Afterschool Centre Study Material on Adhocism and Corporate Governance

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What is adhocism

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Adhocism is organizational philosophy or style characterized by (1) aversion to
planning, (2) tendency to respond only to the urgent, as opposed to the important (3) focus
on fire fighting than on establishing systems and procedures through goal setting and long
term planning. This is kind of corporate management that took places till 1930, in this form
of corporate management, only the urgent situations forced managers to take some sort of
action to deal with the situation.
Then come the great depression. It was a worldwide economic downturn starting in most
places in 1929 and ending at different times in 1930s or early 1940s for different countries.
It was the largest and most important economic depression in 20th century.
This forced the companies to adopt the mechanism of planned policy instead of adhocism.
This included what referred as scenario building. Basically, companies had to take into
account the future scenarios, which were full of uncertainties. With help of intuition, market
research data and past data, companies started to prepare for unforeseen incidents and.
contingencies these were anticipated so as to being ready for the future in case such
developments actually took place.
Even after being incorporated these situational contingencies of future, the corporate
management had to move from planned policy to Environment Strategy Interface.
Whatever strategy the company comes up with, has to cope with the environment.
Environment is in terms of the environment for an organization. It
consists of:
a) External Environment
b) Internal Environment

The External Environment:
A business converts inputs into outputs in order to make a profit. However, the business
does not exist in a vacuum, it exists within an external environment consisting of the
actions of others players who are outside the business. The external environment
consisting of the actions of others players who are outside the business. The external
environment consist of:
Competitors
The economic system
The social system
The monetary system
The political / legal system
The environmental system
Competitors’ actions affect the ability of the business to make profit, because competitors
will continually seek to gain an advantage over each other’s by differentiating their product
and service, and by seeking to provide better value for money.
The economic system is the organization of the economy to allocate scores. The economy
tends to go through periods of faster and slower growth. Business prospers when the
economy is dooming and living standards are rising.
The social system is the fabric of ideas. Attitudes and behavior patterns that are involved
in human relationships. In particular businesses are influenced by consumer attitudes and
behaviors’, which depend on such factors as the age structure of the population.
The monetary system facilitates business exchange. Monetary activity is based
around earning, spending saving and borrowing. Money has been linked to the oil that
lubricates the wheels of commerce. Monetary activity involving financial institutions,



creditors, debtors, customers and suppliers. A key monetary influence. For business is the
interest rate. Higher interest rates increase business costs and act as a break on spending
in the economy.
The political /legal system creates the rules and frameworks within which business
operates. Government policy supports and encourages some business activities e.g.
Enterprise, while discouraging others e.g. the creation of pollution.
The environmental system is the natural system in which life takes place. Increasingly
businesses have become aware of the relationship between their economic activity i.e.
making goods and services for profits and the effects that this has on the environmental
system.
Internal Analysis: -
In order to develop successful strategies to exploit various opportunities or to control
threats that are found from swat analysis, analysis of an organizations capabilities is
important for strategy making which aims at producing a good fit between a country’s
resource capability and its external situation.
When a company efficiently and effectively manages its resources and competencies, it
leads it to a competitive advantage.
These are the different mechanisms through which environmental appraisal is done.
However, organizations have evolved from this environment –strategy Interface, to a more
comprehensive strategic view known as corporate planning. It involves moving ahead from
environmental appraisal to strategic alternatives and choice. The adhocism planning done
is strategic and incorporates the long- term view of all the major decisions.
Thus, the concept of corporate management has moved through the stages, planned
policy, environmental strategy, interface and corporate planning.
Ans2 - corporate governance is the set of processes. Customs, policies, laws and
institutions affecting the way a corporation is directed, administered or controlled.
Corporate governance also includes the relationships among the many stakeholders
involved and goals for which the corporation is governed. The principle stakeholders are
the shareholder, management and the board of directors. Other stakeholders include labor
(employees), customers, creditors (e.g. banks, bond holders), suppliers, regulators and
the community at large.
An important theme of corporate governance is to ensure the accountability of certain
individuals in an organization through mechanism that tries to reduce or eliminate the
principle agent problem. A related but separate thread of discussions focuses on the
impact of a corporate governance system in economic efficiency, with a strong emphasis
shareholders welfare. There are yet other aspects to the corporate governance anodal
around the world.
There has been renewed interest in the corporate governance practices of modern
corporations since 2001,particularly due to the high-profile collapses of a number of large
u.s. firms such as Iron corporation and MC1 inc. (formerly world com). Thus corporate
governance to build an atmosphere of mutual trust and responsibility. Corporate
governance can further be defined as an internal system encompassing policies,
processes and people, which serve the needs of shareholders and other stakeholders, by
directing and controlling management activity. Sound corporate governance is reliant on
external market place commitment and legislation, plus a healthy board culture which
safeguards policies and processes.
Write a note on corporate governance & CSR in India?



Report of SEBI Committee (India) on Corporate Governance defines corporate
governance as the acceptance by management of the inalienable rights of shareholders or
the true owners of the corporation and of their own role as trustees on behalf of true
shareholders. It is about commitment to values, about ethical business conduct and about
making a distinction between personal and corporate funds in the management of a
company. The definition is drawn from the Gandhian principle of trusteeship and the
Directive Principles of the Indian constitution. Corporate Governance is viewed as ethics
and a moral duty.
Since the late 1970’s,corporate governance has been then subject of significant debate in
the U.S. and around the globe. Bold, broad effects to reform corporate governance have
been driven, in part, by the needs and desires of shareowners to exercise their rights of
corporate ownership and to increase the value of their shares and therefore, wealth. Over
the past three debates corporate directors duty have expanded greatly beyond their
traditional legal responsibility of duty of loyalty to the corporation and its shareowners.

In the first half of the 1990s, the issue of corporate governance in the u.s. received
considerable press attention due to the wave of CEO dismissals (e.g. IBM’ kodak,
Honeywell) by their boards In the early 2000s,the massive bankruptcies (and criminal
malfeasance) of Error and world com as well as lesser corporate debates, such as A
Delphi a Communications, AOL, Arthur Andersen, Global crossing, Tyco and more
recently, Fannie Mae Freddie Mac, led to increased shareholder and governmental
interest in corporate governance.

Impact of Corporate Governance: -
The positive effect of corporate governance on different stakeholders ultimately is a
strengthened economy, and hence good corporate governance is a tool for socio-
economic development.
In corporations, the shareholder delegates decision rights to the manager to
act in the principal’s best interests. This separation of ownership from control implies a
loss of effective control by shareholder over managerial decisions. Parties as a result of
this separation between the two parties, a system of corporate governance controls are
implemented to assist in aligning the incentive of managers with those of shareholders.
With the significant increase in equity holdings of investors, there has been an
opportunity for a reversal of the separation of ownership and control problems because
ownership is not so diffuse.
A board of directors often plays a key role in corporate governance. It is
their responsibility to endorse the organization’s strategy, develop directional policy.
Appoint, supervise and remunerate senior executives and to ensure accountability of the
organization to its owners and authorities.
All parties to corporate governance have an interest, whether direct or indirect,
in the effective performance of the organizations. Directors, Workers and management
receive salaries, benefits and reputation, while shareholders receive capital return.
Customer receives goods and services. In return these individuals provide value in the
form of natural, human, social and other forms of capital.
A key factor is an individual’s decision to participate in an organization e.g.
through providing financial capital and trust that they will receive a fair share of the



organizational returns. If some parties are receiving more than their fair return then
participants may choose to not continue participating, leading to organizational collapse.
Principles
Key elements of good corporate governance principles include honesty, trust and integrity,
openness, performance orientation, responsibility and accountability, mutual respect and
commitment to the organization.
Of importance is how directors and management develop a model of governance that
aligns the values of the corporate participants and than evaluate this model periodically
for its effectiveness. In particular, senior executives should conduct themselves honestly,
especially concerning actual or apparent conflicts of interest, and disclosure in financial
reports.
Commonly accepted principles of corporate governance include:
• Rights and equitable treatment of shareholders: Organization should respect the
rights of shareholders and help shareholders to exercise those rights. They can
help shareholders exercise their rights by effectively communicating information
that is understandable and accessible and courage shareholders to participate in
general meetings.
• Interests of other stakeholders: organizations should recognize that they here legal
and other obligations to all legitimate stakeholders.
• Role and responsibilities of the board: the board needs a range of skills and
understanding to be able to deal with various business issues and have ability to
review and challenge management performance. It needs to be sufficient size and
have an appropriate level of commitment to fulfill its responsibilities and duties;
there are issues about the appropriate mix of executive and non-executive
directors.
• Integrity and ethical behavior: Ethical and responsible decision-making is not only
important for public relation. But is also a necessary element in risk management
and avoiding lawsuits. Organizations should develop. A code of conduct for their
directors and executives that promotes ethical and responsible decision-making. It
is important to understand, though, that reliance by a company on the integrity and
ethics of individuals is bound to eventual failure. Because of this, many
organizations establish “Compliance and Ethics Programs” to minimize the risk that
the firm steps outside of ethical and legal boundaries.
• Disclosure and transparency: organizations should clarify and make publicly known
the roles and responsibilities of board and management to provide shareholders
with a level of accountability. They should also implement procedures to
independently verify and safeguard the integrity of the company’s financial
reporting. Disclosure of material matters concerning the organization should be
timely and balanced to ensure that all investors have access to clear, factual
information
Issues involving corporate governance principles include:
• Internal controls and the independence of the entity’s auditors
• Oversight and management of risk
• Oversight of the preparation of the entity’s financial statements
• Review of the compensation arrangements for the chief executive officer and
other senior executives



• The resources made available to directors in carrying out duties.
• The way in which individuals are nominated for position on board
• Divide and policy

The government of India has initiated a special National Award to be given to
the deserving organization based on their sound corporate governance.

Thus, corporate governance is required to build on atmosphere of mutual trust
and responsibility in order to achieve excellence.

The idea of responsible business behavior is for from new. But Since 1990s,increasing
concern over the impacts of economic globalization has led to new demands for
corporations to play a central role in efforts to eliminate poverty, achieve equitable and
accountable systems of governance and ensure environmental security. In essence, the
approach is to view business as part of society and to find ways to maximize
The positive benefits that business endeavor can bring to human and environmental well
being whilst minimizing the harmful impacts of irresponsible business. The agenda that
has resulted from these concerns has variously been called “corporate citizenship”
“ Corporate social responsibility (CSR)”,”corporate accountability” or simply “corporate
responsibility”
Corporate Social Responsibility (CSR) is an expression used to describe what some see
as a company’s obligation to be sensitive to the needs of all to take account not only of the
financial /economic dimension in decision making, but also the social and environmental
consequences.

Sustainable Development:
One of the most significant developments in the field of CSR over the past few years
has been the growth in public expectations that the companies not only make
commitments to its stakeholders in its business operations. The principle is closely linked
with the imperative of ensuring that these operations are “sustainable”, that is, that CSR is
recognized as not only necessary but also develop systems to manage implementation
and systematically assess and report on progress relative to those commitments.
Corporate accountability encompasses the systems a company establishes to develop
policies, indicators, targets and processes to manage the full range of activities. The scope
of operations for which companies are expected to be accountable has increased
dramatically in recent year to include not only company’s own performance but also that of
the business partners and other actors throughout the company’s value chain. The
mechanisms a company uses to demonstrate accountability are varied and inevitably need
to change and grow as a company involves, at the some time effective systems for
increasing accountability generally allow the company to inclusive, responsive and
engaged with its shareholders.
Accountability in its basic sense implies rendering of accounts and by extension,
indicate answerability, to an external agency or group and future implies ensuring
propriety, legality and safeguarding public interest in satisfaction of the expectations of the
external agency or group. Social Accountability suggests accountability to the people; this



is a core value in a democratic set-up. In a decentralized democracy the basic objective is
power to the people.
Effective and accountable management systems help companies ship cultures that
support and reward CSR performance at all levels. As part of this effort, many companies
are working to increase accountability for CSR performance at the Board, how Directors
handle social and environmental issues, and how the Board manages itself, and fulfill its
responsibilities to investors and stakeholders Companies are also seeking to build
accountability for CSR performance at the senior management level, in some cases by
creating a dedicated position responsible for broad oversight of a company’s CSR
activities. Finally many companies are working to integrate accountability for CSR
performance into actions from ranging from long-term planning to everyday decision-
making including rethinking processes for designing products and services and changing
practices used to hive, retain, reward and promote employees.
The demand for increased corporate accountability today comes from all sectors.
Evidence of this is found in the increasing number of sustainable-related market indices
and by external demands for certification or lobbing of certain products as, for example,
old growth child labor free. Underpinning this demand for increased corporate
accountability is the expectation that companies can and should be more transparent,
which essentially means measuring, reporting on and economic performance. These
increased demands are in part a result of recent events that have contributed to erosion in
the treats extended to companies. Stakeholders now expect companies to provide access
to information on impacts of their operations, to engage stakeholders in meaningful
dialogue, and to be responsive to particular concerns unearthed in the dialogue process to
increase the credibility of what is disclosed. Leadership companies are also investigating
carefully the value of various types of assurance that right support their reporting efforts.
At the same time, many stakeholders are becoming increasingly sophisticated in the
type and quality of information they are demanding from companies. In an effort to meet
these demands as well as to strengthen the credibility of their social and environmental
reports-some companies are choosing to have their reports externally verified. In doing so,
the companies recognize that verification by a third party can add value to the overall
social and environmental reporting process by enhancing relationships with stakeholders,
improving business performance and decision making, aligning practice with
organizational values, and strengthening reputation risk management.
One of the most significant issues within the CSR agenda concerns the dynamic
relationship between CSR and good public governance. The limits both to corporate
accountability through law and to “voluntary” CSR related actions by businesses lie with
the public good governance agenda.
The need is to implement social, ethical and environmental policy (commonly
known as codes of conduct) through the development of objectives, programmers and
mechanisms for monitoring social compliance performance.
One very important aspects of ensuring social accountability is establishing social
compliance through continuous audit and monitoring. The demand of increased corporate
accountability today comes from all sectors. Thus social accountability ensures
transparency, reduce leakages, forces proper spending of funds, generates trust and
peace, and creates demand led improvement in services. In a sense, it is a contusing
audit and a constant check on malfunction.



Social compliance is the end product of social accountability. Under social
accountability, the civil society and stakeholders to be responsible towards the society and
they are operating in and to be accountable for the activities are undertaking expect the
big multi national companies to take steps in this regard. Throughout Europe and the US,
the pressure groups have demanded that production and services sourced out to the
developing or underdeveloped countries due to cheap labor should not lead to
environmental deterioration, exploitation and bad working conditions. The all-important
consumers in these developed countries object to buying clothes or other products, which
are produced under inhuman or swear shop like working conditions, using child labor, or
forced labor, or by underpaid workers.

CSR: the Indian Scenario
Many India business houses, private sector and public sector companies have
undertaken major initiatives till date and have adopted several modes of practice related to
CSR in India. Companies towards the institutionalization of CSR that includes CSR
initiatives by lupine, lipid, Ranbaxy, NIIT, TCS, BPCL, and Ion exchange have also
adopted several innovative measures.
To understand the current status of CSR in India, it is important the current status of
CSR in India, it is important first to map out the landscape and identity the main families
of corporate responsibility. For long established dynasties, such as the Birlas and Tatas,
concepts of nation building and trusteeship have been alive in their operations long before
CSR become a popular cause. Alongside these are the leading Indian companies with
strong international shareholdings, such as Hero Honda, HLL, ITC and Haruti udyog,
where local dynamics fuse with the business standards of the parent or partner. Another
tradition emerges form the public sector enterprises, such as BHEL, HDFC, NIPC and
ONGC, Where social obligations remain an integral part of their business despite the
March of privatization. And then there is a new generation of enterprises that has surged
on the back of knowledge-based globalization such as Dr Reddy’s Infosys. Ranbaxy and
Wipro, Where less emphasis is on minimizing negative impacts and more on maximizing
the positive spillover effects of corporate development?
Making Corporation responsible to CSR
In recent years, intangible assists -company values, human and intellectual capital,
reputation and brand equity have become increasingly important to organizations.
Companies that exhibit good corporate citizenship are likely to gain a competitive edge.
Challenges to Social Compliance:
Though many multinational retailers can now boast of a code of conduct, only a few
have been able to roll out a full scale and independent monitoring programmed. The
issues invoke from finding resources to conflicts with short-term business objectives. On
the other hand, most suppliers consider compliance programmers a new burden resulting
in poor and entrust worthy partnership with their buyers when it comes to implementing the
code of conduct.
External Challenges include cultural diversity, understanding the local law and at
times finding the local law. Finding local language and dialect skills, finding local audit and
monitoring professionals who are well conversant with the local issues, involving workers,
local communities, NGOs and other stakeholders.



Write a note on E-commerce and E-business
In the emerging global economy, e-commerce and e-business have increasingly become
a necessary component of business strategy and a strong catalyst of economic
development. The integration of information and communication technology in business
has revolutionized relationship within organizations and those between and among
organizations and individuals Specifically the use of ICT in business has enhanced
productivity, encouraged greater customer participation, and enabled mass customization,
besides reducing costs.
With development in the Internet and web-based technologies, distinctions between
traditional markets and the global electronic market place-such as business capital size,
among others-are gradually being narrowed down. The name of game is strategic
positioning, the ability of a company to determine emerging opportunities and utilize the
necessary human capital skills (such as intellectual resources) to make the most of these
opportunities through an e-business strategy that is simple, workable and practicable
within the Centex of a global information milieu and new economic environment. With its
effect of leveling the playing field, e-commerce coupled with the appropriate strategy and
policy approach enables small and medium scale enterprise to compete with large and
capital rich businesses.
A plane, developing countries are given increased access to the global market place,
where they compete with and complement the more developed economies. Most, if not all,
developing countries are already participating in e-commerce, either as sellers or buyers.
It is recognized that in the In the Information age. Internet commerce is a powerful tool in
the economic growth of developing countries. While there are indications of E-commerce
patronage among large firms in developing countries, there seems to be little and
negligible use of the Internet for commerce between small and medium sized firms. E-
commerce promises better business for sees and sustainable economic development for
developing countries. However, this is premised on strong political will and good
governance, as well as on a responsible and supportive private sector within an effective
policy framework. This primer seeks to provide policy guidelines toward this end.
Electronic commerce or e-commerce refers to wide range of online business activities for
products and services. It also pertains to any form of business transaction in which the
parties interact electronically rather than by physical exchanges or direct physical contact.
E-commerce is usually associated with buying and selling over the Internet or conducting
any transaction involving the transfer of ownership or rights to use goods or services
through a computer mediated network. Though popular, this definition is not
comprehensive enough to capture recent developments in this new and revolutionary
business phenomenon. A more complete definition is: E-commerce is the use of electronic
communications and digital information processing technology in business transactions to
create, transform and redefine relationships for value creation between or among
organizations, and between organizations and individuals.
While some use e-commerce and e-business inter changeably, they are distant concepts.
In e-commerce, Information and Communication Technology (ICT) is used in inter-
business or inter-organizational transactions and in business-to-consumer transactions.
In e-business, on the other hand, ICT is used to enhance one’s business. It
includes any process that a business organization conducts over a computer-mediated
network. A more comprehensive definition of e-business is: “The transformation of an



organization’s processes to deliver additional customer value through the application of
technologies, philosophies and computing paradigm of the new company.
The major different types of e-commerce are: business to business (B2B),
business to consumer (B2C), business-to government (B2G), consumer-to consumer
(C2C) and mobile commerce (m-commerce).
B2B e-commerce is simply defined as e-commerce between companies this is the type of
e-commerce that deals with relationships between and among business. About 80% of e-
commerce of is of this type, and most experts predict that B2B commerce will continue to
grow faster than the B2C segment. The B2B market has two primary components: e-
frastructure and e-markets.
Advantages:

Disinter mediation: Through B2B e-markets, suppliers are able to interact and transact
directly with buyers, thereby eliminating intermediaries and distributors. However, new
forms of intermediaries are emerging .For instance, e-markets themselves can be
considered as intermediaries because they come between suppliers and customers in the
supply chain.

Transparency in pricing: Among the more evident benefits of e-markets is the increase
in price transparency. The gathering of a large numbers of buyers and sellers in a single e-
market reveals market price information and transaction processing to participants. The
Internet allows for the publication of information on a single purchase or transaction,
making the information readily accessible and available to all members of the e-market.
Increased price transparency has the effect of pulling down price differentials in the
market. In this context, buyers are provided much more time to compare and make better
buying process.
Moreover, B2B e-markets expand boarder for dynamic and negotiated pricing
where in multiple buyers and sellers collectively participating in price setting and two-way
auctions. In such environments, the requirements of both buyers and sellers are thus
aggregated to reach competitive prices, which are lower than those resulting from
individual actions.

Economies of scale and network effects: The rapid growth of B2B e-markets creates
traditional supply-side cost-based economies of scale. Further more, the bringing together
of a significant number of buyers and sellers provide the demand-side economies of scale
or network effects. Each additional incremental participant in the e-market creates value
for all participants in the demands side. More participants from a critical mass, which is
key in attracting more users to an e-market.

Business-to-consumer e-commerce, or commerce between companies and comers,
involves customers gathering information, purchasing physical goods (i.e. tangible such as
books or consumer products) or information goods (or goods of electronic material or
digitized content. such as software, or e-books); and for information goods, receiving
products over an electronic network. It is the second largest and the earliest from of e-
commerce, its origins can be traced to online retailing. Thus the more common B2C
business models are the online retailing companies such as Amazon.com, Drugstore.com.



E-commerce makes “mass customization” possible E-commerce applications in this
area include easy-to-use ordering systems that allow customers to choose and order
products according to their personal and unique specifications. For instance, a car
manufacturing company with an e-commerce strategy for online orders can have new cars
built within a few days based on customer’s specifications. This can work more effectively
if a company’s manufacturing process is advanced and integrated into ordering systems.

E-commerce allows, “network production.” This refers to the parceling out of the
production process to contractors who are geographically dispersed but who are
connected to each other via computer networks. The benefits of network production
include: reduction in costs, more strategic target marketing, and the facilitation of selling
add-on products, services and new systems when they are needed. With network
production, a company can assign tasks within its non-core competencies to factories all
over the world that specialize in such tasks (e.g. the assembly of specific components).
In C2B transactions, customers/consumers are given more influence over what and
how products are made and how services are delivered, thereby broadening consumer
choices. E-Commerce allows for a faster and more open process, with customers having
greater control.
E-commerce makes information on products and the market as a whole readily
available and accessible, and increases price transparency, which enable customers to
make more appropriate purchasing decision.

E-commerce link customers, workers, suppliers, distributors and competitors. E-
commerce facilitates organization networks, where-in small firms depend on “partner”
firms for supplies and product distribution to address customer demands more effectively.

To manage the chain of networks linking customers, workers, suppliers, distributors and
even competitors, an integrated or extended supply chain management solution is
needed. Supply chain management (SCM) is defined as the supervision if materials,
information and finances as they move from supplier to manufacture to wholesaler to
retailer to consumer it involves the co ordination and integration of these flows both within
and among companies. The goal of any effective SCM is timely provision of goods or
services to the next link in the chain and ultimately, the reduction of inventory within each
link.

There are three main flows in SCM, namely:
• The product flows, which includes the movement of goods from supplier to a
customer, as well as any customer returns or service needs.
• The information flow, which involves the transmission of orders and the update of
the status or delivery and
• The finances flow, which consists of credit terms, payment schedules, and
consignment and title ownership arrangements.
Some SCM applications are based on open data models that support the sharing of data
both inside and outside the enterprise, called the extended enterprise, and includes key
suppliers, manufactures and end customers of a specific company. Shared data resides in
diverse database systems or data warehouses, at several different sites and companies.



Sharing this data “upstream”(with a company’s suppliers) and “downstream”(with a
company’s clients) allows SCM applications to improve the time-to-market of product and
reduce costs. It also allows all parties in the supply chain to better manage current
resources and plan for future needs.

E-COMMERCE APPLICATIONS: ISSUES AND PROSPECTS
Various applications of e-commerce are continually affecting trends and prospects for
business over the Internet; include e-banking, e-tailing and online publishing/online
retailing. A more developed and mature e-banking environment plays and important role in
e-commerce by environment plays and important role in e-commerce by encouraging a
shift from traditional modes of payment (i.e. cash, cheques or any from of paper based
legal tender) to electronic alternatives (such as e-payment systems), thereby closing the e-
commerce loop.
An electronic payment system (EPS) is a system of financial exchange between buyers
and sellers in the online environment that is facilitated by a digital financial instrument
(such as encrypted credit card numbers, electronic checks or digital cash) backed by a
bank, an intermediary or by legal tender.
EPS play an important role in e-commerce because it closes the e-commerce loop. In
developing countries, the underdeveloped electronic payments system is a serious
impediment to the growth of e-commerce. In many countries, entrepreneurs are not able to
accept credit card payments over the Internet due to legal and business concerns. The
primary issue is transaction security. The absence or inadequacy of legal infrastructure
governs the operation of e-payments is also a concern. Hence banks with e-banking
operations employ service agreements between themselves and their clients.
The relatively underdeveloped credit card industry in many developing countries
is also a barrier to e-commerce. Only a small segment of the population can buy goods
and services over the Internet due to small credit card market use. There is also the
problem of the requirement of “explicit consent” (i.e. a signature) by a card owner before a
transaction is considered valid a requirement that does not exist in the U.S. and in other
developed countries.

E-banking includes familiar and relatively mature electronically based products in
developing markets, such as telephone banking, credit cards, ATMS and direct deposits. It
also includes electronic bill payments and products mostly in the developing stage,
including stored-value cards (e.g. smart cards/smart money) and Internet –based stored
value products.

Thus, there are few of the various E-businesses and E-business models.

‘‘In this business environment, satisfy the customer is a sacred cow. Even most car
dealers are doing that. Sales managers and store managers everywhere are imploring
their people to put the customer first. But they’re only playing catch up. In the new world of
commerce, satisfying is only the beginning . . . So don’t satisfy customers, everyone does
that. Surprise them. Give them something they don’t expect.’’



Robert Kreigel and David Brant

The four phase-model of Management Process is one of many useful frameworks for
planning the sales process. It includes:

1.Conception – What will be offered?

2.Planning – How?

3.Execution – When and at what pace and scale?

4.Control – How will feedback and contingencies be acted upon?

5.Feedback – How we have to integrate and reply back activity to activity?

This model is cyclical, so it is a constant/continuous process.

Sales Management, however, is concerned with the process of encouraging customers to
exchange their funds for your services or goods. By contrast, marketing might concern
itself with expanding opportunities for installing more processes in more places and
expanding or creating new sales channels. For example, a firm might have "walk-in
customers." Sales management would concern itself with the customer experience, the
sales dialog ("whats in it for me," suggestive selling, up selling, positioning statements,
consultative sales), and ultimately closing the sale. This organization's marketing
department, on the other hand, would be concerned with developing sales channels other
than "walk-in" customers or increasing the volume. For example, out-bound telephonic
out-reach might be a viable additional sales channel. Sales management, in turn would be
tasked with developing this channel's compensation plan, customer experience, sales
dialog, and closing. Developing a sales management process for the 'walk-in customer
sales process' might be very different from the 'out-bound telephonic sales management
process.'

Sales, and selling and the sales force, is inherently a part of the marketing mix. It must be
deployed appropriately if it is to play its part and have a significant effect on thewhole.
Thatmeans that those people undertaking the sales task must be professional: able to
communicate persuasively and create the necessary relationship with customers. It also
means that the efforts of sales staff must be properly coordinated and therefore well
managed: sales management is therefore important, and can directly influence results.
The management of any group of staff is important if they are to perform well. In sales
there are a number of particular factors that make it especially so.



» Isolation: sales people must work predominantly on their own and there is a possibility
that, without supervision, they become disassociated from the overall marketing effort and
that their activity is therefore incomplete.

» Geography: sales people must work away from base, sometimes far away. Apart from
the isolation referred to above, this means that applying management to them is inherently
more difficult, and probably more time consuming than with staff in the office.

» The nature of the task: selling is a social skill, one that must be constantly fine-tuned if it
is to do the desired job satisfactorily. Customer attrition can dilute such skills and
management must act regularly to prompt sales people to maximize their approach in
whatever way prevailing market conditions make necessary.

Key Approaches to Sales Management

Sales management is not simply a supervisory process, that is, in the sense of the
‘‘policing’’ role of management: checking and making sure things are done. It is, or should
be, a creative role, one that enhances the ongoing sales activity and ensures it achieves
everything possible. So too the relationship between sales people and sales manager
should be a constructive one and viewed as such by both sides. Two other factors are of
key importance.

» Change and complexity: the markets of the twenty-first century are nothing if not
dynamic. For example: customers are increasingly demanding and fickle, distribution
patterns are ever changing (e.g. with the increasing power of large customers and the e-
sales routes now possible in many industries), buying processes and responsibilities
change and pressure on time means buyers may want less personal relationships with
suppliers.

» Competition: competition (including global competition) seems to increase all the time.
There is a direct impact here on the sales job. Customers not only have considerable
choice in almost any industry and product area one cares to mention, they have choices
that are very close in performance, price, service and other factors. There has come to be
a powerful commodity aspect to many markets. This means that sales people have a
three-tier job to do. They must:

» communicate (clearly and appropriately)



» bepersuasive

» differentiate.

In other words it is not enough to be able to describe products and services effectively, nor
even to do so persuasively – always there is the added dimension of ensuring something
is described in a way that makes it more desirable than other similar products on the
market. Because of these factors the quality of selling itself can literally be a differentiating
factor, giving any organization that maximizes its effectiveness an edge over competition.
This is a vital factor in marketing success. The manager or managers who head up the
sales function, and who work to make it effective, have a vital task. It is a complex job, and
one that in future will tend to get more complex as the trends described here progress. For
sales management, creatively making the sales activity work well is a challenge; for the
organization an effective sales management function, now and in the future, is a must.


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