Truth about the Practice of Management

In Truth about Management Education, we talk about the problems faced by MBA students. The problem is real and solutions are not easy. But, for whatever they are worth, here are some suggestions for making management education more relevant to the concerns of real-world managers.

a) Course structure
In the MBA course, let's bring in more areas related to what the new MBAs would be doing in their first few years. This means - more exposure to aspects of law as it applies to business (statutory legal frameworks, maybe of several neighboring countries, contract laws and so forth) as well as a composite course called "commercial management". This would include all the nitty-gritty of daily business that gets swept aside in the MBA programme - how does one open a letter of credit? How do you start a business - what permissions are required? What are the ways in which an organization deals with its suppliers and customers? What does an invoice in a typical manufacturing organization look like? What does a typical agreement in a service industry e.g. a bank, look like? Obviously, given the great variety of commercial situations, everything cannot be simulated in the classroom, but one can be given a close look at the day-to-day reality of the business, which the MBA would be immersed in, once he/she joins an organization.

b) Faculty
The insistence of PhDs as faculty by many institutions has severely impacted the real-world experience profile of faculty in the classroom. In areas such as economics, such academic background is definitely a huge benefit, but, applied to areas such as marketing, one is almost certain of getting a faculty who is intimately involved in quantitative models and statistical analysis, but who has probably never sold or marketed anything in his or her career. The same considerations apply to areas such as human resources, operations and finance. Visiting faculty can close the gap to some extent, but only partially. The solution is to have full-time faculty with significant managerial experience (who are adequately compensated). After all, would you like to be taught surgery by a medical professor who has never conducted a surgery oneself? Yet, we think nothing of being taught strategic management by professors who have never developed and executed a strategy for an organization (typically a senior management or board responsibility).

c) Interaction with industry
Summer internships and projects, while extremely useful; rarely provide the kind of real-world environment with capabilities and responsibilities, the MBA students require. This is a complicated question, which various forward-thinking schools are trying to address in different ways. Some are proposing breaking up the programme into two parts: the first year followed by a one-year internship in an organization, followed by a second year, by which time the young MBA has a much better appreciation of the real dilemmas and issues of the real world. Others are proposing taking practicing managers out of their assigned roles for two years and immersing them in various learning environments. This approach has been taken by Henry Mintzberg, who firmly believes that management cannot be taught, only experienced and learned, and in his management development programme, only takes in practicing managers. These are exposed to various learning situations in different countries relevant to their working experience and then revert to their original employer.

Whatever be the structure of industry-academic interaction, it is clear that the quantity and quality of real-world exposure of the MBA student has to go up - a lot.

If we study professions such as law, medicine and accounting, it is clear that management theory and practice still has some distance to go before it can be called a profession. Even so, an appreciation of the issues involved in management education would ensure that we are moving in the desired direction - towards a meeting of the real world, where risks are taken, decisions are made and consequences suffered or enjoyed, and the academic world, where such situations are dissected and analyzed.

Truth about Management Education (that your professors did not tell you)

Key issues facing management education
For more than 50 years now, the notion of a newly minted MBA as a "ready-to-go" manager has been accepted across the world. Two (or in some cases, one) years of induction in the arts and science of management is supposed to prepare the young manager for leading change, conquering new markets, introduce new technologies, manage financial complexity and plot grand strategy for the enterprise.

This concept is now coming under attack. Led by vocal critics of the traditional MBA, like Henry Mintzberg, a section of academics have raised several pertinent questions about the differences between managers and MBAs. Some of them are as follows:

a) MBAs without relevant experience are not fit to assume higher responsibility straightaway
This argument holds that only relevant experience in an industry prepares one for a leadership role. An academic degree such as an MBA should just be a way of entering the industry. They should then spend a considerable time mastering the specific issues in an industry before assuming managerial positions.

b) The faculty in MBA programs is unable to bring real-world managerial issues to the classroom
This is a serious criticism related to the fact that, due to increased academic specialization, many management professors today have not set foot within a commercial enterprise in their careers. Also the intense focus on research in many (primarily, American) business schools means that professors concentrate on narrow subjects which may have limited managerial relevance; but these have very positive implications for their careers in terms of publications, obtaining tenure, etc. Hence, the faculty cannot bring to life issues which are very relevant to a practicing manager, but of which the faculty, without own managerial experience, knows little.

c) The issues which MBA students grapple within the classroom are not relevant in the initial stages of their careers
This criticism stems from the fact that many problems or issues framed in the MBA classroom are framed from the perspective of the CEO, Board of Directors or senior management. One of the reasons for this is that many faculty writing management cases, prefer "higher-level" issues and interact with, and write about, problems facing very senior management. However, these issues in many cases arise at such a high level of responsibility that management students would reach it after many years of experience. As an example, how many of us, studying in business school, have taken a company public in the first class (corporate finance course), then in the second class launched a new product in a new category (marketing management course), then in the third session developed a career path for fast-track managers (human resource course), all in the course of one morning! In reality, managers would spend decades developing their careers before they get to make decisions on IPO/Capital structures, New Product Development, and Talent Development, respectively. Simulating these high-level decision­ making situations in the MBA classroom develops a false sense of accomplishment and capability amongst budding managers, whereas they are not equipped with the skills or capabilities to make decisions involving such large stakes, or many variables.

FAQs on Internet Banking

Banking is no longer confined to the traditional brick and mortar branches. Customers are being provided with multiple modes of accessing banking transactions, including Mobile Banking, banking through ATM and Point of Sales terminals and now Internet Banking.

What is Internet banking?
Internet Banking is a means by which customers can manage their bank accounts and conduct real time banking transactions electronically over the Internet. Internet Banking gives customers the control over nearly every aspect of managing their bank accounts. Besides, the customers can check balances, see cheques status, transfer money from one account to another account, view transaction history and impor­tantly avoid going to an actual bank. In addition, the customer can also use Internet Banking to pay bills to service providers and also shop online.

What are the advantages of going in for Internet banking?
The advantages are many. First, there is round-the-clock, real time access. And second, one can access the bank from anywhere in the world at one's own convenience.

What are the requirements for accessing Internet banking?
The user will first need to open an account with the bank providing Internet Banking and register for the online banking facility; thereafter the bank will pro­vide the customer a unique personal password or Per­sonal Identification Number (PIN) to log into the internet banking site. There on, the customer will simply re­quire a computer and an internet access to avail the service. No additional software will be required to avail Internet Banking.

How is it actually done?
The user needs to be online and visit the bank's web site on the Internet. Then the user will have to click onto the Internet Banking section. The personal password supplied by the bank enables the user to access the bank and do any required transaction. Some banks even provides demo in their web site, to famil­iarize first-time user with Internet Banking.

What type of transactions or operations can be undertaken?
A user will be allowed to perform a vast range of trans­actions; some of these are as follows:

• Account information.
• Funds transfer.
• Online real-time payment for shopping done on Internet.
• Requests and intimations.
• Contacting/communicating with the accounts or relationship manager.
• Electronic bill payment towards utility bills.
• For business users, they can also initiate issu­ance of Bank Guarantee, Letter of Credit etc.
  

Can funds be transferred from one bank to another on-line?
Some bank has this facility and but most of the banks does not support it. But all banks can transfer funds among the various branches of the bank.

What are the safety tips I need to remember?
Online users would be safe with Internet Banking, if they abide by these rules and other online banking guidance and safety tips as provided by the bank pro­viding Internet Banking. Some safety tips are as fol­lows:

• Users will need to read the bank's web site privacy policy and fully understand and satisfy with the policy before using the internet banking site.
• Bank providing Internet Banking should provide safe­guards to protect personal information from being accessed by unauthorized persons. Online users should ensure these security mechanism are in place.
• Secure method of sending information back and forth
• Scrambled or encrypted information
• Firewall
• Password protection
• Automatic sign off after a certain period of inactivity
• If someone contacts a user via e-mail or the internet and claims to be a representative from their bank, the user by no means should give them any infor­mation. If such instances occur, the bank should be immediately contacted.
• When choosing a password, the user should avoid using easily available information like the user's mother's maiden name, birth date, the last four dig­its of the user's passport number or phone number, or a series of consecutive numbers etc. User needs to use their judgment to have a difficult password at all time and frequently change them. Password should always be heavily guarded and not disclosed to anyone, anytime.

What is e-commerce and what are its current capabilities?
E-commerce is making payments electronically. Here both the buyer and the seller will require opening an account with the bank providing Internet Banking. For availing the products/services of the seller/supplier, the buyer will make payment online and the seller will be notified instantly on such payment either through emails or SMS.

The same concept applies to online shopping, wherein the retail customer of the bank will visit the website of the online shopping portal, chose a product as displayed in the online portal and at the time of making payments, the online shopper will log into the Internet Banking website of the bank and make such payments. Electronic payment through internet is slowly expected to decrease the usage of the conventionally used system of making payments through cheques.

Can one access bank accounts through a mobile phone?
Yes, one can access banking through the SMS Banking services of the bank. SMS stands for Short Messaging Service. In SMS technology, one has to key in certain predefined "keywords", as instructed by the bank, to access the services. As the keyword is entered, the cellular service provider connects the customer to the bank, which in turn, will flash the required information on the cellular phone screen.

Unlike SMS Banking, in WAP-enabled mobile bank­ing, one actually logs on to the bank's website, as in Internet Banking and avails the full services as pro­vided by the Internet Banking.

Corporate Crimes and Criminal Liability

Introduction
The popularity of corporate form of organizations like corporations and companies for running the business is growing day by day.

However, along with the growth of companies, both private and public, different types of corporate crimes are also increasing everyday. Corporate crimes in the form of fraud, forgery, misrepresentation, tax evasion, fund embezzlement, statutory offences and many other kinds of offences may take place.

Corporate Crimes
Corporate crimes cannot be looked at in a narrow manner. It covers a wider area of criminal offences. It not only deals with crimes which include false and misleading advertising, illegal exploitations of employees, mislabeling of goods, violation of weights and measures, selling adulterated foodstuffs and evading corporate taxes, but also socio-economic crimes like bribery and corruption, misappropriation of funds, frauds, embezzlement, black marketing, profiteering and hoarding, smuggling and violation of foreign exchange. It is no longer limited in its nature and scope. Therefore, any corporation may be involved in any kind of above-mentioned crimes.

Corporate Criminal Liability
The question of imposing criminal liability to a corporation for criminal offences committed by directors, managers, officers and other employees of the corporation while conducting corporate affairs has gained a lot of importance in the jurisprudence of criminal law. The very basis for the possibility of imposing criminal liability to a corporation is its independent legal personality.

Now the question is whether a corporation as an artificial person is capable of committing a crime and is criminally liable by the law or not. The traditional view was that a corporation could not be guilty of a crime, because criminal guilt required intent and a corporation not having a mind could form no intent. In addition, a corporation had no body that could be imprisoned.

Courts are especially likely to impose criminal liability on a corporation when the criminal act is requested, authorized, or performed by the board of directors, an officer or another person having responsibility for formulating company policy or high level administrator having supervisory responsibility over the subject matter of the offence and acting within the scope of his employment.

Though a corporation may be characterized as a 'person' capable of a crime, the theoretical difficulty of attributing a criminal intent - a required element of most criminal offences - to non-human, artificial entities create problems in the process. At the same time it is also argued that though the corporation is a legal person, its true responsibility can be located in its organizational structure, policy, procedures and culture. Therefore, imposing corporate criminal liability on the basis of the fault of the directors or senior corporate managers who are identified for such purposes as the corporation has also been raised for deliberation. Here the question of "directing minds" arises. In fact, the issue of corporate criminal liability has mostly focused on the problem or articulating a test or mechanism for locating a corporation's "directing minds" so that the criminal intent of the directing minds can be attributed to the corporation.

Theories of Corporate Criminal Liability
Three devices have been used, in different contexts, to hold corporations criminally liable for true crimes and regulatory offences. The first device is vicarious liability and the second is the identification theory. A third device - locating fault in the corporation's organizational structure, policies, culture and ethos which permitted or encouraged the commission of the crime - has been advocated by legal theorists such as Fisse and Wells.

Traditional doctrine of vicarious liability holds the master (or employer) liable for the acts of the servant (or employee) in the course of the master's business without proof of any personal fault on the part of the master. This is because vicarious liability does not require proof of personal fault on the part of the master. The master can be either an individual or a corporation.

Under the second device, the identification theory, the acts and state of the directing minds are identified as the corporation. The corporation is considered (fictionally) to be directly liable, rather than vicariously liable if mind of certain senior officers in a corporation - the directing minds of the corporation- are deemed to be the acts and state of mind of the corporation. The identification doctrine arose out of the perceived need to find a way to hold corporations liable for mens rea offences.

Rationale for Adoption of Corporate Criminal Liability
The rationale for adoption of the concept of corporate criminal liability is that the human agents running the corporations or companies began to cheat or defraud the public and even the government, knowing that law will not pursue a corporate body for the criminal acts of its directors and employees. It went against the intention of the legislators as conceived of. Corporate bodies reap all the advantages flowing from the acts of the directors and they act to the detriment of the public in the name of the corporate bodies. Since the companies are legal entities, they are open to prosecution and indictment for criminal acts of its directors and employees. Thus, the gravity of harm caused to the community and to the individuals by human agents with the help of sophisticated scientific and technical measures warranted such a change, which not only needs to be kept up but also tightened for the general good.

Cooperative at a Glance

"Cooperative enterprises provide the organizational means whereby a significant proportion of humanity is able to take into its own hands the tasks of creating productive employment, overcoming poverty and achieving social integration."
- Kofi Annan, UN Secretary-General

1) What are Co-operatives?
Co-operatives are a form of business enterprises or community organization, incorporated in service to its members and users, in order to meet their common economic, social and cultural needs and aspirations. Co-operatives are jointly-owned and democratically controlled by their members and users on the basis of one member, one vote.

Co-operatives use democratize, participatory, and transparent decision-making processes and organizational structures so that their members and users (i.e. owners, workers and consumers) may be directly responsible for benefiting themselves and the society in general.

2) Values and principles
Co-operatives are based on the value of self-help, mutual help, self-responsibility, democracy, equality, equity and solidarity. Co-operative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

Guidelines by which co-operatives put their values into practice are:

• Voluntary and Open Membership
• Democratic Member Control
• Member Economic Participation
• Autonomy and Independence
• Education, Training and Information
• Co-operation among Co-operatives
• Concern for Community

3) International Cooperative Alliance
The International Cooperative Alliance (ICA) is an independent worldwide international association of cooperative organizations of all types. Founded in London on 18th August 1895 by the International Cooperative Congress, the ICA has affiliates in 90 countries with 251 national and 4 international level organizations as members serving well over 800 million individual members worldwide.

The ICA collaborates with several United Nations agencies, including the International Labor Organization (ILO) and the Council for Trade and Development (UNCTAD). ICA enjoys Category-I Consultative Status within the United Nations Economic and Social Council (UN/ECOSOC).

4) Functions of Co-operatives
The co-operatives carry out the following functions with a view to attaining its missions and objectives.

a. Promotion and Development

• Launch publicity programs for creating an awareness of cooperative spirit among the people and for accelerating and widening the cooperative movement and cooperative activities in a healthy manner.
• Encourage people for organizing need-based cooperatives which may be self-inspired self-reliant, voluntary and autonomous.
• Conduct study and research on various aspects of cooperatives and extend assistance to them.
• Support cooperatives in developing the leading capacity for cooperative leaders.

b. Training and Education

• Organize programs like education, training, seminar, workshop and meetings to develop human resources required for the competitive management of the cooperatives and unions.
• Business Promotion and Operation
• Carry out business activities involving, natural resources, environment management, renewable energy, agricultural production and other products and export such products as per demand.
• Make arrangement for the import and supply of materials, machinery, equipment, consumer goods, construction materials etc. required for the cooperatives and unions.
• Establish agro-based industries and other industries or carry out such programs in collaboration with the interested cooperatives and unions or other institutions or provide cooperation to the cooperatives and unions for carrying out such activities.

d. Planning and Management Consultancy

• Provide support to the cooperatives and unions in planning, implementation, monitoring and evaluation of programs in order to make their management and business effective and efficient.
• Provide managerial and legal advises required for the cooperatives and unions through consultancy services.

e. Inter-Cooperative Relation

• Promote and establish relation with government, Donors, INGOs, NGOs and coordination with the concerned organizations at national and international levels.

f. Leadership and Representation

• Lead and represent the cooperative movement at national and international levels.
• Act as the chief spokesperson of the cooperative movement.

5) Why Co-operatives?

• To teach the lesson practically and theoretically in the grassroots level about the democracy, equality, ethical and the moral value of the honesty, social responsibility, caring for others as well as the cooperation among the members of the cooperatives. Members learn a vital role of the human beings towards the society and the country from the cooperative society as a best school of the management of the day-to-day life of the people.
• Cooperative intervene the private monopoly in the market where the artificial scarcity of supply, adulteration of commodities, unfair pricing, etc. is taking place. Cooperative works and services for members of the community but company works for the individual owners for their individual benefits. So, cooperatives need to be established to safeguard the interest of the grassroots level people or the voiceless people of the community. Cooperatives can serve the people of the country as a best partner of the welfare state.

How to build brand loyalty in customers

It is widely believed that advertising is the key to nurturing brand loyalty. It not only tempts people to try out a new product, it reinforces brand loyalty. Study after study demonstrates that the reinforcement effect of advertising that follows the sale is at least as important as the effect of advertising that led to the sale.

Cultivating loyalty saves the company money. Studies reveal that it costs four to six times as much to attract a new customer as it does to retain an old one. That's what's behind the welter of frequent flier programs, money-back guarantees, etc.

Companies can boost their sales almost 100% by retaining just 5% more of their customers. One very simple reason is that loyalists buy more. An extraordinary share of sales can be traced to a tiny share of loyal heavy users. Campbell Soup Co. discovered that not all sales were equally valuable after it analyzed one brand. The soup giant found that only 4% of its customers accounting for 15% of sales volume were highly profitable and that all the brand's profits came from a mere 10% of its customers.

In fact, Kathleen McDonnell, group president of Campbell's frozen foods group said that the most profitable group of brand loyalists tend to pay more for your product, buy less frequently on price-off deals and are very positively disposed toward your brand.

Brand loyalty is a necessary component to brand domination and thereafter brand leadership. And that obviously is the right place to be. It has been observed that the No. 1 brand enjoys a price premium of 10% over the No. 2 brand and a 40% premium over store brands. Top brands not only sell more; they also sell at higher prices.

Today there is a wave where marketers are evolving from a transaction mentality to a relationship mentality.

First was the mass marketing wave where what you got made got sold; build awareness and they will come.

Then came target marketing where customers assumed more respect but still didn't call the shots. Instead of being addressed en masse, they were corralled into demographic or psychographic segments like women 18-34 or strugglers.

Next came global marketing and now we are moving to the fourth wave, brand-loyalty marketing. Here, enduring, profitable growth is the goal, and the sale is just the beginning of an opportunity to turn the purchaser into a loyalist.

The question that is uppermost in the minds of most marketers today is "is brand a reality or is it just a myth"?

Today's customers are questioning whether there is value in firm loyalty to any company. This clearly indicates that something is missing in what business deliver compared to what they promise and what customers expect. Today, too many companies aim no higher than meeting customer satisfaction, instead of addressing the deeper issue of loyalty.

Every company strives for a high level of brand loyalty, which ultimately guarantees a high level of profitability. But, ultimately, the brand loyalty they aim for, that is a consumer so loyally devoted to the brand that they buy it again and again, can never be achieved because they place the emphasis of brand loyalty in the wrong place. They assume that brand loyalty is something the company and the brand do for the customer.

Influencing the customer to buy is not the same thing as somehow transforming the consumer into a customer that always buys that brand.

At its most basic, consumers can develop a brand "habit" meaning that out of habit they reach for a specific branded product without thinking. A brand habit makes shopping easier and the eventual outcome of the purchase predictable.

A higher, more refined connection of consumer with brand is through a special brand affinity. That is where some recognizable, inherent attribute of the brand touches an emotional chord with the consumer. They feel connected to the brand on a personal level. Many consumers feel an affinity to Coke as the soft drink linked with their youth. Other consumers feel an affinity to branded products that they display and others see. The Polo logo, the Mercedes hood ornament, the Rolex watch label all say something about the consumer, who they are and who they aspire to be.

Brand loyalty, therefore, is essentially all about how effectively and completely the company's brand satisfies the consumers' needs, desires, and dreams. A brand is loyal to the consumer when it connects with the consumers' emotional desires. When that emotional connection occurs, the company may then be rewarded with some special affinity the consumer feels for the brand, which may influence them to buy again. A brand's loyalty to its customers therefore yields consumers having an affinity for the brand. Truly connecting with the customer on an emotional level is the key to brand loyalty and customer affinity.

In other words, brands are made for customers; not customers made for brands. Peter Drucker said, “Marketing is the whole business seen from the point of view of its final result, that is, from the customer's point of view." If we are to achieve consumer affinity with our brands, we need to understand the consumer, what their drives and desires are and how our brands fulfill consumer fantasies.

Ultimately, the challenge for brand marketers is all about connecting why the consumer buys with how to reach them and where to reach them. There is dire need to effectively connect with the consumer. Connecting is about talking less and listening more. It is about giving more value, rather than taking more money. It is being involved and passionate about the customer rather than waiting for the customer to get involved. It's about connecting with the community and the things that matter to the consumer. It's about creating your business to satisfy the needs of your customer.

The more a company shows they care, the more loyal customers appear to be. Just as in friendships, constant demonstrations of caring encourage a feeling of comfort and build stronger relationships. Even in the most advanced businesses, studies reveal that the key to loyalty marketing is 5% technology and 95% psychology.

What is brand loyalty

Marketing involves activities necessary for the planning and delivery of products and services from you as the supplier to the customer, to satisfy the customer needs and to meet the organization objectives. Majority of organizations aspires hard to market leadership. So what does it take to be a market leader? Turns out it is not just attainable by a chosen few, yet in a knowledgeable economy it does require some intellect, a map to show the way ahead, the will to succeed and the team working for the common goal. Lifelong customer loyalty is the ultimate frontier for true leadership in today's intensely competitive marketplace.


What is Loyalty?
According to the dictionary, loyalty means being faithful to the cause, supportive of and having allegiance to. In free enterprise, repeat business, returning customers, frequent buyers and satisfied customers are the essence of loyalty. To better understand what loyalty is, let us examine four different types of loyalty. These are the most common loyalties found in the business realm.


Types of Loyalty
1. Product or brand loyalty
This kind of loyalty is based on a customer's preference for a type of product, level of service or a particular brand name. Most people are loyal to a business, product or service. For e.g. some of us only buy Colgate toothpaste, drink only Coke and wear Levi's jeans. Product or brand loyalty is usually based on experience or use. We've tried it, we like it, and we'll buy it until a better alternative comes along.


2. Deal loyalty
This type of loyalty is also known as coupon, incentive or value loyalty. I fly United Airlines because of the frequent flier program. However, my loyalty is not blind, but rather based on previous good experiences as well as incentives. Price-off coupons, two-for-one offers, zero percent incentives and price reductions are all aimed at attracting people and turning them into satisfied customers. While deal loyalty can be used as a tool to create product or brand loyalty, you must necessarily deliver the goods every time. Sometimes deal loyalty can backfire. Poor product performance and inferior service may actually drive customers away instead of making them more loyal. Remember you are only as good as your last customer memory.


3. Location loyalty
This type of loyalty can be defined as convenience loyalty. Most customers have the following human characteristics: they are lazy, short of time and basically creatures of habit. Therefore, if the location is easily accessible, adds to the basic comfort level and makes life less difficult and complicated, he will be loyal to your location, all other things considered equal.

4. Relationship loyalty
People prefer to do business with people they know and trust. Besides, we definitely prefer to do business with people we enjoy being around. For several years, we frequented a particular restaurant. The food was consistently good, the place was clean and the owner was friendly and knew our names. Often, the owner would be out in the dining area greeting and visiting with customers. Then the owner decided to sell the business. The new owner was a stranger and made absolutely no effort to get to know any of his customers. We did visit thereafter, but nevertheless, the magic was gone. Relationships are evidently important and business is still definitely about people.

The best-run brands recognize that a brand's identity is not comprised only of the brand's name, graphic identity, tagline and positioning, but it also is significantly impacted by the actions surrounding it.

Brand loyalty is something that every brand and company strives for and believes they can attain. As far as the company is concerned, to attain a high level of brand loyalty, all it takes is a bigger marketing budget, a new advertising campaign, and another creative agency.

Studies show that as brand loyalty goes up, consumers grow less sensitive to changes in the brand's price. Loyal customers are less likely to be sensitive to competitive promotions, driving down the marketing costs. As brand loyalty goes up, so does consumer's interest in trying out new products and services from that brand and most importantly, so does the brand's profitability.