficiency.
Distribution cost analysis.
P i h
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Price research
What is understood?
Pricing strategy of company.
Company¶s pricing incomparison with its rivals.
Segment wise price monitor.
Advertising and sales
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Advertising and salespromotion research
What is understood?
Media research.
Feedback on advertising campaigns.
Impact of advertisement and itseffectiveness.
Assessment and effectiveness of sales promotion campaigns.
S le ethod e e h
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Sales methods research
New sales programs.
Analysis of sales problems.
Analysis of sales territories.
Measurement of sales forceeffectiveness.
Study of sales compensation plans.
Review of sales targets/quotas. Sales forecasting and budgets.
Financial Reporting
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Financial Reporting.
Significance:
It gives a picture of financialactivities of business/company.
Helps in resource allocation.
Helps in analyzing and interpretingfinancial results.
Helps in understanding company¶sfinancial performance.
Financial Reporting
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Financial Reporting.
How is financial reportexpressed?
Balance Sheet: It reports the
following,
Company¶s assets.(What co. owns)
Liabilities.(What co.owes)
Ownership equity.
Financial Reporting
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Financial Reporting.
An Income Statement:
It lists the various revenues andexpenses that result from a business.
It can be studied on a quarterlybasis, half yearly basis for a specifictime.
It is also known as ³Profit & loss´ statement.
Financial Reporting
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Financial Reporting.
Retained Earning report: Itindicates changes in the company¶sretained earnings.
Cash Flow statement:
Indicates all sources of company¶smoney and its usage. For e.g.
revenues, long-term financing, saleof non-current assets etc.
Financial Reporting
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Financial Reporting.
Various Types:
Internal Reporting: Reports usedby managers for effective handling of
operations.
Internal financial reports aregenerated on a daily, weekly,
monthly basis.
Financial Reporting
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Financial Reporting.
Special Purpose Financialreporting: These reports aregenerated to meet the needs of
parties outside the organization. General Purpose reporting: These
reports are generated for the sake of
stakeholders, employees, etc.
Inter Company Analysis
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Inter Company Analysis.
³Inter company´ analysis is doneamongst the various companies of different groups.
When analysis is done amongst theinternal companies of the samegroup, it is referred as ³Intra-
Company´ analysis.
Inter Company Analysis
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Inter Company Analysis.
Purpose of Inter-companyanalysis:
To understand company¶s standing in
the market.To understand strengths and
weaknesses.
To understand company¶sperformance in comparison with itscompetitors.
Inter Company Analysis
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Inter Company Analysis.
Benefits:
To decide on future investments.
To decide on relevant businesses.
To decide on products.
To understand new businessmethods.
Creates cost consciousness.
Macro Economic Analysis
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Macro-Economic Analysis.
Definitions:
It is concerned with
aggregates like nationalincome, investments and
consumption.
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Macro-Economic Analysis
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Macro-Economic Analysis.
The main focus of macro-economicanalysis is on;
Gross Domestic Product.(GDP)
Inflation.
Unemployment.
Macroeconomics thus focuses on theoverall economic factors, tounderstand the economic condition.
Macro-Economic Analysis
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Macro-Economic Analysis.
Gross Domestic Product: (GDP)
In simple words, it means how muchgoods and services a nation
produces.While interpreting the GDP, inflation
has to be taken into account.
This gives an insight into recessions,slowdowns and booms in themarket/economy.
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Macro-Economic Analysis
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Macro-Economic Analysis.
Unemployment:
It tells how many jobs are createdfor the labor class.
Unemployment rate is low when theGDP is up.
Higher GDP means higher growth,
production and output, which meansmore labor and more jobs.
Macro-Economic Analysis
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Macro Economic Analysis.
Demand and Disposable Income:
Demand means how much isconsumer willing to buy.
Consumer¶s buying power dependson how much savings and hisdisposable income.
Disposable income is the income leftwith the consumer after all expenseshave been taken care of.