Marketing Principles

ABC stands for activity based costing. This is defined as a method which identifies various activities needed to provide a product and determines the cost of these activities. I would say it is a method of breaking down the process of the business’ activity down to its root components. Then the causes of profit losses can be weeded out. For example, in a warehouse setting in which I worked, there were a few major departments which included receiving, stock dept., pick/pack, and shipping department. Merchandise traveled through the warehouse along this pathway. If say, production (boxes shipped) is down, we can specify the cause using this technique. Instead of just knowing that production is down, we may learn that the receiving dock is backed up , which leads to no merchandise for the stock dept., which results in orders being held up on the flows. Management can then find the cause of the backup in receiving and go from there.

Stands for the Age Discrimination in Employment Act, which, according to text, prohibits age discrimination and mandatory retirement. It was established in 1967. It pretty much explains itself. Basically, there cannot be a maximum age for employees, and termination can not be based solely on age. A good example of this would be a mother returning to the work force. They may be frowned upon due to their age. I have read somewhere that people over the age of forty are in a protected class, and cannot be discriminated against by virtue of the law.

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This stands for Behaviorally Anchored Rating Scale. It is defined as a rating technique that relates an employees performance to a specific job related incident. This definition doesn’t really help me. It seems that the procedure is to define certain personality traits that are essential for a certain function, then to rate the prospective employee based on a scale of these trait. For example, someone applying to be a chef would be hired on base on a number of traits, one being prior experience. A ten on the scale would be something like, “10+ years of experience in a 4 star restaurant”, while a zero would be “no experience”. The employees “worth” could be determined by a composite of all these scales.

Stands for Consolidated Omnibus Budget Reconciliation Act. This is defined as a policy established in 1985 which required continued health coverage (paid by employee) after job termination. This means that health insurers cannot discriminate base on a person’s employment status. An example would be a victim of a downsized company, forced to work for a company which does not provide health insurance, and so must continue their current plan.
Stands for Effort yields performance, and is defined as: The degree of expectation that putting effort into a given task will lead to high performance. I would say, “Is it worth all the trouble?” For example, no matter how much effort I put into reading a first edition Crime and Punishment, written in Cyrillic figures, my performance in reading Russian will not improve in the least. However, if I put a good deal of effort in actually learning Russian from the beginning, taking a class or reading a how to book, there is a greater chance that my performance will increase.

Stands for Economic Value Added system. It is defined as a control system that measures after-tax profits minus the cost of capital invested in tangible assets. This , according to text, is intended to capture all the things a company can do to add value from its activities. I would guess that this method roots out all unnecessary assets, as can be shown by increases and decreases in this figure.If a company is buying new real estate every year, this may lead to loss of net profits, if the real estate is purchased carefully. This fact could be discovered using this method.

Defined as a simplification of Maslow’s hierarchy of needs. This theory has three levels; existence, relatedness, and growth. This is a simplification which makes this psychological theory applicable to the business world. The achievement of these needs make for a satisfied worker. A warehouse worker first want to feel safe and physically comfortable at work (existence), then would like to get along with their fellow employees (relatedness), and finally, would like to know that they are not in a dead end job. If it is 120 degrees in the warehouse, their first need is not met, and therefore no progress will be made. In a comfortable warehouse full of jerks, the worker will still have a ceiling of satisfaction. Finally, even the best environment combined with a dead-end job will make for an unhappy worker.

Food and Drug administration, a government agency which approves the safety of food products and drugs as safe for human use. An example of their legislation is the approval of the abortion pill. Although some may believe it is immoral, the FDA still approved it. This is because they felt it was safe for consumption, which is the ethical decision. The FDA is not influenced by moral issues.

General Agreement on Tariff & Trade, which basically mapped out international trade regulation. The main function is to protect the “little guy” from unfair trade practices. For example, the United States cannot hamper the chances of a third world county in the global economy, by imposing unfair tariffs, etc. This is an attempt to bride the gap between wealthy and poor nations, which evidently hasn’t accomplished much.

Stands for health maintenance organization. I couldn’t find much in the text about this one, although I know that it is the same as health insurers. Their major downfall, it seems, is that they have lost a “human touch”, which is at the root of the medical profession (Hippocratic Oath). For example, possibly an extreme example, a covered person who receives medical service could possibly not be covered because of something like forgetting to cross a “T”. All business.

Human Resources, name for employees, or a department of a company which is responsible for recruiting, hiring, and keeping employees happy. They can implement strategies to departments for particular company goals. The functions of the HR dept. at my company which have affected me include hiring me, referring me to my department, orientation, explanation of benefits, and approval of my tuition assistance.

Management by objective, basically setting goals for employees as a means of management. Problems with this method of management is that it does not account for any major changes in the future. In my warehouse work, we were required to maintain a rate of 75 picks per hour. This is a decent environment for this type of management, since there is no major fluctuation in the work. It failed, however, to account that most of its employees couldn’t count to 75.

Occupation safety and health Act, it establishes mandatory safety and health standards in organizations. Basically, creates a safe work environment for employees. At almost any new job, you are required to watch a video about safety with chemicals in the workplace, even if there are no chemicals. Many places in which I have worked have a huge book which contains hazards of many chemicals. Also, when I used to do house painting, all of our ladders had to be OSHA approved, in order to ensure safety.

The next step of EP, which means performance yields outcome. Back to my prior example of learning Russian, I ask myself, “Does my increased performance enhance the outcome of my work?” For my current job, the answer is a resounding “no”. But if I were relocated in Russia, my increased performance would lead to greater work outcome. This seems to be rooted in operant conditioning (Skinner), “If I press this bar (performance), will there be a food pellet (outcome)?
Stands for Strengths, Weaknesses, Opportunities and threats. This is what is searched for in a situation analysis, which is used to determine organization performance. According to the text, this is especially important for companies considering globalization. Personally, I think this type of strategy would be useful for everyday decision making. These factors, although I didn’t know of this particular strategy, affected my decision to continue my schooling while working full time. I will demonstrate a more detailed example later in the exam.

1. The new management paradigm is based in the idea of a learning organization, which all employees are participants in the decision making process. This is a major diversion from the old paradigm, which is based in a vertical setup, where all of the power sits at the top. In the new paradigm, employees are given access to company information, which results in a more participatory decision making process.

This new paradigm is a result of a very rapidly changing, globalizing economy, diversity in the workplace, chaos, and the new speed in which information is moved throughout the world. All of these factors point to the idea of chaos. In the old structure, stability was the main premise of its success. We are fining now that the non-adaptibilty of these old structures have lead to their downfall. In a learning organization, the structure is very dynamic, due to the input of more employees, and the development of better ideas.

All of my jobs have held to the old paradigm. Especially warehouse work, where we are essentially robots, all legislation is from the top down. Suggestions were humored, but never acted upon. Although the new global economy is pushing major global corporation into the new paradigm, the old paradigm still rings true and is very effective for many smaller, more localized companies, which are still a vital part of our world today.

Symbols can be very important to corporate culture. As cited in the book, symbols can convey themes which are important to a well functioning corporation. The symbol “Big Blue”, was once a symbol of pride for its employees, but is now a symbol of lost jobs as a result of massive downsizing in the early 1990’s.Unfortunately, I think that most of these things are laughed off by the general population of employees. The symbol for my company is a bee, because our late founder thought of us as worker bees, constantly plugging away at work. I doubt that anyone thinks this while working, instead it is only cited jokingly, even by managers.

I feel the same applies to stories, slogans and heroes. In a warehouse I worked at, there where signs that read, “The customer is why.” Everyone laughed at that one. Our paycheck was why. We also used to make up fiction stories of warehouse heroes who could “carry 34 boxes at once”. The only time a story or hero could be motivation is when the employee can see themselves as that person, who succeed against odds. Or stories related to chaos, which one small event greatly influenced the company. But in general, I feel that these thing are around the same level as symbols, passively perceived.

I heard that if we were to eliminate the City of New York right now, that the work, not just the United States, would enter a severe depression. This, in a nutshell, demonstrates borderlessness. Not since the 1920’s has the US adapted a an isolationist policy, and now, with the worldwide economy, it is impossible. An example would be our dependency of foreign oil, which if cut off, would probably ruin our nation for a period of time. We no longer have the means to support ourselves, nor do most other first world countries. We are all, almost to the point of danger, interdependent.

Statelessness goes back to the new management paradigm and chaos theory. In the last ten years, companies have undergone drastic changes. General Motors now uses automobiles as a mean of making profits on fincancing interest. They are now essential in the banking industry. When a company is less centralized and more dynamic, you may never have the same day twice, in theory. This company is stateless, compared to the warehouse, where the employees have been doing essentially the same exact thing for 10+ years.

Yes. If the corporations forecast a loss of money, they will adapt. I would hypothesize that certain practices are taken as a trade-off to the maximum liability for a related irresponsible action. If there is no ceiling for liability, I think that these big corporations would be much more cautious in their procedure, especially those which may pose a risk to the environment.

However, to implement such legislation, it must be done gradually, yet steadily, to ensure that oil production is not halted. 99% of environmentalists are 100% dependent on oil, as is the rest of the population. Extreme legislation, implemented too quickly would be more immediately detrimental to human beings that deterioration of the environment. It is important to know that current practices will also lead to the pre-mature extinction of humans at some point in time. Therefore, we must find a middle ground.

Strengths- Scenic location, good education with qualified staff, affordable price for in-state residents
Weaknesses- Overshadowed by university centers such as SUNY Albany and SUNY Binghamton, reputation as a drug school, remote location, medium level school, “Well, it’s not Harvard.”,
Opportunities- Increased local population, i.e. Rockland and Orange counties, increased national enrollment, vast market for local people looking to return to school
Threats- new SUNY in Orange county, relative lack of room for expansion
1. Chaos theory states that the universe is a series of random event, and that one insignificant even could have very far reaching consequences. In order to survive in a chaotic world, a species must be dynamic and adaptable. This is why lower orders of life have outlived higher orders by sometimes immeasurable amounts; their ability to adapt to a changing environment, e.g. ice ages, meteorites, etc.
This type of thing can be conveyed to the mindset of a modern, successful company in today’s chaotic global environment. The strong and rigid used to be the most powerful in the stable industrial age, but now the lean, efficient, dynamic company under the new management paradigm will succeed. It’s like an old muscle car. They can beat any car in the straight drag race, but the smaller, light, better designed car will respond much more successfully to the winding, chaotic road.

The reason chaos theory has influence management so greatly is because we are now in a chaotic world economy. One hundred years ago, there was no need for anything more progressive and dynamic than the old management paradigm
Culture shock is another result of the chaotic, globalizing economy. I have heard that if you don’t know how to bow in Japan, don’t, since it itself is a dialect, and more likely than not, you would end up insulting your host. Also, a firm handshake and eye contact are seen as a threat in Japan, although they are an essential in American culture. For the American who has learned this the hard way, they have experienced culture shock.
When an American works or manages in a foreign land, they are almost always bombarded with new values of their new colleagues. It is impossible to determine what is “right”, and for now, it is essential that we adapt to the mores and ethics of these different cultures. As the global marketplace develops, I believe that all business practices will diffuse and mix with each other, and in time, form one established way of acting in a workplace setting.

I could not find much about future shock, so I will wager a guess that it occurs when classically trained managers encounter the new global economy, and watch the demise of all the “truths” they hold dear, the same way an atheist would feel if she/he saw God face to face. I would also venture a guess that this occurred when the old managers, used to their power, saw their methods lose strength and validity.

A mission statement is defined in the text as a broadly stated definition of an organization’s basic business scope and operations that distinguishes it from similar types of organizations. This makes me think of the electronics store, “Best Buy”. I was browsing in the store when the salesman came up to me and went on to explain how he didn’t work on commission and that he would not pressure me into a high priced product.. The mission statement for that company probably stated that in order to set them apart from other electronics stores.

A mission statement focuses the goals of the organization in order to be successful. Possibly methods such as ABC analysis could be used with a mission statement. The functions of the company, or lack thereof could be compared to see if they are consistent with the mission statement, assuming “success” is not being achieved. If they are, the mission must be changed, if not, the actions can be changed.

It is important that the mission statement be flexible, as to “conform” to the new management paradigm. If it does not take chaos into account, it is likely that the company’s goals will not be achieved.

Total quality management (TQM) is defined as a management approach that focuses orgainzationwide attention on delivering total quality to customers and includes (1) employee involvement, (2) focus on the customer, (3) benchmarking, and (4) continuous improvement. This seems like another interpretation of the new management paradigm, as evident by the first part, employee involvement. TQM assumes that the input and involvement of employees is one of the main parts of providing customer satisfaction, which is the goal of any organization, chaos or not.

Which leads to focus on the customer. This is a departure from the old focus on profits. In the old paradigm, profits were the measure of success. Now, as we globalize, it is more important to adapt to a variety of needs and desires of a broader base of customers. Benchmarking is setting a standard. This seems like an idea of the old paradigm, i.e. what was good enough yesterday is good enough today. This is not true, although benchmarking is vital as a measure of where not to fall below.

This brings us to the fourth part, which is continuous improvement. What was good enough yesterday is NOT good enough today. This should apply to individuals as well as businesses. New benchmarks must be set for success in the chaotic atmosphere.
The concept of virtual corporation is the icing on the cake for ideas such as globalization and interdependence. Buy a personal computer and you will see a manifestation of a virtual corporation. 20 years ago, IBM, more or less, made the whole computer (chip, software, harware, etc.) Now when you buy, for example, a new Dell system, you may get a Sony monitor, Microsoft Keyboard, mouse, and operating system, Intel Chip, and a cannon printer.
The idea is that Dell focuses on manufacturing the computers. They leave the speed of the chip and the clarity of the monitor to Intel and Sony, respectively. This results in a much more efficient corporation which isn’t “spread too thin”. It also results in a better product, and more profits for more companies, fueled by high customer satisfaction.

One flaw in this type of setup is an interdependency between all of these companies. If Intel is having problems, then 99% of PC manufacturers are having them too. This is rarely the case, since each company is only concerned with the one task at hand. Virtual corporations are just another result of decentralization and more free and faster exchange of goods and ideas.


Bibliography:
Principles of Marketing text, 1999