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Sunday, September 26, 2010

BCG Growth Share Matrix for Strategic Management

Boston Consulting Group developed this BCG Growth Share Matrix which helps you to determine what priorities should be given in your product portfolio of a product. BCG growth share matrix is a strategic management analytical tool. This provides guidance for all resource allocation among the company 
's business units.

BCG matrix has essentially two dimensions - relative market share and market growth rate. It can be used to classify product portfolio in four business types based on four graphic labels including Stars, Cash Cows, Dogs and Question Marks.

Stars: Leaders of the business comes in stars group. Products in this category are in high growth rate & high market share. It generates high cash flow and requires high cash input. Cash flow is flat in this category.

Cash Cows: Foundation of the business (stars of past years). Products in this category are in low growth rate & high market share. They generate high cash flow with low cash input requirements.

Dogs: Drags of the business. Products in this category are in low growth rate & low market share. They must be avoided whenever possible. Liquidate as many as possible.

Question Marks: Ambiguity of the business - Products in this category are in high growth rate & low market share. It requires high cash demand and low returns. Usually new products are comes in question marks. If you keep new products in question marks, you must ensure increase in market share and deliver cash.




Strategies to Pursue BCG Matrix

Build: The product market share needs to be increased to strengthen its position. Short-term earnings and profits are intentionally forfeited because it is hoped that the long-term earnings and profit will be much higher than this. This strategy is suited to Question Marks if they want to become stars.

Hold: The objective is to maintain the current market share position and this strategy is often used for Cash Cows so that they continue to generate large amounts of cash.

Harvest: Company tries to increase short-term cash flows as far as possible even at no profit and no loss. It is a strategy suited to weak Cash Cows or Cash Cows that are in a market with a limited future. Harvesting is also used for Question Marks where there is no possibility of turning them into Stars, and for Dogs.

Divest: This strategy is to rid the organization of the products that are drain on profits and to utilize these resources elsewhere in the business to make greater benefit. This strategy is typically used for Question Marks that will not become Stars and Dogs.

Sunday, September 19, 2010

5 tips to be an active listener

Listening is one of the most important skills you can have. How well you listen has a major impact on your job effectiveness, and on the quality of your relationships with others.

Why is it important to become a good listener?

  •  We listen to obtain information.
  •  We listen to understand.
  •  We listen for enjoyment.
  •  We listen to learn.

Unfortunately, most of us only remember somewhere between 25-50% of what we hear, which means when we're receiving directions or being presented with information, we probably aren't hearing the whole message.  So, boosting our listening skills is important.  By becoming better listeners, we can avoid conflict and misunderstandings and improve our productivity, as well as our ability to influence, persuade and negotiate.

There are 5 key elements of active listening. They help ensure that you hear the other person, and that the other person knows you are hearing what they are saying.

1.      Pay Attention.
Give the speaker your undivided attention and acknowledge what they're saying. Recognize that what is not said also speaks loudly.

  • Look at the speaker directly.
  • Shelve distracting thoughts. Don't mentally prepare a rebuttal.
  • Avoid being distracted by other things happening around you.
  • Listen" to the speaker's facial expressions and body language.
  •  Refrain from side conversations (when listening in a group setting).

2.      Show that You're Listening.
Use your own body language and gestures to convey your attention.

  • Put away electronic devices. They can often be used as a distraction and a way to tune out.  Using them is disrespectful to the speaker.
  •  Nod occasionally, and smile and use other facial expressions.
  • Note your posture and make sure it is open and inviting.  Crossed arms or "lazy" posture indicates that you're not engaged.
  • Encourage the speaker to continue.  Use small verbal cues, such as "yes," and "uh huh."

3.      Provide Feedback.
Our personal beliefs, assumptions and judgments can distort what we hear. As a listener, your role is to understand what is being said.

  • Reflect what has been said by paraphrasing. "What I‚m hearing is," and "Sounds like you are saying" are great ways to reflect back.
  • Ask questions to clarify certain points. "What do you mean when you say," and "Is this what you mean?"
  • Summarize the speaker's comments periodically.

4.      Defer Judgment.
Interrupting is a waste of time. It frustrates the speaker and limits full understanding of the message.

  • Allow the speaker to finish.
  • Don't interrupt with counter-arguments.

5.      Respond Appropriately.
Active listening is a model for respect and understanding. You are gaining information and perspective. You add nothing by attacking the speaker or otherwise putting him or her down.

  • Be candid, open, and honest in your response.
  • Assert your opinions respectfully.
  • Treat the other person as he or she would want to be treated.

How can active listening help you in your professional or personal life?  Share your comments.

Tuesday, September 14, 2010

Zen Stories II

Holy Man
 
Word spread across the countryside about the wise Holy Man who lived in a small house atop the mountain. A man from the village decided to make the long and difficult journey to visit him.
 

When he arrived at the house, he saw an old servant inside who greeting him at the door.
"I would like to see the wise Holy Man," he said to the servant.
 

The servant smiled and led him inside. As they walked through the house, the man from the village looked eagerly around the house, anticipating his encounter with the Holy Man.
Before he knew it, he had been led to the back door and escorted outside. He stopped and turned to the servant,
 

"But I want to see the Holy Man!"
 

"You already have," said the old man. "Everyone you may meet in life, even if they appear plain and insignificant... see each of them as a wise Holy Man. If you do this, then whatever problem you brought here today will be solved."


I Don't Know
 
The emperor, who was a devout Buddhist, invited a great Zen master to the Palace in order to ask him questions about Buddhism.
 

"What is the highest truth of the holy Buddhist doctrine?" the emperor inquired.
 

"Vast emptiness... and not a trace of holiness," the master replied.
 

"If there is no holiness," the emperor said, "then who or what are you?"
 

"I do not know," the master replied.


Is That So?
 
A beautiful girl in the village was pregnant. Her angry parents demanded to know who was the father. At first resistant to confess, the anxious and embarrassed girl finally pointed to Hakuin, the Zen master whom everyone previously revered for living such a pure life. When the outraged parents confronted Hakuin with their daughter's accusation, he simply replied "Is that so?"
 

When the child was born, the parents brought it to the Hakuin, who now was viewed as a pariah by the whole village. They demanded that he take care of the child since it was his responsibility. "Is that so?" Hakuin said calmly as he accepted the child.
 

For many months he took very good care of the child until the daughter could no longer withstand the lie she had told. She confessed that the real father was a young man in the village whom she had tried to protect. The parents immediately went to Hakuin to see if he would return the baby. With profuse apologies they explained what had happened. "Is that so?" Hakuin said as he handed them the child.


Nature's Beauty
 
A priest was in charge of the garden within a famous Zen temple. He had been given the job because he loved the flowers, shrubs, and trees. Next to the temple there was another, smaller temple where there lived a very old Zen master.
 

One day, when the priest was expecting some special guests, he took extra care in tending to the garden. He pulled the weeds, trimmed the shrubs, combed the moss, and spent a long time meticulously raking up and carefully arranging all the dry autumn leaves. As he worked, the old master watched him with interest from across the wall that separated the temples.
 

When he had finished, the priest stood back to admire his work. "Isn't it beautiful," he called out to the old master. "Yes," replied the old man, "but there is something missing. Help me over this wall and I'll put it right for you."
 

After hesitating, the priest lifted the old fellow over and set him down. Slowly, the master walked to the tree near the center of the garden, grabbed it by the trunk, and shook it. Leaves showered down all over the garden. "There," said the old man, "you can put me back now."




Also Read:



Zen Stories I

Zen Stories III
Zen Stories IV 

Sunday, September 12, 2010

Price Deflator / GDP Deflator

What is a price deflator ?



A deflator is used to convert data compiled over a period into prices prevailing at an earlier point in time.for example,the current price of a television can be deflated to what it would cost say three years ago.Essentially,a deflator removes the effect of inflation from data,making it comparable across periods.


What is the role of price deflator in GDP calculations ?


Prices are always in a state of flux,but generally move upwards over time.Therefore,a change in prices can give the impression of an increase in the gross domestic product (GDP -- a measure of national income) even without an increase in the quantity of goods and services produced by an economy.The impact of prices has to be removed to arrive at a true measure of economic growth.A deflator is used to restate output estimates at current prices into what they would be if calculated with reference to prices in an earlier year.This will give an idea of the real growth in the economy,minus the price effect.


Why is GDP deflator considered a good measure of inflation ?


The ratio between the GDP at current prices and GDP at constant prices gives an idea of the increase in prices of all goods and services with reference to the base year.In that sense it is a more comprehensive measure of inflation than price indices,which are based only on a limited basket of goods collected from select centres.However,the deflator comes with a lag,which limits its usefulness.


How is it used in India ?


In India a combination of WPI and CPI is used as deflator.The usage is dependent on the particular estimate we are trying to deflate.There will be different deflators for private consumption and government consumption.There is a difference in the value of quarterly and year-end deflators.This is due to the fact that prices are not constant.At the year-end we have an overall measure of WPI/CPI,which is used appropriately.This is why year-end estimates of GDP are more reliable than quarterly estimates.

Saturday, September 11, 2010

Tuesday, September 7, 2010

Effective Body Language

It begins even before you say your first word.

As the client or prospect walks toward you to shake hands, an opinion is already being formed.

And as you sit waiting to "sell" what you have to say, you are already being judged by your appearance, posture, smile or your nervous look.

We all want to appear confident and successful, but often forget how much body language affects how others perceive us.  It's important to raise our self-awareness and understand the nonverbal signals we send.  Often it's not what we say that influences others, but rather what we do not say.  The clues we send nonverbally suggest attitude, understanding, empathy, and ethics.

Janine Driver, in her book You Say More Than You Think: A 7-Day Plan for Using the New Body Language, cites the "7%-38%-55% Rule," coined by psychologists who claim that the impact we make on others depends on what we say (7%), how we say it (38%), and most importantly, by our body language (55%).

Whether sitting, standing, or making eye contact, we are always communicating nonverbally. If you've spoken to a group or participated in a meeting lately, you've undoubtedly noticed body language at play.  Here are 5 nonverbal messages to be aware of - for both speakers and participants.

As a speaker

Strong and effective body language can help establish an immediate rapport with an audience, signaling confidence in your message.

  • Vocal expression.  Does your voice project warmth, confidence and enthusiasm, or is it flat, strained and blocked?  A voice that has a lot of variety in tone, pitch, rate of speech, and expression is the opposite of a monotone, which quickly becomes boring.  A moderate rate, punctuated by appropriate pauses is also important. Mastering just these 2 aspects of the voice will infuse your delivery with a level of power and energy that will engage participants.
  • Posture.  If you are standing, certain positions can be viewed as aggressive. Arms crossed over chest may be viewed as defensive, and hands on hips translate to "You can't tell ME what to do." Keeping your hands stiffly by your side or stuck in your pockets can give the impression that you're insecure whether you are or not.  Stand in a comfortable body position that is not slouching in order to convey confidence and openness. Use slight hand gestures while speaking to suggest energy and emphasis.
  • Eye contact.  It's important to build rapport with your audience by looking at them. If it's a fairly small group (20 or fewer), you should try for contact with each person. In a large group, take in small groups. Aim for 3-5 seconds per contact.  If you don't look people in the eye, they may feel that you are insecure or aren't being truthful.
  • Movement.  Great speakers move around the room, pointing to a slide instead of reading from it, placing their hands on someone's shoulders instead of keeping their distance. Don't animate your slides - animate your body!  Standing in one spot makes you seem stiff and uninteresting.  Pacing back and forth shows your nervousness and insecurity.  Moving around comfortably conveys confidence and a sense of ease
  • Use your hands.  When you're speaking, let your hands support your message. Positive hand gestures convey confidence and strength.  Great speakers use hand gestures more than average. Watch charismatic speakers like Bill Clinton, Colin Powell, or Barack Obama. You'll notice that they punctuate nearly every sentence with a hand gesture. To support messages about things that are spiritual or uplifting, raise your hands shoulder level or above (note how a church minister will raise his hands in blessing).  Regular messages are supported by gestures at the middle level of your body, and gestures below the waist support unpleasant or less than desirable messages.

To get a sense of strong, positive body language, look back at memorable speakers you've heard. Which ones stand out? The ones who were more animated and entertaining, or the ones who just gave out information?

As a meeting participant or listener
You may only be listening, but your nonverbal signals can speak volumes.

  • Posture.  Sitting in a straight but relaxed position in a chair during a meeting signals that you're open and attentive, and leaning forward slightly indicates that you're interested and engaged with what's happening.  This quickly changes if you slouch in your chair or lean back with your hands behind your head.  Suddenly you're expressing disinterest, boredom or superiority.  Cross your arms in front of your chest and you may be expressing insecurity or a defensive position.
  • Eye contact.  Rolling the eyes, checking your watch, not focusing on a speaker or not making eye contact can all be viewed as workplace body language that says "I'd rather be doing something else," and expresses disinterest.
  • Active listening.  Smiling and nodding are appropriate workplace body language when talking with others. They are a form of active listening that says, "I get you, and I agree with you." (When you don't agree with someone it's usually not appropriate workplace body language to smile and nod, and it will seem like a contradiction.) Leaning forward or in more closely to a speaker also shows interest.
  • Don't fidget. There is nothing worse than people playing with their hair or jewelry, tugging at their clothes, clicking pen tops, tapping feet or unconsciously touching parts of the body.  This type of body language can express insecurity, boredom and disinterest, and immaturity.  Offer your speaker respect and don't distract others by fidgeting.
  • Put away the electronic devices.  Yes, we're a tech savvy world.  But tech devices have their place and it's not in a meeting.  Checking email and banging away on a laptop is disrespectful to the speaker and sends the signal that you're bored, not interested, or not fully engaged in the meeting.  If you must reply to an urgent email, do so at break or politely excuse yourself.

What types of body language have you observed, or what nonverbal signals do you want to work on?  Post your comments.

Monday, September 6, 2010

Thornton's 3-C Leadership Model

Numerous theories have been put forth about the many aspects of leadership such as motivation, alignment, and empowerment. However, it is not obvious how these pieces fit together into a coherent model, if they do at all. As such, leadership has a reputation of being an art that is practiced by the lucky few who possess certain talents.

In his 1999 book, Be The Leader, Make The Difference, consultant Paul B. Thornton proposed an integrating framework that takes these various leadership ideas and transforms them into a model that quickly can be studied, understood, and implemented by managers in order to develop an effective leadership style and better lead their organizations. The model is based on the premise that leaders exist because individuals need guidance, without which they do not always know what they can accomplish, what they should accomplish, or how to accomplish it. To this end, leaders can provide challenge, confidence, and coaching. Thornton calls this framework the 3-C Leadership Model and depicted it as shown below.


This three vertex diagram illustrates the balanced relationship among the three 3-Cs of leadership: presenting a challenge, building confidence, and providing coaching.

Present a Challenge

Of the 3 aspects of leadership, challenge is the one that is practiced most widely by managers as they ask their employee's to set increasingly higher goals. Human nature is such that most people do not want to leave their comfort zone and therefore are inclined to suggest small, incremental improvements in their objectives. In today's competitive environment, such small improvements often are insufficient. Improvements of 30%, 50%, or even several hundred percent sometimes are required. There are many ways in which leaders can challenge their employees. They can:

  • Share their vision, inspiring them to believe that more is possible.
  • Set very high goals, forcing people to leave their comfort zones to find ways to achieve them.
  • Ask challenging questions that lead people to reconsider their assumptions about what is possible.
  • Use benchmarking to reveal the best practices of others and use these as a challenge.
  • Provide a wide variety of assignments. Many firms make it a policy to expose their employees to a wide range of aspects of the firm. Each new position is a new challenge that develops the employee further.

Once success is achieved, it is important continue raising the bar in order to fight the temptation to rest on one's laurels.

Build Confidence

A challenge brings people out of their comfort zones, often resulting in a drop in their confidence level. Without confidence, the challenging goals that caused the drop in confidence in the first place become even more difficult to reach. Therefore, a major responsibility of a leader is to build confidence in his or her employees so that they will believe in their ability to reach their objectives.

Many motivation experts make the case for positive thinking and self-affirmation as a means of building confidence. Paul Thornton argues that simply thinking something does not make it reality, and that a person achieves genuine self-confidence not by repeating affirmations but by actually working and achieving something. In the process of achievement we expand our abilities, and these expanded abilities create a more genuine, lasting confidence.

With this philosophy in mind, leaders can instill real confidence in their employees by:

  • Recognizing and rewarding positive accomplishments rather than focusing on deficiencies.
  • Providing professional development in order to build confidence through competence.
  • Empowering them by providing both responsibility and authority, thereby expressing confidence in them.
  • Verbally expressing confidence in them.
  • Reminding them of past successes that may have faded from their consciousness in the face of new challenges.

Provide Coaching

Coaching is the process of advising people in a way that facilitates their success. It may take various forms, from training to offering a broader perspective. Coaching can help employees to better understand how their efforts fit into the larger strategy, thereby allowing them to make better decisions.

Leaders may coach employees by:

  • Providing feedback immediately after the employee performs some important task such as meeting with a client or delivering a presentation.
  • Showing them the best practices of others as examples of how tasks can be accomplished.
  • Posing carefully formulated questions designed to improve their understanding by leading them to think through the situation.
  • Setting an example, especially one of continual self-improvement.

Overcoaching should be avoided as it can create dependent employees, reduce their initiative, and cause them to feel micro-managed.

Relationship Among the 3-Cs

The triangle diagram is particularly appropriate for depicting the 3-C Leadership Model because there is no single "correct" order and because balance among the three vertices is important.

The 3-Cs do not need to occur in any specific order. For example, the leader may choose first to present a challenge, then to build the confidence needed to meet the challenge, followed by coaching. Alternatively, the leader first may build the team's confidence, then present the grand challenge.

A proper balance among the 3-Cs is important. Consider the balance between confidence and challenge. A significant challenge without enough confidence likely would result in failure. Conversely, high confidence with little challenge would result in under-utilization of one's abilities and boredom. In the case of insufficient confidence, coaching can be used to improve the employee's skills and thus build confidence. In the case of insufficient challenge, the employee may need to be offered an assignment that better utilizes his or her capabilities.

When the right balance is achieved, employees will experience a higher degree of effectiveness and satisfaction in their work.

Thursday, September 2, 2010

National Income Accounting/GDP Calculation

GROSS DOMESTIC PRODUCT: The gross domestic product (GDP) is the aggregate monetary value of all goods and services produced in the country during a period of time. The word domestic here assumes special importance as it highlights the fact that only goods & services produced within the confines of the country would be taken into account while calculating the GDP.


CALCULATING GDP: There are 3 ways for calculating a countrys GDP:
1 SUPPLY/PRODUCTION SIDE: The whole economy is divided into distinct water-tight segments-Agri,industry & services. The total value of output of goods and services & the value of inputs of raw materials & services used for production is estimated for each of these. The value added for each sector is arrived at by deducting from the total value of output the value of inputs of raw materials and services is attained.
2 DEMAND/EXPENDITURE SIDE: The income generated at production stage is finally spent on purchase of goods & services or is invested. GDP can, therefore, be also estimated from the expenditure by different segments namely government,private sector and investments. Private final consumption expenditure would include all household expenditure on goods and services except on land and buildings. GFCE would include the amount the government pays to its employees. The remaining part of expenditure would be classified under gross fixed capital formation, which would include various kinds of investments.Adding all three of the expen-ditures would give us a third estimate of GDP.
3 INCOME SIDE: Income generated during the production of goods & services is distributed between two factor inputs,labour & capital. Income is distributed among people who own the capital & those put in their labour.Through this exercise we get a second estimate of GDP.


Difference in the three sets of numbers: The differences arise due to the following reasons. We have a number of taxes/subsidies on various products.This should explain the differnces between the supply and demand estimates of GDP. Various estimation methods are used under different approaches,which also caused discrepancy in data.


Supply side widely followed: The supply side estimation of GDP is taken to be more accurate. The baseline figure for GDP growth put out by the CSO is based on the one derived from the supply/production side. Any revision in the expenditure side of the equation is therefore does not affect the headline. GDP The two sets of numbers helps policymakers/analysts to understand the current position of the industries and the overall demand picture.