Messi Syllabus

8/18/2019 Messi Syllabus

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ABS

1

Amity Business SchoolMBA, Semester – 4

Management in Action Social, Economic & Ethical

Issues

-Teena Bagga


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ABSAim

The course aims at bringing the students closer to reality

by developing their understanding of the professional

prerequisites to practice of management in terms of

required skills and attitude to respond proactively torapid discontinuous change in business environment

!ntegrative in approach, this course aims at developing

not theoreticians but practitioners "ho are e#pected to

sense the ongoing conflict bet"een environmentalchange and internal desire of management for stability


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ABSLearning Outcomes

• n completion of this course! students will beable to " – #xamine political! economic! geographic and cultural

sources that shape a global competitive context

– $rovide deep understanding and working knowledgeof managing a consulting firm

– Be able to develop a systematic % structured approachto diagnose management problems.

– Develop critical thinking skills through reading andcase studies to apply social responsibility conceptsand ethical principles to current business scenario


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ABS Module I:

Introduction

Modern Management $ractices and !ssues

!nvolved, %utsourcing Management Services

and &volution of Management 'onsultancy,Skills(set )equired for Management 'onsultants

'onsulting and performance counseling


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ABSModule II:

The Process o Management!onsulting

'onsulting Proposals. Identification and Definition of

Problem, Fact-Finding Leading to SolutionDevelopment and Implementation, Developing

Strategic and Tactical Plans and Subcontracting,

Pricing of Consultancy, c!uiring and DevelopingTalents for Consulting.


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ABSModule III:

In-house Management versus

Management Outsourced

*hy a Sense of Skepticism and +nease To"ardsManagement 'onsultants 'ost versus alue

of Advice, Separating 'onsulting Success

from 'onsulting disaster Some )evealing

Situations


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ABSModule ":

Economic and Social Issues inManagement

Adaptation to 'hanging &nvironment in /eneral and

&conomic &nvironment in $articular, &conomic /ro"th

and 'hange Areas, &merging %pportunities in arious

Sectors including Social Sector, Management $ractice

and 'ultural !ssues, The global $olitical Situation, The

/lobal 'ompetitive &nvironment and the internal scene

in !ndia, *ar /ame


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ABSModule "I:

Ethical Issues in Management)elationship among arious Stakeholders,

)easons for 'onflict of !nterests Among

Stakeholders, 'orporate /overnance and &thics

*hy +nethical 1ecisions 2eading to 'onflicts

are Taken, $o"er and $olitics, !nitiatives on

'orporate /overnance by the /overnments


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ABSAssessment

3 HA 5

3 Seminar 5

3 Project 63 Viva 5

3 A 5

3 End Term Exam 7

11


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ABSThe !areer Structure

• &nalysts

• 'onsultants

• (enior 'onsultants• Business development managers

• Directors%$artners


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ABS

Challenges faced

by

Business

1)


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ABSUncertainty – +ncertainty in the global economy

– uncertainty in the credit markets,

– uncertainty in ho" ne" regulations "ill affect business,

– uncertainty about "hat competitors are doing, and

– uncertainty about ho" ne" technology "ill affect the business8

– 9

– uncertainty leads to a short-term focus

– "e believe that a failure to strategically plan five years into the

future can end up destroying value

– The problem to be solved, therefore, is to balance the need for amore reactive, short(term focus "ith the need for informed, long(

term strategies

1*


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ABSGloali!ation

– +nderstanding foreign cultures is essential to everything from theability to penetrate ne" markets "ith e#isting products and

services, to designing ne" products and services for ne" customers

– to recogni-ing emergent, disruptive competitors that only months

earlier "eren:t even kno"n

– The problem to be solved is to better understand international

markets and cultures through better information gathering and

analysis of "hat it all means

– Similarly, the incredible degree of government intervention in

nearly all ma;or economies of the "orld is leading to much greateruncertainty in the global marketplace, making international

operations ever harder to manage

1+


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ABSInnovation

– Big companies are struggling "ith innovation – A better innovation process is at the top of the agenda for

most '&%s

– But the idea of a more innovative culture appears too

frightening to many – The problem to be solved is ho" to become more

innovative "hile still maintaining a sense of control over

the organi-ation

1,


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ABSGovernment Policy

!egulation – A changing regulatory environment is al"ays of concern in

certain industries,

– +ncertain energy, environmental and financial policy is

complicating the decision making for nearly all companies today

– 1ealing "ith an unkno"n regulatory environment is fast

becoming the ne" normal and companies are deciding to get on

"ith it8"hatever


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ABS"echnology – The pace of technological improvement is running at an

e#ponentially increasing rate

– the pace today makes capital investment in technology as much an

asset as a handicap

– because a competitor may "ait for the ne#t(generation technology,

"hich may only be a year a"ay, and then use it to achieve anadvantage *hat:s a '&% to do>

– Similarly, the ability for even the best of technologists to stay

informed about emerging technology is in conflict "ith the need to

master a company?s current technology

– The problem to be solved is to develop a long(term technologystrategy "hile remaining fle#ible enough to take advantage of

unforeseen technology developments

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ABS#iversity – A particular subset of human capital planning is found so often in our research

that it is "orth its o"n mention – 1iversity brings many challenges, as it makes it far more likely that people do

not agree, and the lack of agreement makes running a business very difficult

– At the same time, the lack of diversity "ithin many large company leadership

teams leads to a narro" vie" of an ever(changing and diverse "orld8

contributing to groupthink, stale culture and a tendency to live "ith the status

quo for too long

– The problem to be solved is to first define "hat diversity @and "e:re not

talking about satisfying government statisticians really means in your

company, then foster the e#pansion of differing ideas and vie"points "hileensuring a sufficiently cohesive environment that efficiently gets things done

1/


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ABSCom$le%ity – 0heres no doubt that life and business have gotten more complex!

even as certain tasks and activities have become easier due toinformation technology.

– 0he pace of change is quickening.

– 0he global economy is becoming still more connected! creating amuch larger and more diverse population of customers and suppliers.

– 2anufacturing and services are increasingly targeted at smaller!speciali3ed markets due to the flexibility that 40 provides in theseareas. 5e know from our knowledge of the patterns of evolution that!in reality! systems tend to become more complex as they evolve! thenbecome simplified again.

– 0he problem is how to develo$ better systems&thin'ing ca$ability so you can design your business models! processes! products andservices in a way that minimi3es unnecessary complexity.

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ABSInformation Overload• 4t is said that the only true constant is change! and in

todays world nothing is changing more! or growing faster!than information.

• #very day! 6.+ quintillion bytes of data are created.

• 0he ability of companies! much less individuals! to consume

and make sense of the information that is available 8andnecessary9 to make good decisions is becoming a nearlyinsurmountable challenge.

• 0he problem to be solved is to deal (ith this mountain of

information (ith both technology and human 'no(&ho(! then to convert this information into valuableknowledge.

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ABSSu$$ly Chains

– Because of uncertainty in demand and the need to staylean.

– companies are carrying smaller inventories than ever.

– &t the same time! uncertainty in supply! driven by wildly

changing commodity prices! an apparent increase inweather:related disruptions! and increasing competition forraw materials makes supply chain planning morechallenging than ever.

– 0he problem to be solved is to develo$ a su$$ly&chainstrategy that not only ensures the lo(est costs! but alsominimi)es the ris' of crippling supply:chain disruptions.

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ABSStrategic "hin'ing

Problem Solving – 0he lack of sophisticated approaches to information acquisition! analysisand the development of unique insight leaves many companies at adisadvantage;

– they lack a long:term strategic imperative and instead


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ABS

Outsourcing

*anagement Services

6*


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ABS>0(>?'4@A 4@0?D>'04@

>0(>?'#?'2$&@(ervices

rgani3ationCevel

&greement

(erviceCevel

&greement

Outsourcing denotes the continuous $rocurement of services from a

third $arty+ ma'ing use of highly integrated $rocesses+ organi)ation

models and information systems,

the strategic use of outside resources to perform activitiestraditionally handled by internal staff and resourcesE Dave Ariffiths


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ABS

• 4 to 5 of the top 5 companies in the "orld isleveraging on outsourcing for most of their business

processes• 'urrent figures values this robust industry to a staggering CD

billion +S1• %n an average global outsourced pro;ects involve about DE

that belong to the hardcore !T sector, 66 to finance sector,

65 to sales and marketing and F from administrative sector

The remaining DD belong to many other different sectorssuch as consumer distress calls, general data segregation ;obs,

tourism etc

?ecent trends inoutsourcing


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ABS?easons for utsourcing

-hy Outsource. – $rovide services that are scalable! secure!and efficient! while improving overallservice and reducing costs.

"raditional role & reaction to $roblem – ?eduction and control of costs

– &void large capital investment costs – 4nsufficient resources available

*odern role / business strategy – &llows company to focus on their core

competencies

– Feeping up with cutting:edge technology – 'reating value for the organi3ation and its

customers – Building partnerships


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ABS

Business process outsourcing 8B$9 is a subset ofoutsourcing that involves the contracting of theoperations and responsibilities of specic businessfunctions or processes to a third-party service provider.

Fnowledge process outsourcing 8F$9 describes theoutsourcing of core business activities, which often arecompetitively important or form an integral part of a

company's value chain. Therefore KPO reuires advancedanalytical and technical s!ills as well as a high degree ofproprietary domain e"pertise

T#$es o Outsourcing


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ABS

?ecruitment $rocess utsourcing8?$9 is a form of businessprocess outsourcing #$PO% where an employer outsources ortransfers all or part of its recruitment activities to ane"ternal service provider.

#ngineering process outsourcing8 #$9&PO oers global consulting and outsourcing servicesproviding end-to-end services in the areas of &ngineeringand Technical Process Outsourcing.

Cegal process outsourcing 8C$9 refers to the practice of alaw rm or corporation obtaining legal support servicesfrom an outside law rm or legal support servicescompany. This process has been mar!ed by the practiceof outsourcing any activity e"cept those where personal

presence or contact is reuired.

T#$es o Outsourcing


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ABS5hen to utsource

Arey &rea

@otutsourced

4n Gouseif $ossible

utsource

'ompetitive

(trategic @on:(trategic

@on:'ompetitive

Price(aterhouseCoo$ers *odel


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ABSDecision 2atrix

)1


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ABS0orm a strategic alliance

• 0asks in this quadrant are high in strategic importance! butcontribute little to operational performance.

• (o! although you need to retain control of them to ensure theyare done exactly as you want! or you get the quality you want!they are relatively insignificant in terms of cost or smooth

running and so not worthy of full in:house focus.

• 0his means that you should form a strategic alliance . Horexample! an auto manufacturer could align with anadvertising agency.

• 0he manufacturer needs to be closely involved in themessage and tone of adverts! but advertising has little impacton the day:to:day operational performance of the company.

)6


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ABS!etain

• 0asks in this quadrant are high in strategic importanceand have a big impact on operational performance.

• 0hese tasks should be kept in:house so that yourorgani3ation keeps maximum control.

• 4n our auto manufacturer! the assembly of cars would beretained as it is strategically critical – it should be one ofthe organi3ationIs core competences ! in fact – and itmakes a massive contribution to the smooth running of

the organi3ation.

))


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ABSOutsource• 0asks this quadrant are important for successful operational

performance! but are not strategically important.• 0hese tasks could safely be outsourced. 0heyIre simply not worth

spending in:house time managing.

• Hor example! the auto manufacturer in the example above couldoutsource its delivery logistics to a specialist company.

• Gow you deliver cars to dealers is generally not a source of competitiveadvantage! as it doesnIt touch the customerIs experience! but how wellitIs done has a huge impact on operational performance.

• 4f transporters are late! stock builds up at the manufacturing plant! and

dealers donIt have the vehicles they need in their show rooms forcustomers to test drive. ou can learn more about outsourcing in5orking with utsourced (uppliers .

)*


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ABS1liminate• 0asks in this quadrant are not important to your organi3ationIs

overall strategy and nor do they make a significant contributionto its day:to:day operational performance.

• &lthough you might not be able to eliminate these taskscompletely! itIs important to check why youIre doing them.

• &n example might be running a subsidi3ed staff crJche. &lthough

having an in:house childcare facility might help you to attractcertain staff 8strategic importance9 or reduce absenteeismcaused by childcare problems 8operational performance9! doesthe effort involved


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ABSAdvantages of

Outsourcing• S(iftness and 1%$ertise: 2ost of the times tasks are outsourced to vendors who

speciali3e in their field. 0he outsourced vendors also have specific equipment andtechnical expertise! most of the times better than the ones at the outsourcingorgani3ation. #ffectively the tasks can be completed faster and with better qualityoutput

• Concentrating on core $rocess rather than the su$$orting ones: utsourcing

the supporting processes gives the organi3ation more time to strengthen their corebusiness process and help in Increased $roductivity and 1fficiency

• !is'&sharing: one of the most crucial factors determining the outcome of acampaign is risk:analysis. utsourcing certain components of your businessprocess helps the organi3ation to shift certain responsibilities to the outsourcedvendor. (ince the outsourced vendor is a specialist! they plan your risk:mitigating

factors better • !educed O$erational and !ecruitment costs: utsourcing eludes the need to

hire individuals in:house; hence recruitment and operational costs can beminimi3ed to a great extent. 0his is one of the prime advantages of offshoreoutsourcing

),


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ABSProblems -ith

Outsourcing• !is' of e%$osing confidential data: 5hen an organi3ation outsources

various services! it involves a risk if exposing confidential companyinformation to a third:party

• Synchroni)ing the deliverables: 4n case you do not choose a right partnerfor outsourcing! some of the common problem areas include stretched

delivery time frames! sub:standard quality output and inappropriatecategori3ation of responsibilities. &t times it is easier to regulate thesefactors inside an organi3ation rather than with an outsourcedpartner.Selection of su$$lier 222

• 3idden costs: &lthough outsourcing most of the times is cost:effective attimes the hidden costs involved in signing a contract while signing a contract

across international boundaries may pose a serious threat• Lac' of customer focus: &n outsourced vendor may be catering to theexpertise:needs of multiple organi3ations at a time. 4n such situationsvendors may lack complete focus on your organi3ations tasks. Loss ofControl222

• Provider may not understand business environment

• Provider slo( to react to changes in strategy• "oo de$endent on service $rovider


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ABSOutsourcing

Im$lementation• $rogram initiation

– pinions and ideas shared to form draftcontract

• $rogram implementation – 0ransferring staff – (ervice Cevel &greement 8(C&9 – #stablish communications between partners – &ctual transfer of the service – #stablish management procedures

• 'ontract agreement

• 'ontract fulfillment


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ABSSo4

• 0he guiding principle of outsourcing has been the transferof a process or function! that is typically not a corecompetence of an enterprise! to an organi3ation that hasexpertise in that area! allowing the enterprise to effectivelyutili3e its resources in its core areas of business.

• 0his principle has dual ob


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ABSOnshore Outsourcing• nshore outsourcing limits the outsourced work within the locality or the country

of origin! making outsourcing providers more accessible and is nearer to the

company itself.• 0here will be no problem with traveling and it makes communication between

you and the outsourcing team more comfortable and available.

• nshore outsourcing will not impose as much risk as offshore outsourcing! butthe benefits that you would en


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ABSffshore utsourcing3 %ffshore outsourcing can be defined as the system of

collaborating "ith an e#ternal organi-ation and assigning thatorgani-ation to carry out some of your business roles

3 +sually the product or the service "hich has been outsourced

"ould not be sold in the offshoring locationG it "ould only be

marketed in the outsourcer?s country3 %ffshore outsourcing gives organi-ations access to high(quality

services at lo"er operating costs

3 There are basically three main categories in offshore

outsourcingG business process outsourcing @B$%, infrastructureand technology outsourcing and soft"are outsourcing

*1


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ABSDifferences in the sourcingstrategy..

Insourcing vs, Outsourcing – 2anaging the complexities of the global deliverymodel requires a deep expertise in the local environments and experience withcross border business operation! making the evaluation of whether to outsource apro


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ABSDifferences in the sourcingstrategy..

!esource de$loyment5rede$loyment – ffshore utsourcing transactionsrarely include asset and resource transfers from the buyer to the serviceprovider! whereas in onshore sourcing deals! that is a common point ofnegotiation.

6no(ledge transfer – the transfer of information and training around the

buyers 40 environment and other relationship parameters are very difficult to doin offshore sourcing. (ince this has a direct effect on path to productivity forservice providers! it becomes an important evaluation criterion! as well as aphase in the sourcing cycle.

Portfolio Assessment and $lanning – the Moffshoreability of an 40 service or

business process is dependent on many factors! and in most enterprises!transitioning to an offshore model requires early planning. 0he portfolioassessment and planning phase is a critical component of a successfuloffshore sourcing initiative.–

*)


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ABS

Consultancy

**


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ABSGistory

• 2anagement as a unique field of study• &rthur D.Cittle 81/7s9• 2cFinsey N 'ompany

– Hirst management and strategy consultancy – Hounded by Oames 2cFinsey in 1/6, 8'hicago9

– Giring of bright young 2B&s• ?ise of management consultancy after 5orld 5ar 44

– Development of tools for strategic management – Boston 'onsulting Aroup 81/,)9! 2cFinseyN'o! Garvard Business

(chool – BainN'o : focus on shareholder wealth

• 'onsulting within accountancy and technology firms – $w' and 4B2

• @iche consultancy firms – 'orporate social responsibiity


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ABS0ypes of firms in theindustry

• &ccountancy firms offering consultancy

• Carge non:accounting consultancies

• (mall specialist boutiques• Aurus

• 4ndependents(trategy G?

2arketing

'hange

$rocess andperations

rg design

4nfotech

2anagementconsulting


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ABS2a


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ABSDifferent types of consulting

services"

a knowledge:based view$espo!e

&"pert economics

Person-to-person

(T enables personal

$uild e"perience

)eward for!nowledge creation and

sharing

*cKinsey + ompany

Productise

)euse economics

People-to-documents

(T focus

$uy e"perience

)eward forcontribution todocument database

&rnst + oung

Competitive strategy

Economic model

KM strategy

Technology

HRM

Example


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ABS5hy=• 0he cost of Mdoing it yourself is often more than getting experts in to do it

for you! even if their daily rate is high.• 4t is unsurprising that Mexpertise is not the only reason why clients

bringing in consultants.

• 'lients are quite capable of doing themselves! yet they do not have thetime.

• 'lient managers call in consultants because their image of Mexpertiseprovides security in an inherently insecure and uncertain business world.

• 'lients can use this Mexpert identity to bolster their own image in anorganisation or to provide legitimacy to a decision that the client hasalready made.

• 'onsultants also provide a very real succor to clients in that they provide alegal liability for when decisions go wrong.

*/


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ABS5hat=

0he definition of management consultancy is no minor problem. 0he 2anagement'onsultancies &ssociation 82'&9 in the >F defines the role as"

“…the creation of value for organisations,

through the application of knowledge, techniques and assets,

to improve business performance.

This is achieved through the rendering of objective advice and/or the implementation of

business solutions.”

“onsulting involves individuals, whether self!emplo"ed or emplo"ed, individuall" or

collectivel" using their knowledge, e#perience and anal"tical and/or problem!solving

skills to add value into a wide variet" of organisations, and therefore to the $%econom" as a whole, within a framework of appropriate and relevant professional

standards, disciplines and ethics.” 84'9

+7


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ABS5hat ===“…to tr" to take ownership of an organisation&s problems and

use research and logic to develop possible options for a wa"forward.”

2att Baumann

“giving solutions to the problems that companies have.”

Oane ?idley

4n @utshell P..

'onsulting is about helping an organisationget from & to BP

tt ib t f S f l


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ABSttributes of Successful

Consultants" Po#erful $egotiator

" %ffective Communicator

" &eservoir of Self Control

"'nderstanding of Individual Psyc(ology" 'nderstanding of )roup Psyc(ology

" 'nderstanding of *rgani+ational Psyc(ology

" Complete mastery of t(e given area.


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ABSarriers common to Consultants

/. 0no# 1 it 1 all attitude

2. Inability to understand tec(nical language

3. Inade!uate bac4ground or 4no#ledge

5. Poor organi+ation of ideas

6. Differences in perception

7. Pre8udice or bias

9. Personality conflicts

:. Tendency not to listen

;. &esistance to c(ange

/ostile attitude

/3. Lac4 of feedbac4/5. Differences in status or position

/6. Too many )ate4eepers

/7. *verly Competitive ttitude


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ABS &ctivityP• Cist down the consulting firms in 4ndia.

• (egregated them into three categories" – (trategy and general business consulting firms in 4ndia

– 40 consulting firms in 4ndia

– G? consulting firms in 4ndia

• Hind out the kind of openings%profiles these firmshave for Hresh%#xperienced 2anagement Araduate.

• &nd the competency required for the various

profiles.

+*

D l i fi


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ABSDeloittes one firm strategy0he consultancy market has experienced unprecedented

change through the 1//7s and over the

last decade. (trong growth over this period hasbeen driven by waves of new ideas! not least the

introduction of technology in all its forms" from enterprise

resourcing planning systems during the

boom years of the late /7s! through the inflation

and bursting of the internet bubble! a trend towards

offshoring! to todays market where cost reduction

is the service in demand.

0hroughout this time! the competitive landscape

has been in flux. f particular significancewas the ma


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ABS

+,

or more relevant skills. 0he result is rarely the bestoutcome for the client! who may receive very differentservice depending upon which part of the

firm was originally engaged. 4t is important to remember that clients do not care which service linethey are speaking to. 0hey have a challenge – andthey would like it solved. 0he best solution to thischallenge will often come from a multi:disciplinaryteam! possessing a blend of different skills.4n 6777! Deloitte was perhaps best known as anaudit and financial advisory firm! but consultancy wasalso a core and expanding part of the business. Gaving

retained its consultancy capability! whilst other firms sold theirs! Deloitte had a valuable differentiator.4n particular! the firm was well positioned to providea broad and comprehensive service! supporting theclient from the start of an issue or initiative! throughto the implementation of a solution. 5hilst manyfirms could compete on advisory services and manyothers could compete on implementation and operationalservices! few could offer such a full breadth of

support through the lifecycle of the business.Hor example! consider a company that has en


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ABS

+-

Deloittes approach was based on the followingstrategic choices"1. 'ollaborate as one Deloitte team! going to

market with a portfolio of businesses thatcan team effectively to serve clients withdistinction.6. Develop and maintain four world:classbusinesses 8audit! tax! consulting and corporatefinance9.). &ttract and retain the best people! becomingknown as the place where the bestchoose to be.

*. Be a client:centric organi3ation and deliver exceptional client service with an unrelentingfocus on quality.+. wn the high ground! leading the professionin restoring public trust in auditing andbusiness advisory services.

5e planned to drive incremental value for our clients by leveraging synergies across the different

facets of our capability. 0he ne Hirm approachsupported the delivery of more complex engagements.By offering co:ordinated support across avariety of different areas! clients received a more


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ABS

+

• lt is important to formally recogni3e crossservice line activity and referrals. ur assessments of partner and staff performance

recogni3e sales for any service line asstrongly as the originators own service line.• 'ommunication of examples and rewardingof successes is important and needs tobe constantly reinforced.

0he co:ordinated approach needs to beapplied at all levels of the organi3ation!not


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ABS0he 'onsulting $rocess• During a typical consulting intervention! the consultant and the client

undertake a set of activities required for achieving the desired purposes andchanges! known as the consulting processE.

• 0his process has a clear beginning 8the relationship is established and workstarts9 and end 8the consultant

• departs9.

• Between these two points the process can be subdivided into severalphases! which helps both the consultant and the client to be systematic andmethodical! proceeding from phase to phase! and from operation tooperation.

• 2any different ways of subdividing the consulting process! or cycle! intoma


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ABS

•Hirst contacts with clients•$reliminary problem diagnosis

• &ssignment $lanning• &ssignment $roposals to clients

•$urpose &nalysis•$roblem &nalysis•Hact Hinding•Hact &nalysis

•Heedback to client •Developing (olutions•#valuating &lternatives•$roposals to clients•$lanning for implementation

• &ssisting with implementation• &d


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ABS$rocess

• 'onsulting $roposals.• 4dentification and Definition of $roblem!

• Hact:Hinding Ceading to (olution

•Development and 4mplementation• Developing (trategic and 0actical $lans and(ubcontracting

• $ricing of 'onsultancy

• &cquiring and Developing 0alents for 'onsulting.

,1

0h ' lti $


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ABS

•Hirst contacts with clients•$reliminary problem diagnosis

• &ssignment $lanning• &ssignment $roposals to clients

•$urpose &nalysis•$roblem &nalysis•Hact Hinding•Hact &nalysis

•Heedback to client •Developing (olutions•#valuating &lternatives•$roposals to clients•$lanning for implementation

• &ssisting with implementation

• &d


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ABS#ntry• 4nitial phase in any consulting process and assignment.

• 0he consultant and the client meet! try to learn as much as possible

• about each other

• Discuss and define the reason for which the consultant has been broughtin! and on this basis agree on the scope of the assignment and theapproach to be taken.

• 0he results of these first contacts! discussions! examinations and planning

exercises are then reflected in the consulting contract! the signature ofwhich can be regarded as the conclusion of this initial phase.

• #ntry is very much an exercise in matching.

• 0he client wants to be sure that he is dealing with the right consultant

• &nd the consultant needs to be convinced that he is the right person! or

that his firm is the right consulting organi3ation! to address the problems ofthis particular client.

,)

# t


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ABS#ntry• Initial contacts

– 0he consultant makes the contact or 0he client makes the contact

– Hirst meetings and $reparing for initial meetings

– &genda for the first meeting

– &greement on how to proceed

• Preliminary $roblem diagnosis – (cope of the diagnosis

– (ome methodological guidelines! rules! procedures and analytical techniques used in the preliminary problem diagnosis are the same as those of the later diagnosis

– >sing comparison8Aap &nalysis9

– 0he clients involvement

– (ources of information

– &lternative approaches8 problem!identification workshops, 'elf!diagnosis b" individual business owners or managers etc.(

• "erms of reference – initial statement of the work to be undertaken by a consultant

– 4f terms of reference are used" the clients policy is to do as much analytical and planning work as possible before considering to use a consultant; often this will be thecase with assignments dealing with relatively narrow and well:defined technical issues; the c lient 8usually in the public sector9

– 4f terms of reference are not used" the client 8usually in the private sector9 prefers to select a consultant! do the preliminary problem diagnosis! and define the scope ofthe assignment


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ABSDiagnosis

• 0he purpose of diagnosis is to examine the problem faced and the purposes pursued by theclient in detail and in depth! identify the factors and forces that are causing and influencing

the problem.• 0he consultant should start the diagnostic work with a clear conceptual framework in mind.

• Diagnosis is sometimes viewed as equal to collecting! dissecting and analysing vast amountsof data! including a great deal of data that may have no relevance to the purpose of theassignment.

• 4n principle! problem diagnosis does not include work on problem solutions. 0his will be donein the next phase! action planning.

• Diagnosis may even lead to the conclusion that the problem cannot be resolved! or that thepurpose pursued cannot be achieved and the problem is not worth resolving.

• 4n practice! however! it is often difficult or inappropriate to make a strict distinction betweenthe diagnostic and the action planning – and even the implementation – phases of theconsulting process

• Diagnostic work will identify and explore possible solutions.

• ?equires to ?estating the problem and the purpose

• 'hallenge " 0he human side of diagnosis

,+

Diagnosis


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ABSDiagnosis

7, #iagnosing $ur$oses and $roblems – 4nstead of starting diagnosis by asking 5hats wrong here= 5hats the matter=E! the

consultant should ask first 5hat are we trying to accomplish here= 5hat are wetrying to do=E

8, #efining necessary facts – Hacts should enable the examination of processes! relations! performances! causes

and mutual influences! with special regard to underutili3ed opportunities andpossible improvements.

9, Sources and (ays of obtaining facts – records; events and conditions; memories.

, #ata analysis

;, 0eedbac' to the client

,,

&ction $lanning


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ABS &ction $lanning

• 0his phase includes developing possible solutions to the problem diagnosed!choosing among alternative solutions! presenting proposals to the client! and

preparing for the implementation of the solution chosen by the client.• 0he clients involvement in action planning should be even more active than in the

diagnostic phase.

• 0he emphasis is no longer on analytical work! but on innovation

and creativity.

• 0he ob


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ABS &ction $lanning

• Searching for $ossible solutions

• #evelo$ing and evaluating alternatives – "he evaluation techni


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ABS4dentification andDefinition of $roblem

• Steps for prolem identification" definition and solution-6 1escription of problem@s to be solved

D %b;ectives and e#pected results @"hat is to be achieved, final

product

H Background and Supporting information4 Budget estimate or resource limit

5 Timetable @key stages and control dates

I !nterim and .inal reporting

7 !nputs to be provided by the clients

E clusions from the assignment @"hat "ill not be its ob;ect

F 'onstraints and other factors likely to affect the pro;ect

6$rofile and competencies of eligible consultants

66)equested consultant inputs into the pro;ect

6D'ontact persons and addresses


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ABS#A$T-#%&'%&G

(EA'%&G T) S)(UT%)& 'EVE()P*E&T A&'

%*P(E*E&TAT%)&

+hat should the ne, solution achieve

•*hat basic purpose>•*hat other purposes>•*hat level of performance>

•*hat quality of output>•*hat ne" product, service, or activity>•*hat behaviour>

Ho, ,ill the ne, situation differ from the present

•1ifferent products, services, or activities•1ifferent methods•1ifferent system@s•1ifferent equipment•1ifferent location•1ifferent "ay of managing


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ABS

Are the effects li.ely to last

•Are the client:s business and market changing rapidly>•!s competition likely to come "ith better solutions>•!s there a possibility that people "ill revert to present practices>•Should further developments be foreseen>

+here could solutions and ideas e found

•!n the same unit>•!n the same enterprise>•.rom business partners or friends>•!n literature>•!n a research institution>

•!n the consulting firm>•.rom other consultants>


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ABS'EVE()P%&G ST/ATEG%$ A&'

TA$T%$A( P(A&S A&' SU0$)&T/A$T%&G

Strate1ic Plans

•Porter2s #ive #orces3 Barriers, Buyer $o"er, 'ustomer $o"er, Substitutes,'ompetition•4$s3 'ustomers, 'ost, 'ompetition, 'ompanies•4Ps3 $roduct, $rice, $romotion, $lace•Scenario Plannin13 $lanning done according to the situations


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ABSTactical PlansSome of the tactical plans used in the management consulting are(•0eneficiary" Tar1et 1roup3 *ho "ill actually benefit from the pro;ect

•Purpose3 *hat purpose is to be accomplished by the pro;ect•/esult3 $ro;ect must be result(oriented, "hat results are estimated to be achieved•'evelopment )jective3 !t defines a "ider perspective, frame"ork !t tell about theultimate or long term ob;ective•%mmediate )jective3 The ob;ective of completion of pro;ect successfully and ho",

the short term ob;ective•)utput3 *hat all delivered by the pro;ect and "hat all has to be delivered by the pro;ect•%ndicator of Achievement3 Measurement of "hether ob;ective is achieved and ho"successfully A controllable indicator used

•Actions3 A set of actions to achieve and meet ob;ective•%nput3 )esources to be utili-ed( both quantitative and qualitative methods


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ABSSU0$)&T/A$T%&G•Subcontracting is especially prevalent in areas "here comple# pro;ects arethe norm, such as construction and information technology Subcontractors

are hired by the pro;ect?s general contractor, "ho continues to have overallresponsibility for pro;ect completion and e#ecution "ithin its stipulated

parameters and deadlines•Subcontracting is a type of "ork contract that seeks to outsource certaintypes of "ork to other companies This is a step do"n from general

contracting, "hich is a contract overseeing a much broader pro;ect in manycases Subcontracting is done "hen the general contractor does not have the

time or skills to perform certain tasks•.or e#ampleJ *hen a building is being constructed, subcontracting becomesa ma;or deal A general contractor may take care of a number of tasks,

including the brick(and(mortar construction, but look to subcontractors for

other types of tasks, especially things like plumbing and electrical "ork

These disciplines are nearly al"ays subcontracted out


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ABS

Advanta1es of Sucontractin13

Subcontracting offers a number of advantages

•.irst, it allo"s "ork on more than one phase of the pro;ect to be done atonce, often leading to a quicker completion•Second, because subcontractors already have the e#pertise andequipment to provide the service, it is often much cheaper for them to do

the "ork than a general contractor "ho may not have that special

e#pertise•.inally, the subcontractor is usually able to "ork "ith a generalcontractor on more than one pro;ect, thus creating a savings for both in

the long run as a relationship is formed


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ABS

-,

P/%$%&G *)'E(S

• ) core pricing models that are practiced in the management consulting industry• Hixed $rice!

• 0ime and 2aterial and• ?isk:?eward.

• Hixed $rice approaches would be more suited to pro


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ABS

--

P/%$%&G *)'E(S


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ABS

-

P/%$%&G *)'E(S

C lti f d l


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ABS

-/

• 0he main strategies for setting consulting fees include"

• Doubling%tripling your hourly wage• >sing a daily rate for consulting• (etting consultant fees by the pro


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ABS

7

• 2any new consultants underestimate operating costs when pricing their services.Bill 2ooney! founder of 5illiam 2ooney &ssociates! a consultant to consultancies!

offers a simple formula for calculating your daily rate.• "he *agic 0ormula : (tart from the bottom of your income statement and build up

to get to your top line 8i.e. the fees that you will charge9.$rofit S Cabor 'osts S verhead T Daily Hee ?evenue

• Labor : our time is money. 4f you plan to take home an annual salary of U677!777and work 6,7 days per year 8),+ days! minus (undays! a few (aturdays! holidays

and two weeks vacation9! you will pay yourself U-,/ per working day.• Overhead : verhead includes recurring expenses associated with running yourbusiness! such as rent! a secretary! phone bills! postage! benefits! insurance andequipment. (ay all of that equals U1+!777 per month! or U17!777 per year. @ext!divide your annual costs by the number of working days per year. 2arket:researchfirm Fennedy 4nformation figures most consultants spend +L to ,6L of their timeworking directly for their clients; ,6L of those 6,7 days equals 1,1 days per

year. Arand total" U1!167 per day.• Profit *argin : By 2ooneys estimates! a consultancys profit margin averages

between 1+L and 6+L of its total expenses. 'ontinuing from the previous slide!67L of U1!167 is U66*.

• Adding It All =$ : $lug those numbers back into the fee formula. our daily feeequals U-,/ S U1!167 S U66*. 0hats U6!11) per day–or U611 per hour for a ten:hourday.

P/%$%&G *ETH)'

A$5U%/%&G A&' 'EVE()P%&G


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ABSA$5U%/%&G A&' 'EVE()P%&G

TA(E&TS #)/ $)&SU(T%&G


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ABS

&cquiring and Developing


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ABS &cquiring and Developing0alents for 'onsulting

)

People skills: igh

Sales skills: *edium

Communication skills: igh

nalytical skills:&"tremelyigh

!ility to synthesi"e: igh

Creative a!ility: igh

#nitiative: *edium

Computer skills: *edium

$ork hours: /0-102wee!

&cquiring and Developing


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ABS &cquiring and Developing0alents for 'onsulting

*

• 'onsulting is an exciting but risky profession• 'onsulting is &bout• 'onsultants Cisten• @ot #veryone (tarts on• @etwork! @etwork and @etwork

• 0eamwork! 0eamwork...• Brainwork! Brainwork...• & Different $erspective 'an 5ork• 4ndustry Fnowledge 'ounts.• $resentation skills matter.• 4tIs @ot &lways Hun...

S


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ABS

5hy a (ense of (kepticism and>nease 0owards 2anagement'onsultants

• utsource vs. 4n:house

+

ABSutsourcing


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ABSutsourcing

Pros

• (peciali3ed : you can get the best

• $ersonal attention from a senior practitioner

• #ach campaign treated uniquely

• Golistic view : consultant is intimately aware ofall aspects of the campaign

• +.?elationship – it is easier to form a long term

relationship with the owner%operator than anaccount rep that may change


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ABS

Cons

• (peciali3ed : yet another vendor to manage

• Gas to wear many hats 8eat what they kill9

• $hysical limitations on number of clients that canbe serviced

• 'an be more expensive per hour

• Cimited in the number of things that can be donewell

-

ABS4n:house


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ABS4n:housePros

• (trong connection to the product % service offering and in depthunderstanding of the industry and top competitors.

• 'oncentrated focus on servicing


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ABS

Cons

• 4nternal positions do not usually foster competitive spirit.

• & sense of boredom and eventual lack of motivation due to continuallyworking on the same site as opposed to new challenges andopportunities.

• Cack of informal learning opportunities which inhibits the ability to deliver

in a rapidly changing environment.• $rofessionals are rarely equally trained or experienced in both organic

optimi3ation and paid search marketing

• Difficult to drive organi3ational change from within.

• #xternal resources are needed to


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ABS'ost vs. Ralue of &dvice

• 4f an outsourcing consultant warns of danger 3ones as abuyer steps into uncharted territory! the advice isinvaluable.

•4f the advice ties up dangling loose ends! gathers andanaly3es relevant input from the right sources! andprevents costly mistakes! the value is easy to measure.

• 4f the consultant provides a systematic way of making

things predictable and understanding implications ofdecisions! the value of advice is far more than its price.

/7

ABS


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ABS

• &n outsourcing advisory firms value includes crucialexpertise in designing an effective ?H$! service levels!pricing components! and other contractual elements.

• &n advisory firm has daily insight into the marketplace and

can provide valuable advice on strategic and cultural fit ofpotential providers.

• &n advisory firm knows the pitfalls of outsourcingrelationships and can construct animplementation%transition phase that comes in on time andon budget.

/1

ABS

(eparating 'onsulting (uccess


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ABS

from 'onsulting Disaster • 4t is best for companies to engage consultant for a specific

task.

• 'ompanies will have to remember that consultants are not asubstitute for vision and good management.

• Bringing in consultants without any clear idea of the helpthat is needed is a waste of time and money.

• 2any consulting interventions ultimately fail to achieve theends intended! because they call for the consultant to makehighly sub


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ABS

• 0o overcome this problem! there has to be strong dialoguesbetween the consultant and the client.

• &part from recognition of the circumstances and the issuesat hand! there has to be conviction from the consultant andmanagement team on the need for the correct course ofaction and change.

• ften this requires the consultant and management team to

look at observable facts and arrive at a set of sharedassumptions about the future.

/)

ABS(ome ?evealing (ituations :


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ABS(ome ?evealing (ituations 0G&4 &4?5&(

• 4mplementation of &sias Hirst &irline2anagement 'ockpitV

• 0hai &irways turned to &tos rigins

management consulting practice to implement0he 2anagement 'ockpitV which is a tool tohelp 0hai &irways to execute their corporatestrategies.

/*

ABS


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ABS

• Business Challenges

• 0o strengthen 0hai &irways competitiveadvantage by"

– 4ncreasing revenues and profitability

– 4ncreasing customer satisfaction

– 4mproving productivity of staff and assets

– #nsuring proper management of key pro


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ABS

• Solutions

• 4mplementation of the 2anagement'ockpitV built around the following key

principles" – & framework driven by 0hai &irways

– Fey $erformance 4ndicators 8F$4s9

– Balanced (corecard 8B('9

/,

ABS


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ABS

• Benefits

• 0hai &irways management can now able to focus on essential issues

for more effective decision:making

• 'onsolidation of a high:level information or equivalent! accepted bytop management using modern world classE performance indicators

• 4mproved shared responsibility and accountability amongst its

managers

• 4mproved transparency for the management thereby helping them ineffective decision making

• 'reated an environment that encourages more focus management

meetings and boosts team performance in amicable ways

/-

ABS>nderstanding 'ulture


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ABS>nderstanding 'ulture

• 'ulture is composed of many elementscategorised as"

– (ymbols

– Geroes – ?ituals

– Ralues

/

ABS


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ABS

4n management consulting! concern for culture is

as important as any technical concern.• Being 'ulture:conscious

– Aenerate interest and enhance knowledge aboutvarious cultures

• Being 'ulture:tolerant – ?espect for different cultures

– 0olerance of their values and beliefs

– vercome the disparity between consultants cultureand the culture at work.

//

ABS

0ypes of organi3ationalculture


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ABSculture• >ormative Culture:

– @orms and procedures of the organi3ation are predefined

– #mployees behave in an ideal way and strictly adhere to the policies of the organi3ation.• Pragmatic Culture:

– 2ore emphasis on the clients and the external parties.

– 'ustomer satisfaction is the main motive

– (uch organi3ations do not follow any set rules.

• Academy Culture:

– ?oles and responsibilities are delegated according to their skill set. – 0raining to upgrade the knowledge and to improve their professional competence.

– 0he employees stick to the organi3ation for a longer duration and grow within it.

– #ducational 4nstitutions

• Baseball team Culture: – #mployees are the most treasured possession of the organi3ation who have a ma


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ABS

• Club Culture: – 4ndividuals are hired as per their speciali3ation! educational qualification and interests.

– &ppraisals are a regular feature of such a culture.

• 0ortress Culture: – #mployees are not very sure about their career and longevity.

– 0he employees are terminated if the organi3ation is not performing well.

– (tock broking industries

• "ough Guy Culture: – Heedbacks are essential. 0eam managers are appointed to discuss queries with the team members and guide

them whenever required.

– #mployees are under constant watch in such a culture.

• Bet your com$any Culture: – 0ake decisions which involve a huge amount of risk.

– 0he principles and policies are formulated to address sensitive issues and it takes time to get the results.

• Process Culture: – &dherence to the processes and procedures of the organi3ation.

– Heedbacks and performance reviews do not matter much. – Aovernment organi3ations

171

ABS(trength and 4mportance


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Sg p

of organi3ational culture

• $owerful strategic tool – 0o orient all units towards common goals

– 0o mobili3e employee initiative

– 0o ensure loyalty – 0o facilitate communication

• 2ix of cultures within organi3ation;#x"2@'s

176

ABS

'ultural Ralues and Behavioural@orms within organi3ations


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@orms within organi3ations

• rgani3ations mission and image

• (eniority and authority• ?elative importance of different management positions and functions

• 0reatment of people

• ?ole of women in management and other


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'onsulting Hirm s culture

4t encompasses values and norms concerning wide range of

issues including"

• 'onsulting methods and practices

• 'ommitment to clients

• ?esponsibilities and rights of


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culture

2anaging external adaptation"• 2ission and strategy: shared

understanding of primary tasks

• Aoals – derived from mission

• 2eans – how goals should be achieved

• 2easurement – determining how well thegroup is doing

• 'orrection – remedial and repair strategies

17+

ABSHunction of organi3ational


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2anaging 4nternal integration"• 'reating a common language and conceptual

categories

• Defining group boundaries and criteria for inclusion

and exclusion• Distributing power and status

• Developing norms of intimacy

• Defining and allocating rewards and punishments• #xplaining the unexplainable – ideology and religion

17,

culture

ABS'ultural 2odels


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• 0hey are made up of culturally derivedideas and practices embodied! enactedand instituted in everyday life.

• 0hey give a form and direction toindividual experiences.

17-

ABSAeert Gofstede and 'ross:


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'ultural 4ssues

• 'ulture is more often a source of conflict than of synergy.'ultural differences are nuisance at best and often adisaster.E – Aeert Gofstede

• 0he Gofstede 2odel of 'ultural Dimensions can be of

great use when it comes to analy3ing a countrys culture.

• Developed a model that identifies + dimensions to assist indifferentiating cultures – $ower distance

– >ncertainty &voidance – 4ndividualism

– 2asculinity

– Cong:term rientation

17

ABS


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Gofstede 'ultural Dimensions

17/

ABS


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• Po(er #istance: 0he extent to which the people of a particular culture are willing to acceptunequal power distribution.

• Gigh $ower Distance"

– 'entrali3ed decision making.

– 2anagement and superiors are highly respected and have the last say in decisions.

• Cow $ower Distance"

– #veryone expects to share in decision making.

– 2anagement hierarchies are flatter and more open to questioning

• =ncertainty Avoidance: 0he extent to which a society fears and avoids uncertainty anduncertain outcomes.

• Gigh >ncertainty &voidance"

– (trictly defined rules of behaviour and formality

– 0hings that are different or unexplained can be viewed as dangerous

• Cow >ncertainty &voidance"

– 5illingness to take risks – 2ore experimentation and % or innovative behaviour

117

ABS


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• Individualism vs, Collectivism: 0he extent to which people in the society definethemselves as part of larger groups.

• Gigh 4ndividualism"

– (ocial ties are loose

– 4ndividuals expected to look after themselves

• Gigh 'ollectivism"

– 4ndividuals are strongly incorporated into groups of family! clan! school

– Aovernment policies often favour the group over individual rights• *asculinity vs, 0emininity: 0he extent to which a society favours certain gender traits.

• Gigh 2asculinity"

– Havours assertiveness

– #mphasis on competition

• Gigh Hemininity"

– Hocused on quality of life

– 4mportance placed on the well:being of relationships

111

ABS


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• Long vs, Short&term "ime Orientation: 0he extent to whichsociety is focused on the future as opposed to the past and present.

• Cong:term time orientation"

– $romotes virtue and persistence.

– Hocus towards future rewards.

• (hort:term time orientation" – #mphasi3e the past and present.

– Hosters a respect for tradition.

116

ABS


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+hat are sta.eholders

A sta.eholder is anyone "ith an interest in a business Stakeholders areindividuals, 1roups or or1anisations that are affected by the activity of the

business They includeJ

•),ners "ho are interested in ho" much profit the business makes

•*ana1ers "ho are concerned about their salary•+or.ers "ho "ant to earn hi1h ,a1es and .eep their jos•$ustomers "ho "ant the business to produce quality products at reasonable prices•Suppliers "ho "ant the business to continue to buy their products•(enders "ho "ant to be repaid on time and in full

•The community "hich has a stake in the business as employers of local peopleBusiness activity also affects the local environment .or e#ample, noisy night(timedeliveries or a smelly factory "ould be unpopular "ith local residents

%nternal sta.eholders are groups "ithin a business ( eg o"ners and "orkers

External sta.eholders are groups outside a business ( eg the community

ABS


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#iagram sho(ing the internal and e%ternal shareholders

ABS


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Stakeholders are involved in andKor affected @negatively or positively by

the outcome and impact of an action, pro;ect or program Stakeholderscan be divided into t"o main categoriesJ

!nternal stakeholdersJ

!nternal Stakeholders are engaged in economic transactions "ith the

business @.or e#ample, stockholders, customers, suppliers, creditors,and employees

ternal stakeholdersJ

ternal Stakeholders are affected by or can affect a business?s actions

"ithout being directly engaged in the business @.or e#ample, the general public, communities, activist groups, business support groups, and the

media

ABS


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Sta'eholders and their objectives

ABS


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ABS


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ABSTypes of Sta.eholders3


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Types of Sta.eholders3

6$eople "ho influence an endeavour but are not directly involved "ith doing the

"ork amples include managers, suppliers, or the financial department of anorgani-ation

D$eople "ho are affected by any action taken by an organi-ation or group amples

are parents, children, customers, o"ners, and employees

HAn individual or group "ith an interest in an organi-ation?s success These

stakeholders influence programs, products and services An e#ample of such a

stakeholder is one "ho o"ns stock in the organi-ation

4 Any organi-ation, governmental entity, or individual that has a stake in or may beimpacted by a given approach to environmental regulation, pollution prevention,

energy conservation, etc The environmental organi-ation /reenpeace "ould be an

e#ample of such a stakeholder

5A participant in a community mobili-ation effort representing a particular segment of

societ am les include school board members environmental or ani-ations elected

ABS


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ABS


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.$onflictin1 sta.eholder ojectives

1ifferent stakeholders have different ob;ectives The interests of different

stakeholder groups can conflict .or e#ampleJ

•%"ners generally seek high profits and so may be reluctant to see the business pay high "ages to staff

•A business decision to move production overseas may reduce staff costs !t "illtherefore benefit o"ners but "ork against the interests of e#isting staff "ho "ill

lose their ;obs 'ustomers also suffer if they receive a poorer service

ABS


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Disagreements between stake holders

1ue to the demands placed on businesses by so many different stakeholders, it is no surprise

that there are often disagreements and conflict bet"een the different groups Some of the

more common areas of conflict areJ

67Shareholders and mana1ement

$rofit ma#imisation is often the over(riding ob;ective of shareholders ( resulting in large

dividend payments for them 0o"ever, it is far more likely that the managers of the business"ill aim to profit satisfy rather than profit ma#imise @that is, they "ill aim to earn a

satisfactory level of profits, and then use the remaining resources to pursue other ob;ectives

such as diversification and gro"th This conflict bet"een these t"o groups is often referred

to as divorce of o"nership @the shareholders and control @the management

87$ustomers and the usiness'ustomers are unlikely to remain loyal and repeat purchase from the business if the product

that the have purchased is of poor quality andKor is poor value for money More customers

are prepared to complain about the quality of products and after(sales service than ever

before, and the business must ensure that it has in place a number of strategies designed to

satisfy the disgruntled customer, reimburse any financial loss that they may have incurred

and persuade them to remain loyal to the business

ABS


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97 Suppliers and the usiness

Suppliers are often quoted as complaining about the lack of prompt paymentsfrom businesses for deliveries of ra" materials, and if this became a regular

problem then the suppliers may "ell refuse credit to the businesses or may even

cease all dealings "ith them %n the other hand, many businesses have been

kno"n to complain about the late deliveries of ra" materials and components

from suppliers, and the dubious quality of the parts once they have beeninspected

47The community and the usiness

As outlined previously, the local community can often suffer at the hands of a

large company through the negative e#ternalities of pollution, noise, congestion

and the building of ne" factories in areas of outstanding beauty 0o"ever, if the

business faces strong protests from residents and from pressure groups

concerned about its actions, then it may decide to relocate to another area,

causing much unemployment and a fall in investment in the community it leaves

behind

ABS


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+hat is corporate 1overnance

The system of rules, practices and processes by "hich a company is directedand controlled $orporate 1overnance essentially involves balancing the

interests of the many stakeholders in a company ( these include its

shareholders, management, customers, suppliers, financiers, government and

the community

The follo"ing definition should help us to understand the concept better


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+hat are the ojectives of corporate 1overnance

The development of corporate governance concept is naturally and essentially related tothe Lob;ectives of corporate governance: and it may be important to note "hat the

L!ntroductory frame"ork: has to say on this


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(v) That the Board keeps the shareholders informed of relevant developments

impacting the company;

(vi) That the Board effectively and regularly monitors the functioning of the

management team; and

(vii) That the Board remains in effective control of the affairs of the company at all

times.

The overall endeavour of the Board should be to take the organisation forward, to

maximise long-term value and shareholders’ wealth.”

ABS


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'orporate government initiatives by government

!nitiatives3 e" 'ompanies Act – inducing good '/ practices through self regulation,

responsive legal frame"ork based on shareholders: democracyG disclosure based

regimeG rational penal provisions "ith built(in deterrence and effective protection

3 Amendments to the Acts governing three professional institutes@!'A!K!'S!K!'*A! "ith a vie" to strengthen the disciplinary mechanism and bring

transparency in their "orking

3 otification of Accounting Standards "ith a vie" to bring the disclosure norms in

tune "ith the international reporting standardsG

3 S&B! – 'lause 4F – Appointment of !1s, Audit committee, 'ode of conduct,

disclosures of related party transactions, remunerations, compliance of accounting

standards, certifications of '&% N '.%, 'ompliance 'ertification N *histle(

blo"er policy @optionalG

ABS


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The /overnment has renamed the Ministry from


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+hat is Ethics

A set of standards derived from Social alues, to choose "hat is good and evil, )ight

or "rong, ought to do and not to do is &thical Standards These are the set of

values in accordance to the Social norms "hich helps to survive in the community

The Behaviour values "hich are considered important presently for the

e#istence, acts as a standard for the future ethical organi-ation decision making

There has been an increasing +nethical practices gained importance for being into.air practices, things came into limelight after the +nethical practices like .inancial

.rauds by companies like &nron and Arthur Anderson carried on, by "hich there has

been an !ncreasing pressure on the organi-ation from the /overnment

body and has more concerned on social responsibility and in unethical practices

An ethical decision making should be in such a "ay that it should

be legally and morally, acceptable by &mployees and the Shareholders May

be an ethical decision doesn:t al"ays directs to &thical behavior, "hereas an Ethical

0ehaviour al"ays comes before an Ethical decision ma.in17

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#actors leadin1 to Unethical 'ecision *a.in13

%ne of the reason "hy there is been an increasing unfair practices are because of 'ompetition

1riven $erformance Management, "here the possibilities of iolation of rules are higher

Since the ob;ective of any organi-ation is $rofit ma#imi-ation, the concentration of the mangers

tends to be more on short term goals rather than long term, "hich thrust them for taking unethical

norms ;ust to meet the performance targets

!ntrinsic .actors, like lack of Moral A"areness about the nature of decision, can make the decisiongo "rong and other !ndividual .actor values can also arises problem in making decision as per

organi-ation &thical standards "hich influences greatly "here the intensity depends on ho" strong

one is at, at their o"n values

&ven after the implementation of &thics policy it has been observed that, the subordinates follo"

"hat their supervisors likes rather than, "hat the policy says So, if the manager is unethical, thesubordinates follo" the manager in such unfair practices

$roblems in &thical decision making may occur not only "hen the intentions are evil, but also "hen

there is a conflict bet"een !ndividual !nterest and social norm

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+hat is po,er


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$o"er is the ability to 9

– /et someone to do something you "ant done

– Make things happen in the "ay you "ant

!nfluence is 9

– *hat you have "hen you e#ercise po"er

– pressed by others: behavioral response to your e#ercise of po"er

)e"ard po"er

– The e#tent to "hich a manager can use e#trinsic and intrinsic re"ards to control other

people

– Success in accessing and utili-ing re"ards depends on manager:s skills

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+hat is po,er


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+hat is po,er

'oercive po"er

– The e#tent to "hich a manager can deny desired re"ards or administer

punishments to control other people

– Availability varies from one organi-ation and manager to another

2egitimate po"er – Also kno"n as formal hierarchical authority

– The e#tent to "hich a manager can use subordinates: internali-ed values or

beliefs that the


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+hat is po,er

pert po"er

– The ability to control another person:s behavior through the possession of

kno"ledge, e#perience, or ;udgment that the other person needs but does not

have

– !s relative, not absolute

)eferent po"er

– The ability to control another:s behavior because the person "ants to identify

"ith the po"er source

– 'an be enhanced by linking to morality and ethics and long(term vision

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) i i i i) i i l P li i


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)r1anisational Politics)r1anisational Politics

3 $olitics refers to the structure and process of the use of authority and po"er to affect definition ofgoals, direction and the other ma;or parameters of the organi-ation 1ecisions are not made in arational "ay but rather through compromise, accommodation and bargaining – T+S0MA

.rom the above definition t"o points emerge

3 $olitical behavior is outside one:s specified ;ob requirements

3 !t generates efforts to influence the goals, criteria or processes used for decision making that "ill

result in the distribution of advantages and disadvantages "ithin the organi-ation

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#EATU/ES


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#EATU/ES

3 %rgani-ational politics involves the use of some kind of authority, po"er or pressure over other person or groups )e"ards and punishment are commonlyused for this purpose

3 Basically political behavior is self serving in nature Attempts are made to useorgani-ational resources for personal benefits or to give some benefits to others

3 $olitical behavior is outside ones specified ;ob requirements !t involves gettingthings accomplished that are not formally recogni-ed practices or procedures

3 $olitical decisions may not be rational from the organi-ational point of vie" Theyare usually made to acquire more po"er

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H dli ) i ti l liti


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Handlin1 )r1ani!ational politics

3 %rgani-ational politics has several unintended consequences such as less servicing behavior, goal displacement,conflicts, demotivation of organi-ational members etc

3 !n order to check undesirable behavior follo"ing steps may be follo"ed J

6 'learly defined ;obs

D $roper managerial behaviorH &ffective communication

4 .air evaluation system

5 Oudicial distribution of resources

Messi Syllabus

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