By Ken Sweet
FOXBusiness
Yes, the Dow Jones Industrial Average falling below 10000 -- even just intraday -- is important.
Investors said they are bracing for more downward pressure and even more selling, at least in the near term, with the Dow showing how easily it could sink below the 10000 mark. They expect retail investors, who have for the most part held on, to start pulling out as the key psychological level is broken.
“It’s the kind of barometer that makes the evening news,” said Quincy Krosby, chief market strategist at The Hartford. “The Dow being below 10000 just makes the individual investors very nervous.”
Of the three major indexes tracked by U.S. investors, none is more popular with Main Street than the Dow Jones Industrial Average. The 100-year-old index is consistently cited by the media and individual investors -- much more than broader market averages like the Standard & Poor's 500-stock index.
The S&P 500, which contains 500 companies, compared to the Dow’s 30 stocks, is what Wall Street usually tracks and cites. But when market mentality matters, the Dow becomes the bigger influence.
The Dow’s 10000 level is “both technical and psychological,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
The Dow first broke above the 10000 level in 1999 during the dot-com bubble, only to fall below that level in 2002 when the bubble burst and the country entered a recession. The popular index eventually recovered in 2004 as housing became a popular investment and the economy started to boom.
Being below the 10000 mark on the Dow will probably trigger more selling, technical traders said. Program traders have instructions built into their software when indices hit key technical or psychological levels.
“The 10000 mark has been a key level for rallies and selloffs,” said Richard Sparks, senior equities strategist with Schaeffer’s Investment Research. “We were climbing to 10000, it acted as a ceiling, and when we fell to 10,000 after the dot-com bubble, it acted as a floor for some time.”
Sparks said that the next technical level for the Dow is hard to gauge. Traders now have to go back several years to get technical floors -- and the economy affecting the last drop below 10000 isn't the same economy affecting this market.
The good news, or maybe some possible glimmers of light for investors, is the amount the Dow has fallen in this market downturn. In the average bear market, the Dow traditionally falls around 34% from its high. From its October 2007 top, the Dow is now down around 32%.
"We're getting to the point where people are selling for selling's sake," Krosby said. "A lot of times, that's the sign of market's bottom."
Tuesday, October 7, 2008
Monday, October 6, 2008
Lesson From a Crisis: When Trust Vanishes, Worry
By DAVID LEONHARDT
Published: September 30, 2008
In 1929, Meyer Mishkin owned a shop in New York that sold silk shirts to workingmen. When the stock market crashed that October, he turned to his son, then a student at City College, and offered a version of this sentiment: It serves those rich scoundrels right.
A year later, as Wall Street’s problems were starting to spill into the broader economy, Mr. Mishkin’s store went out of business. He no longer had enough customers. His son had to go to work to support the family, and Mr. Mishkin never held a steady job again.
Frederic Mishkin — Meyer’s grandson and, until he stepped down a month ago, an ally of Ben Bernanke’s on the Federal Reserve Board — told me this story the other day, and its moral is obvious enough. Many people in Washington fear that the country is starting to spiral into a terrible downturn. And to their horror, they see the public, and many members of Congress, turning into modern-day Meyer Mishkins, more interested in punishing Wall Street than saving the economy.
All of which may be true. But there is good reason for the public’s skepticism. The experts and policy makers who so desperately want to take action have failed to tell a compelling story about why they’re so afraid.
It’s not enough to say that markets could freeze up, loans could become impossible to get and the economy could slide into its worst downturn since the Great Depression. For now, the crisis has had little effect on most Americans, beyond their 401(k) statements. So to them, the specter of a depression can sound alarmist, and the $700 billion bill that Congress voted down this week can seem like a bailout for rich scoundrels.
Mr. Bernanke and his fellow worriers need to connect the dots. They need to use their bully pulpits to teach a little lesson on the economics of a credit crisis — how A can lead to B, B to C and C to Depression.
Let’s give it a shot, then.
Why are we talking about the Depression, anyway?
Almost no economist thinks that even a terrible downturn would look like the Depression. The government has already responded more aggressively than it did in Herbert Hoover’s day. So a Depression-like contraction — a 30 percent drop in economic activity — is highly unlikely. The country is also far richer today, which means that a much smaller portion of the population is living on the edge of despair. No matter what happens, you’re not likely to see shantytowns.
But the Depression is still relevant, because the basic mechanics of how the economy might fall into a severe recession look quite similar to those that caused the Depression. In both cases, a credit crisis is at the center of the story.
At the start of the 1930s, despite everything that had happened on Wall Street, the American economy had not yet collapsed. Consumer spending and business investment were down, but not horribly so.
In late 1930, however, a rolling series of bank panics began. Investments made by the banks were going bad — or, in some cases, were rumored to be going bad — and nervous customers besieged bank branches to demand their money back. Hundreds of banks eventually closed.
Once a bank in a given town shut its doors, all the knowledge accumulated by the bank officers there effectively disappeared. Other banks weren’t nearly as willing to lend money to local businesses and residents because the loan officers at those banks didn’t know which borrowers were less reliable than they looked. Credit dried up.
“If a guy has a good investment opportunity and he can’t get the funding, he won’t do it,” Mr. Mishkin, who’s now an economics professor at Columbia, notes. “And that’s when the economy collapses.” Or, as Adam Posen, another economist, puts it, “That’s when the Depression became the Great Depression.” By 1932, consumption and investment had both collapsed, and stocks had fallen more than 80 percent from their peak.
As a young academic economist in the 1980s, Mr. Bernanke largely developed the theory that the loan officers’ lost knowledge was a crucial cause of the Depression. He referred to this lost knowledge as “informational capital.” In plain English, it means that trust vanished from the banking sector.
The same thing is happening now. Financial markets are global, not local, today, so the problem isn’t that the failure of any single bank locks individuals or businesses out of the credit markets. Instead, the nasty surprises of the last 13 months — the sort of turmoil that once would have been unthinkable — have caused an effective breakdown in informational capital. Bankers now look at longtime customers and think of that old refrain from a failed marriage: I feel like I don’t even know you.
Bear Stearns, for example, was supposed to have solid, tangible collateral standing behind some of its debts, so that certain lenders would be paid off no matter what. It didn’t, and they weren’t.
The current, more serious stage of the crisis began two weeks ago today, after the collapse of Lehman Brothers and the Fed’s takeover of the American International Group. Those events created a new level of fear. Banks cut back on making loans and instead poured money into Treasury bills, which paid almost no interest but also came with almost no risk. On the loans they did make, banks demanded higher interest rates. Over the past two weeks, rates have generally continued to rise — and these rates, not the stock market, are really what you should be watching.
The current fears can certainly seem irrational. Most households and businesses are still in fine shape, after all. So why aren’t some banks stepping into the void and taking advantage of the newly high interest rates to earn some profit?
There are two chief reasons. One is fairly basic: bankers are nervous that borrowers who look solid today may not turn out to be so solid. Think back to 1930, when the American economy seemed to be weathering the storm.
The second reason is a bit more complex. Banks own a lot of long-term assets (like your mortgage) and hold a lot of short-term debt (which is cheaper than long-term debt). To pay off this debt, they need to take out short-term loans.
In the current environment, bankers are nervous that other banks might shut them out, out of fear, and stop extending that short-term credit. This, in a nutshell, brought about Monday’s collapse of Wachovia and Glitnir Bank in Iceland. To avoid their fate, other banks are hoarding capital, instead of making seemingly profitable loans. And when capital is hoarded, further bank failures become all the more likely.
The crucial point is that a modern economy can’t function when people can’t easily get credit. It takes a while for this to become obvious, since most companies and households don’t take out big new loans every day. But it will eventually become obvious, and painfully so. Already, a lack of car loans has caused vehicle sales to fall further.
Could the current crisis lift — could banks decide they really are missing out on profitable investing opportunities — without a $700 billion government fund to relieve Wall Street of its scariest holdings? Sure. And is Congress right to fight for a workable program that’s as inexpensive and as tough on Wall Street as possible? Absolutely.
But in the end, this really isn’t about Wall Street. It’s about reducing the risk that something really bad happens. It’s about limiting the damage from the past decade’s financial excesses. Unfortunately, there is no way to accomplish that without also extending a helping hand to Wall Street. That is where our credit markets are, and we need them to start working again.
“We are facing a major national crisis,” as Meyer Mishkin’s grandson says. “To do nothing right now is to do what was done during the Great Depression.”
Published: September 30, 2008
In 1929, Meyer Mishkin owned a shop in New York that sold silk shirts to workingmen. When the stock market crashed that October, he turned to his son, then a student at City College, and offered a version of this sentiment: It serves those rich scoundrels right.
A year later, as Wall Street’s problems were starting to spill into the broader economy, Mr. Mishkin’s store went out of business. He no longer had enough customers. His son had to go to work to support the family, and Mr. Mishkin never held a steady job again.
Frederic Mishkin — Meyer’s grandson and, until he stepped down a month ago, an ally of Ben Bernanke’s on the Federal Reserve Board — told me this story the other day, and its moral is obvious enough. Many people in Washington fear that the country is starting to spiral into a terrible downturn. And to their horror, they see the public, and many members of Congress, turning into modern-day Meyer Mishkins, more interested in punishing Wall Street than saving the economy.
All of which may be true. But there is good reason for the public’s skepticism. The experts and policy makers who so desperately want to take action have failed to tell a compelling story about why they’re so afraid.
It’s not enough to say that markets could freeze up, loans could become impossible to get and the economy could slide into its worst downturn since the Great Depression. For now, the crisis has had little effect on most Americans, beyond their 401(k) statements. So to them, the specter of a depression can sound alarmist, and the $700 billion bill that Congress voted down this week can seem like a bailout for rich scoundrels.
Mr. Bernanke and his fellow worriers need to connect the dots. They need to use their bully pulpits to teach a little lesson on the economics of a credit crisis — how A can lead to B, B to C and C to Depression.
Let’s give it a shot, then.
Why are we talking about the Depression, anyway?
Almost no economist thinks that even a terrible downturn would look like the Depression. The government has already responded more aggressively than it did in Herbert Hoover’s day. So a Depression-like contraction — a 30 percent drop in economic activity — is highly unlikely. The country is also far richer today, which means that a much smaller portion of the population is living on the edge of despair. No matter what happens, you’re not likely to see shantytowns.
But the Depression is still relevant, because the basic mechanics of how the economy might fall into a severe recession look quite similar to those that caused the Depression. In both cases, a credit crisis is at the center of the story.
At the start of the 1930s, despite everything that had happened on Wall Street, the American economy had not yet collapsed. Consumer spending and business investment were down, but not horribly so.
In late 1930, however, a rolling series of bank panics began. Investments made by the banks were going bad — or, in some cases, were rumored to be going bad — and nervous customers besieged bank branches to demand their money back. Hundreds of banks eventually closed.
Once a bank in a given town shut its doors, all the knowledge accumulated by the bank officers there effectively disappeared. Other banks weren’t nearly as willing to lend money to local businesses and residents because the loan officers at those banks didn’t know which borrowers were less reliable than they looked. Credit dried up.
“If a guy has a good investment opportunity and he can’t get the funding, he won’t do it,” Mr. Mishkin, who’s now an economics professor at Columbia, notes. “And that’s when the economy collapses.” Or, as Adam Posen, another economist, puts it, “That’s when the Depression became the Great Depression.” By 1932, consumption and investment had both collapsed, and stocks had fallen more than 80 percent from their peak.
As a young academic economist in the 1980s, Mr. Bernanke largely developed the theory that the loan officers’ lost knowledge was a crucial cause of the Depression. He referred to this lost knowledge as “informational capital.” In plain English, it means that trust vanished from the banking sector.
The same thing is happening now. Financial markets are global, not local, today, so the problem isn’t that the failure of any single bank locks individuals or businesses out of the credit markets. Instead, the nasty surprises of the last 13 months — the sort of turmoil that once would have been unthinkable — have caused an effective breakdown in informational capital. Bankers now look at longtime customers and think of that old refrain from a failed marriage: I feel like I don’t even know you.
Bear Stearns, for example, was supposed to have solid, tangible collateral standing behind some of its debts, so that certain lenders would be paid off no matter what. It didn’t, and they weren’t.
The current, more serious stage of the crisis began two weeks ago today, after the collapse of Lehman Brothers and the Fed’s takeover of the American International Group. Those events created a new level of fear. Banks cut back on making loans and instead poured money into Treasury bills, which paid almost no interest but also came with almost no risk. On the loans they did make, banks demanded higher interest rates. Over the past two weeks, rates have generally continued to rise — and these rates, not the stock market, are really what you should be watching.
The current fears can certainly seem irrational. Most households and businesses are still in fine shape, after all. So why aren’t some banks stepping into the void and taking advantage of the newly high interest rates to earn some profit?
There are two chief reasons. One is fairly basic: bankers are nervous that borrowers who look solid today may not turn out to be so solid. Think back to 1930, when the American economy seemed to be weathering the storm.
The second reason is a bit more complex. Banks own a lot of long-term assets (like your mortgage) and hold a lot of short-term debt (which is cheaper than long-term debt). To pay off this debt, they need to take out short-term loans.
In the current environment, bankers are nervous that other banks might shut them out, out of fear, and stop extending that short-term credit. This, in a nutshell, brought about Monday’s collapse of Wachovia and Glitnir Bank in Iceland. To avoid their fate, other banks are hoarding capital, instead of making seemingly profitable loans. And when capital is hoarded, further bank failures become all the more likely.
The crucial point is that a modern economy can’t function when people can’t easily get credit. It takes a while for this to become obvious, since most companies and households don’t take out big new loans every day. But it will eventually become obvious, and painfully so. Already, a lack of car loans has caused vehicle sales to fall further.
Could the current crisis lift — could banks decide they really are missing out on profitable investing opportunities — without a $700 billion government fund to relieve Wall Street of its scariest holdings? Sure. And is Congress right to fight for a workable program that’s as inexpensive and as tough on Wall Street as possible? Absolutely.
But in the end, this really isn’t about Wall Street. It’s about reducing the risk that something really bad happens. It’s about limiting the damage from the past decade’s financial excesses. Unfortunately, there is no way to accomplish that without also extending a helping hand to Wall Street. That is where our credit markets are, and we need them to start working again.
“We are facing a major national crisis,” as Meyer Mishkin’s grandson says. “To do nothing right now is to do what was done during the Great Depression.”
Wednesday, September 10, 2008
Employee Focus
By Samer Zein
Today’s management model is people focused. It is driven by customers and fueled by employees. The last in its role are the center of attractiveness. Loyal employees after getting well trained and compensated consider themselves the owners of the organization. Employees in such cases create customers loyalty.
When employees get satisfied they perform exactly the way they should to improve performance and influence consumers’ loyalty and leads to better financial return. Mangers should retain loyal employees and value them as assets of the organizations because they are in direct contact with customers and other stakeholders.
Layoffs of good people and loyal employees may help in cutting down costs and improvements in the financial performance of the organizations in the short run but it fires back on medium and long term bases. These loyal employees are the fuel of loyal customers they create the customer relation through their cooperation and the different skills they learned through experience and training programs.
Customer satisfaction is best achieved when relationships between customers and employees, managers and employees, and suppliers are achieved. That creates homogeneous atmosphere in the environment and make all satisfied and encourage them to perform in order to keep this valuable satisfaction in hand.
The interrelation between customer loyalty and the employee loyalty to the organization affect financial performance through:
Today’s management model is people focused. It is driven by customers and fueled by employees. The last in its role are the center of attractiveness. Loyal employees after getting well trained and compensated consider themselves the owners of the organization. Employees in such cases create customers loyalty.
When employees get satisfied they perform exactly the way they should to improve performance and influence consumers’ loyalty and leads to better financial return. Mangers should retain loyal employees and value them as assets of the organizations because they are in direct contact with customers and other stakeholders.
Layoffs of good people and loyal employees may help in cutting down costs and improvements in the financial performance of the organizations in the short run but it fires back on medium and long term bases. These loyal employees are the fuel of loyal customers they create the customer relation through their cooperation and the different skills they learned through experience and training programs.
Customer satisfaction is best achieved when relationships between customers and employees, managers and employees, and suppliers are achieved. That creates homogeneous atmosphere in the environment and make all satisfied and encourage them to perform in order to keep this valuable satisfaction in hand.
The interrelation between customer loyalty and the employee loyalty to the organization affect financial performance through:
- Work place culture and practices
- Employee loyalty.
- Customer loyalty.
- Work place loyalty.
Employees’ loyalty could be developed through plans and actions like employees’ involvement and rewards. Managers should also promote trust and respect and let employees get involve in the corporate strategy and implementation. They could discuss performance with subordinates and delegate authority to employees to have them responsible for their jobs.
Tuesday, September 9, 2008
MBA Recruiters Step Up When the Economy Steps Down
Companies get a jump on hiring top talent if they take the long view: Pounce when rivals are holding back
by Kevin P. Coyne and Jill R. Carty
Any good strategist knows the best time to pounce is when your adversary is reeling. With that in mind, the 2008-09 MBA recruiting season should be prime time for recruiters who have been frustrated by hot competition for top MBAs—if they are willing to be smart about it.
We all know the frustrations of "normal" companies trying to attract top-notch MBA talent that get outbid by the "body shops"—investment banks, consulting firms, and private equity outfits.
But here is 2009's open secret: Consulting firms and investment banks are cutting back their hiring plans. (Private equity already cut back last year.) According to Maryellen Lamb of Wharton's MBA Career Management Center, her office has already received calls from investment banks canceling this fall's interview schedules. The banks said some offers would be made, but they would be much harder to come by, since the banks and their ilk have already filled large portions of their downsized 2009 need with returning interns.
Furthermore, your other campus competition is also likely to pull back, if history is any guide. In the 2001-02 recession, the nationwide portion of MBAs with four or more offers fell from 28% to just 7%. And, the portion who received just one rose from 27% to 48%.
Look at the Whole Candidate
"True" you say, "but aren't you forgetting two things? First, there is a reason for that cutback. Other companies are suffering as well. This is the time we can least afford those expensive MBAs. And, second, MBAs are notorious for job-hopping. Won't they just leave us for their precious consulting firms as soon as the job market improves?"
Here's what I say: Recalculate the value of the positions you normally hire MBAs to fill. Let's assume that you have already correctly calculated their value in normal times—and frankly, the positions are simply not as valuable in a recession. Issue resolved, right? No. That calculation was myopic. It assumed that the only relevant skills that an MBA has are a subset of the skills you normally hire for. What about that MBA's other skills? What else have students learned that might be valuable to your company, even temporarily?
At Wharton, an MBA "major" consists of only five credit units beyond the core courses, out of a total of up to 21 course credit units. An MBA with a marketing "major" will have taken three courses in operations and information management, four in general management, and three in accounting. At Emory University's Goizueta Business School (where I teach), an MBA student can use as little as three of his or her elective courses to obtain a major— with the remaining 21 courses devoted to other areas of study. So, the thought process of a smart recruiter should be: "The MBA I normally hire is not worth the price if he or she only does the job I would normally hire for. So, how large is the value-to-price gap, and what else might I have him or her do temporarily that would fill that gap before we migrate him or her to the normal position?"
For example, could a new hire put operations learning to work, and improve the efficiency of the plant? Or use finance knowledge to take a fresh look at how your company handles the accounts receivables and payables? Frankly, most legal departments have never been examined with a strategic eye—might there be some dead wood there? Use your imagination. It should not be too hard to find areas where a good look can save the company $50,000 or $75,000—and that's enough to cover the cost of most MBAs for six months. Task the MBA with finding the money in three months, and congratulate yourself for making a profit.
Hopping Too Fast?
Will MBAs leave their first job when the economy turns around? Yes, probably half will, if past trends hold. But a smart recruiter knows to focus on finding the other half. Sound obvious? It isn't. Most don't. Few recruiters have a system for even attempting to sort "future leavers" from "long-term players." Go ask your human resource department what validated tools they have for predicting later turnover that you can use during the recruiting process. The tools exist. (And if your particular HR department is unaware of any, that suggests an addition to the MBA "special projects list" mentioned above.)
The average recruiter will follow a lemming strategy—hire more when the highest-paying firms are hiring most and pull back when they are pulling back. The smarter recruiters will look one level deeper, to see if a contrarian approach might yield better results.
And the smartest recruiters? They will look deeper, too. But, they will also have one more trick up their sleeve—the honors undergraduate students. McKinsey recruiter Bob Bonner said in a University of Pennsylvania student publication: "We can pay them less, they work harder, they got better grades in the same classes, and they're easier to mold."
So, don't just shut down recruiting like your adversaries. Think at a level deeper. That's what a good strategist would do.
Source: BusinessWeek
by Kevin P. Coyne and Jill R. Carty
Any good strategist knows the best time to pounce is when your adversary is reeling. With that in mind, the 2008-09 MBA recruiting season should be prime time for recruiters who have been frustrated by hot competition for top MBAs—if they are willing to be smart about it.
We all know the frustrations of "normal" companies trying to attract top-notch MBA talent that get outbid by the "body shops"—investment banks, consulting firms, and private equity outfits.
But here is 2009's open secret: Consulting firms and investment banks are cutting back their hiring plans. (Private equity already cut back last year.) According to Maryellen Lamb of Wharton's MBA Career Management Center, her office has already received calls from investment banks canceling this fall's interview schedules. The banks said some offers would be made, but they would be much harder to come by, since the banks and their ilk have already filled large portions of their downsized 2009 need with returning interns.
Furthermore, your other campus competition is also likely to pull back, if history is any guide. In the 2001-02 recession, the nationwide portion of MBAs with four or more offers fell from 28% to just 7%. And, the portion who received just one rose from 27% to 48%.
Look at the Whole Candidate
"True" you say, "but aren't you forgetting two things? First, there is a reason for that cutback. Other companies are suffering as well. This is the time we can least afford those expensive MBAs. And, second, MBAs are notorious for job-hopping. Won't they just leave us for their precious consulting firms as soon as the job market improves?"
Here's what I say: Recalculate the value of the positions you normally hire MBAs to fill. Let's assume that you have already correctly calculated their value in normal times—and frankly, the positions are simply not as valuable in a recession. Issue resolved, right? No. That calculation was myopic. It assumed that the only relevant skills that an MBA has are a subset of the skills you normally hire for. What about that MBA's other skills? What else have students learned that might be valuable to your company, even temporarily?
At Wharton, an MBA "major" consists of only five credit units beyond the core courses, out of a total of up to 21 course credit units. An MBA with a marketing "major" will have taken three courses in operations and information management, four in general management, and three in accounting. At Emory University's Goizueta Business School (where I teach), an MBA student can use as little as three of his or her elective courses to obtain a major— with the remaining 21 courses devoted to other areas of study. So, the thought process of a smart recruiter should be: "The MBA I normally hire is not worth the price if he or she only does the job I would normally hire for. So, how large is the value-to-price gap, and what else might I have him or her do temporarily that would fill that gap before we migrate him or her to the normal position?"
For example, could a new hire put operations learning to work, and improve the efficiency of the plant? Or use finance knowledge to take a fresh look at how your company handles the accounts receivables and payables? Frankly, most legal departments have never been examined with a strategic eye—might there be some dead wood there? Use your imagination. It should not be too hard to find areas where a good look can save the company $50,000 or $75,000—and that's enough to cover the cost of most MBAs for six months. Task the MBA with finding the money in three months, and congratulate yourself for making a profit.
Hopping Too Fast?
Will MBAs leave their first job when the economy turns around? Yes, probably half will, if past trends hold. But a smart recruiter knows to focus on finding the other half. Sound obvious? It isn't. Most don't. Few recruiters have a system for even attempting to sort "future leavers" from "long-term players." Go ask your human resource department what validated tools they have for predicting later turnover that you can use during the recruiting process. The tools exist. (And if your particular HR department is unaware of any, that suggests an addition to the MBA "special projects list" mentioned above.)
The average recruiter will follow a lemming strategy—hire more when the highest-paying firms are hiring most and pull back when they are pulling back. The smarter recruiters will look one level deeper, to see if a contrarian approach might yield better results.
And the smartest recruiters? They will look deeper, too. But, they will also have one more trick up their sleeve—the honors undergraduate students. McKinsey recruiter Bob Bonner said in a University of Pennsylvania student publication: "We can pay them less, they work harder, they got better grades in the same classes, and they're easier to mold."
So, don't just shut down recruiting like your adversaries. Think at a level deeper. That's what a good strategist would do.
Source: BusinessWeek
Monday, September 8, 2008
The New Management Model
By Samer Zein
A new management model has been emerging for about the last twenty years. It includes such familiar concepts as leadership, vision, mission, teams, empowerment and customer focus. They have been applied in bits and pieces, but this doesn't work well because there are still remnants of the old system actively undermining the new. The new management model has different key success elements such as:
- The transition from traditional management to newly system management must be leaded by senior executives of the firm.
- Knowing the customers and get introduced to there customs, behaviors and back ground to have the full knowledge about their needs and wants.
- Internalize and allocate the companies’ strategy to customer requirements.
- Empowerment and authority delegation to the employees.
- Customers and company requirements must be communicated by managers and supervisors.
- Organizations must value their human resources.
- Build mutual relationships with theirs stakeholders-customers and suppliers.
- Researches reports about customers’ satisfaction and requirements must be done on in a well designed process.
- Organizations should adapt to continue change in the environment.
- Organizations should shed lights on their external and internal environments and make the analysis needed to account for these diverse factors.
This produces a very flexible organization where people will accept and adapt to new ideas and changes through a shared vision. That highly depends on awareness, environment, leadership, empowerment and learning. All of these are the building blocks combine together and create a base line for the new management model. Senior mangers face problems in restructuring their organization and shift to the new management model because here they are dealing with people and changing factors in the environment. Mangers and leaders should run the spirit of shifted thinking and lead it to their employees to adapt to change and be more customer oriented rather than product oriented.
The integration of the overall organizational strategy with customer benefits and requirements and empowering employees create the pass through financial success. Today organizations should no longer focus on profitability and how to increase the dollar per share. However, it is critical to find ways through out which they could understand their environment and create customer relationships and stand back to daily demands in order to improve performance and lead their target segment.
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