Chapter 1

What is Strategic Marketing?

Strategic Marketing is the way a firm effectively differentiates itself from its
competitors by capitalizing on its strengths (both current and potential) to
provide consistently better value to customers than its competitors. In principle
it’s that simple, but it means a lot more than getting creative with the marketing
mix.
Armed with a thorough understanding of the firm’s capabilities and aspirations,
the customer market and the competitive landscape, the Goal of Strategic
Marketing (and the job of the strategic marketer) is to maximize a firm’s positive
differentiation over competitors in the eyes of its target market. It does this by
answering 3 key questions; where, how and when should the business compete.
In understanding this, it’s no surprise that a Strategic Marketing Plan will often lay
a framework for fundamental change in the way a firm works and how it engages
its markets.
OR
Strategic marketing management is the process of implementing your business'
mission through specific and strategic processes in order to maximize your
current marketing plan. Essentially, it is the act of making strategic decisions
within a marketing plan in order to better that plan.

Market driven strategy

A market-driven strategy is the planning and deployment of business resources to
achieve a central set of objectives through a continuously changing set of
circumstances. It is customer focused and organizational wide with every level of
the organization having its business unit strategy nested within the larger
corporate strategy. Finally, it is concise, clear and complete and must be
communicated to everyone in the organization.

Market- Driven Strategy

Market- Driven Strategy (MDS) is very essential in formulating business strategy.
This approach used is always market-oriented and customer-oriented. Next,
understanding what the customers do, understanding the customer’s behaviors
and measuring the interaction among customers. Therefore, the main point is
always orienting to the market and customers in every business activity
performed.

Characteristics Market- Driven Strategy

Market driven strategy is considerably the most popular organizational approach
in running the business nowadays, as the strategy allows the company to obtain a
better understanding of the market, as well as their customers; thus, it allows
company to achieve competitive advantage, and develop a long-term relationship
with the customers. The fundamental logic of this strategy is that the market and
the customers that form the market should be the starting point in business
strategy formulation; which therefore an understanding of the market and the
customers that form the market is essential. The characteristics of market driven
strategies include
The characteristics of market driven strategies include:
 Becoming market oriented
 Determining distinctive capabilities
 Matching customer value requirements to capabilities.
 Achieving superior performance

Becoming market oriented

 Customers focus
The customer focuses mean understanding the basic needs, wants, and
demand of the customers and delivered them responses products as per
their requirements. Marketed oriented businesses always find the
preferences and requirements of customers. Ultimately, their aim is to
satisfy them.
For Example, Dell Company contacts with buyers directly and get
information. It is a very important source of information to get action for
the superior value of their customers.
  Competitor intelligence
Market-oriented business always recognizes how much important is to
understand the competitors and customers. Who fails to understand their
competitors and their customers can create a big threat for a company.
For Example; The Western Union has not defined competition as
telecommunications, but it has been about telecommunications services,
and lastly, but not least, old companies are hiding in the technology of
factories. If Western Union focuses on the market, its administration can
better understand current developments, recognize the threat of
competition, and develop strategies to counter it.

 Cross-Functional Coordination
Market-oriented organizations are compelling in getting all business
capacities to cooperate to give superior value to customers. These
businesses are fruitful in expelling the barriers between business marketing
functions with manufacturing and finance.

 Performance Implications
Market-oriented companies start strategic analyses with an entering
perspective available and the competition. Besides, a growing collection of
research discoveries points to a solid connection between market-oriented
and superior value.

Determining Distinctive Capabilities:

Identifying distinctive capabilities of inorganization is a vital part of market-driven
strategy. “capabilities are complex bundles of skills & accumulated knowledge,
exercised through organizational processes, that enables firms to coordinate
activities & make use of their assets.”
 Organizational Processes
Southwest uses a point-to-point route system rather than the hub-and-
spoke design used by many airlines. The airline offers services to 57 cities
in 29 states, with an average trip about 500 miles. The carrier’s value
proposition consists of low fares and limited services (no meals).
 Nonetheless, major emphasis throughout the organization is placed on
building a loyal customer base. Operating costs are kept low by using only
Boeing 737 aircraft, minimizing the time span from landing to departure,
and developing strong customer loyalty. The company continues to grow
by expanding its point-to-point route network.

 Skills and Accumulated Knowledge

The airline has developed impressive skills in operating its business model
at very low-cost levels. Accumulated knowledge has guided management
in improving the business design over time.

 Coordination of Activities
Coordination of activities across business functions is facilitated by the
point-to-point business model. The high aircraft utilization, simplification of
functions, and limited passenger services enable the airline to manage the
activities very efficiently and to provide on-time point-to-point services
offered on a frequent basis.

 Assets
Southwest’s key assets are very low operating costs, loyal customer base,
and high employee esprit de corps
Classifying Capabilities
The process capabilities differ in purpose and focus. The outside-in processes
connect the organization to the external environment, providing market feedback
and forging external relationships. The inside-out processes are the activities
necessary to satisfy customer value requirements (e.g.,
manufacturing/operations). The outside-in processes play a key role in offering
direction for the spanning and inside-out capabilities, which respond to the
customer needs and requirements identified by the outside-in processes. Market
sensing, customer linking, channel bonding (e.g., producer/retailer relationships),
and technology monitoring provide vital information for new product
opportunities, service requirements, and competitive threats.
  Capabilities and Customer Value
Value for buyers consists of the benefits and costs resulting from the
purchase and use of products. Value is perceived by the buyer. Superior
value occurs when there are positive net benefits. A company needs to
pursue value opportunities that match its distinctive capabilities. A market-
oriented company uses its market sensing processes, shared diagnosis, and
cross-functional decision making to identify and take advantage of superior
value opportunities. Management must determine where and how it can
offer superior value, directing these capabilities to customer groups
(market segments) that result in a favorable competency/value match.

Creating Value for Customers

Intense global competition and the increasing demands of ever-more
sophisticated customers make the creation of customer value an important
challenge for managers. We take a closer look at the concept of customer value,
and consider how value is generated.
 Customer value
Customer value is the result of a conversation between a sales person and a
customer, wherein the sales person is able to determine the customer's
needs and goals and explain how a given product will create value by
satisfying those requirements while generating benefits for the customer.
 Providing Value to Customers
 As discussed earlier, the organization’s distinctive capabilities are used to
deliver value by differentiating the product offer, offering lower prices
relative to competing brands, or a combination of lower cost and
differentiation. Deciding which avenue to follow requires matching
capabilities to the best value opportunities.

Becoming Market Driven

The discussion so far points to the importance of becoming market oriented,
leveraging distinctive capabilities, and finding a good match between customers’
value requirements and the organization’s capabilities. The supporting logic for
these actions is that they are expected to lead to superior customer value and
organizational performance.
 Market Sensing Capabilities
Market-driven companies have effective processes for learning about their
markets. Sensing involves more than collecting information. It must be
shared across functions and interpreted to determine what actions need to
be initiated. Mittal’s global intranet links managers and generates valuable
information for diagnosis and action in performance improvement.
Developing an effective market sensing capability is not a simple task.
Various information sources must be identified and processes developed to
collect and analyze the information. Information technology plays a vital
role in market sensing activities. Different business functions have access to
useful information and need to be involved in market sensing activities.

 Customer Linking Capabilities

There is substantial evidence that creating and maintaining close
relationships with customers is important in market-driven strategies.
These relationships offer advantages to both buyer and seller through
information sharing and collaboration. Customer linking also reduces the
possibility of a customer shifting to another supplier. Customers are
valuable assets.

 Aligning Structure and Processes

 Becoming market driven may require changing the design of the
organization, placing more emphasis on cross-functional processes. Market
orientation and process capabilities require cross-functional coordination
and involvement. Many companies have made changes in organization
structures and processes as a part of their customer value initiatives. The
changes include improving existing processes as well as redesigning
processes. In addition to formulating the strategies essential to delivering
superior customer value, it is vital to adopt a thorough and detailed
approach to strategy implementation.

Corporate, Business, and Marketing Strategy

Business and marketing strategies are being renewed by executives in a wide
range of companies, in their efforts to survive and prosper in an increasingly
complex and demanding business environment. Choosing high performance
strategies in this environment of constant change requires vision, sound strategic
logic, and commitment. Market-driven organizations develop closely coordinated
business and marketing strategies.

Corporate:
Corporate strategy is a unique plan or framework that is long-term in nature,
designed with an objective to gain a competitive advantage over other market
participants while delivering both on customer/client and stakeholder promises
(i.e., shareholder value). Corporate strategy consists of the decisions made by top
management and the resulting actions taken to achieve the objectives set for the
business.

Components of corporate strategy:

The major corporate strategy components are:
 Scope is concerned with resolving questions about the business the fi rm
should be in, where it should focus, and its enduring strategic purpose.
 Corporate objectives indicate the dimensions of performance upon which
to focus and the levels of achievement required.
 Corporate strategies are concerned with how the company can achieve its
growth objectives in current or new business areas.
 Resource allocation addresses the division of limited resources across
businesses and opportunities.
 Synergies highlight competencies, resources, and capabilities that drive
efficiency and effectiveness in the business. Essential to corporate success
is matching the capabilities of the organization with opportunities to
provide long-term superior customer value.

Corporate Strategy Framework

A useful basis for examining corporate strategy consists of (1) management’s
long-term vision for the corporation; (2) objectives which serve as milestones
toward the vision; (3) resources; (4) businesses in which the corporation
competes; (5) structure, systems, and processes; and (6) gaining corporate
advantage through multimarket activity.
 Deciding Corporate Vision
Vision is a future-oriented concept of the business. Forming a strategic
vision is an exercise in thinking about where a company needs to head to
be successful. A vision is a mental image of a possible and desirable future
state of the organization. A vision describes aspirations for the future – a
destination for the organization. We can say that a vision is a dream – a
distant, long-term dream.
 Objective:
Corporate objectives may be established in the following areas: marketing,
innovation, resources, productivity, social responsibility, and finance.
Examples include growth and market share expectations, product quality
improvement, employee training and development, new-product targets,
return on invested capital, earnings growth rates, debt limits, energy
reduction objectives, and pollution standards. Objectives are set at several
levels in an organization beginning with those indicating the enterprise’s
overall objectives.

 Resources
It is important to place a company’s strategic focus on its resources—
assets, skills, and capabilities. These resources may offer the organization
the potential to compete in different markets, provide significant value to
end-user customers, and create barriers to competitor duplication

 Business Composition
Defining the composition of the business provides direction for both
corporate and marketing strategy design. In single-product fi rms that serve
one market, it is easy to determine the composition of the business. In
many other fi rms it is necessary to separate the business into parts to
facilitate strategic analyses and planning. When fi rms are serving multiple
markets with different products, grouping similar business areas together
aids decision-making.
A business segment, group, or division is often too large in terms of
product and market composition to use in strategic analysis and planning,
so it is divided into more specific strategic units. A popular name for these
units is the Strategic Business Unit (SBU).

 Structure, Systems, and Processes

Structure determines the composition of the corporation. Systems are the
formal policies and procedures that enable the organization to operate.
Processes consider the informal aspects of the organization’s activities.
 Strategic choices provide the logic for different structure, systems, and
process configuration.

Business and Marketing Strategy

A business strategy is the means by which an organization sets out to achieve its
desired objectives. A business strategy is a set of guiding principles that, when
communicated and adopted in the organization, generates a desired pattern of
decision making. It is therefore about how people throughout the organization
should make decisions and allocate resources in order accomplish key objectives.
A marketing strategy refers to a business's overall game plan for reaching
prospective consumers and turning them into customers of their products or
services. A marketing strategy contains the company's value proposition, key
brand messaging, data on target customer demographics, and other high-level
elements.

Business and Marketing Strategy Relationships

An understanding of business purpose, scope, objectives, resources, and strategy
is essential in designing and implementing marketing strategies that are
consistent with the corporate and business unit plan of action. The chief
marketing executive’s business strategy responsibilities include (1) participating in
strategy formulation and (2) developing marketing strategies that are consistent
with business strategy priorities and integrated with other functional strategies.

Strategic Marketing
Marketing strategy consists of the analysis, strategy development, and
implementation of activities in: developing a vision about the market(s) of
interest to the organization, selecting market target strategies, setting objectives,
and developing, implementing, and managing the marketing program positioning
strategies designed to meet the value requirements of the customers in each
market target.
Strategic marketing is a market-driven process of strategy development, taking
into account a constantly changing business environment and the need to deliver
superior customer value. The focus of strategic marketing is on organizational
performance rather than a primary concern about increasing sales. Marketing
strategy seeks to deliver superior customer value by combining the customer-
influencing strategies of the business into a coordinated set of market-driven
actions. Strategic marketing links the organization with the environment and
views marketing as a responsibility of the entire business rather than a specialized
function.

The Marketing Strategy (process)

REGISTER

Challenges of a New Era for Strategic Marketing:

Nearing the end of the first decade of the 21st century, it is apparent that
executives face unprecedented challenges in strategic marketing to cope with
turbulent markets, competitive revolution, and escalating customer demands for
value superiority.
Escalating Globalization
The internationalization of business is well recognized in terms of the importance
of export /import trade and the growth of international corporations, particularly
in the Triad, comprising North America, Europe, and Japan. However, for strategic
marketing in the 21st century, such a view of the international marketing issue
may be shortsighted.
Technology Diversity and Uncertainty
The impact of technology on business may also be underestimated.
The skills and vision required to decide which radical innovation opportunities can
be successfully commercialized will be extremely demanding, and the risks of
failure will be high.
Ethical Behavior and Corporate Social Responsiveness
Ethical behavior is characterized by honesty, fairness and equity in interpersonal,
professional and academic relationships and in research and scholarly activities.
Ethical behavior respects the dignity, diversity and rights of individuals and groups
of people. In the broadest sense of the term, social responsiveness is a person's
obligation to contribute to their community or country in a way that makes the
quality of life and environment better for those around them. ... On a personal
level, volunteering is an act of social responsiveness because it improves the
community.
The Web 2.0:
Web 2.0 has been a term that's been used often and all over the place in the early
to mid-2000s. It's worth pointing out first that there's not one clear definition of
Web 2.0. Like many technological concepts that have seemingly spring out of
nowhere, Web 2.0 is one that has basically taken on a life of its own. The Web 2.0
era served as a marker of change in the philosophy of web companies and web
developers. Even more than that, Web 2.0 was a change in the philosophy of a
web-savvy society as a whole.
Chapter 2

Markets and Competitive Space

Markets are increasingly complex, turbulent, and interrelated, creating challenges
for managers in understanding market structure and identifying opportunities for
growth. The traditional view assumes that the market and competitive space are
stable and changes are predictable. Importantly, this perspective may be
misleading and even dangerous when market boundaries reconfigure because of
new technologies and competition and the emergence of new business designs
(such as Google, Inc., the world’s leading Internet search engine). A complete
view of the market is important, even when management’s interest centers on
one or a few market segments within a particular market. Understanding the
scope and structure of the entire market is necessary to develop strategy and
anticipate market changes and competitive threats.

Markets and Strategies

Knowledge about markets and competitive space is essential in guiding business
and marketing strategies. First, we look at how markets impact strategy and
discuss the importance of thinking outside the competitive box. Next, we examine
several forces that are creating changes in market boundaries and structure, and
consider the need to defi ne markets in terms of buyers’ needs and product
benefits.
Markets and Strategies Are Interlinked
Market changes often require altering business and marketing strategies.
Managers who do not understand their markets and how they will change in the
future may find their strategies inadequate as buyers’ value requirements change
and new products become available which better satisfy buyers’ requirements.
Many forces are causing the transformation of industries and are changing the
structure of markets and nature of competition.

Thinking Outside the Competitive Box

“competitive box” around their businesses—defined by technology, geography,
competitors, and the existing customer base but fails to address the reality that
the real threats as well as exciting opportunities may be present outside the
conventional competitive box. Importantly, effective processes for understanding
markets and competitive space and guiding the strategic initiatives appropriate
for the markets require strategic thinking outside the competitive box.
 An Array of Challenges
Changes in markets are drastically altering opportunities and competitive space
and increasing the importance of strategic thinking in these changing markets.
Disruptive innovation, commoditization of product designs, creation of new
market space, and fast changing markets are challenges that underline the need
to identify changes in the market(s) and diagnose the strategic implications of the
changes.
 Disruptive innovation:
The opportunity for market access by disruptive innovations is created by
the products of incumbent fi rms in the market which are exceeding the
value requirements of buyers. Disruptive innovations may meet the needs
of new segments or entire markets. Disruptive innovations may impact
various technologies and industries. Indications of these new threats to
existing fi rms can often be identified through perceptive market sensing
outside the competitive box. Complacency and management’s hesitancy to
consider options beyond the core business focus are potential problems.
 Commoditization Threats:
commoditization in markets highlights the importance of developing a
vision about how the market is likely to change in the future, and deciding
what business strategy initiatives to pursue. Strategies to overcome
commoditization threats may involve competing at a different stage in the
value chain or moving into a different product category that provides
attractive growth and profit opportunities.

 Creating New Market Space

Kim and Mauborgne offer an interesting and relevant perspective on how
companies can create new market space. These actions require finding and
pursuing opportunities to offer potential buyers’ value in markets and
segments that are not being served. The purpose is to target new
opportunities where buyers’ value requirements are not being satisfied by
existing products.

 Fast changing market:

Fast changing markets require modifications in management’s strategic
thinking. Indications of changes are signaled by shifting customer value
requirements, new technologies changes in competitive space, and new
business models. Importantly, even in markets assumed to be
comparatively stable, innovation can quickly alter market space.

Matching needs with product benefits:

 The term product-market recognizes that a market exists only when there
are buyers with needs who have the ability to purchase goods and services
and products are available to satisfy the needs. Markets are comprised of
groups of people who have the ability and willingness to buy something
because they have a need (value requirement) for it. A product-market
combines the benefits of a product with the needs that motivate people to
express a demand for that product.
  “A product-market is the set of products judged to be substitutes within
those usage situations in which similar patterns of benefits are sought by
groups of customers. The influence of competing brands becomes stronger
the closer the substitutability and the more direct the competition.
 Defining a product-market, it is essential to establish boundaries that are
broad enough to contain all of the relevant product categories which are
competing for the same buyer needs.

Defining and Analyzing Product-Markets

1. Determining Product-Market Boundaries and Structure

Product-market boundaries and structure provide managers with important
information for developing business and marketing strategies, and alert
management to new competition. Considering only a company’s brands and the
direct competitors may mask potential competitive threats or opportunities.

 Product-Market Structure

 A company’s brand competes with other companies’ brands in generic,

product-type, and product-variant product-markets.
  The generic product-market includes a broad group of products that satisfy
a general, yet similar, need.
 The product-type product-market includes all brands of a particular
product type, such as ovens for use in food preparation by consumers. The
product type is a product category or product classification that offers a
specific set of benefits intended to satisfy a customer’s need or want in a
specific way.
 Differences in the products within a product type product-market may
exist, creating product-variants

 Guidelines for Definition

In defining the product-market, it is helpful to indicate
1) the basis for identifying buyers in the product-market of interest (geographical
area, consumer/business, etc.);
(2) the market size and characteristics; and
(3) the brand and/or product categories competing for the needs and wants of
the buyers included in the product-market.

The composition of a product-market can be determined by following the steps

shown. The buyers in various specific product-markets and the different brands
competing in these product-markets can be identified and analyzed.
 2. Forming Product-Markets
The factors that influence how product-market boundaries should be determined
include the purpose for analyzing the product-market, the rate of changes in
market composition over time, and the extent of market complexity.

 Purpose of Analysis
If management is deciding whether or not to exit from a business, primary
emphasis may be on financial performance and competitive position. Detailed
analysis of the product market may not be necessary. In contrast, if the objective
is finding one or more attractive market segments to target in the product-
market, a much more penetrating analysis is necessary.

 Changing composition of market:

As discussed, earlier product-markets may change as new technologies become
available and new competition emerges.
 New technologies offer buyers different ways of meeting their needs.
 The entry into the market by new competitors also alters competitive
space.
Industry classifications often do not clearly defi ne product-market boundaries.
Alternative ways of meeting needs.
Industry classifications typically have a product supply rather than a customer
demand orientation. Of course, since industry associations, trade publications,
and government agencies generate a lot of information about products and
markets, information from these sources should be included in market analysis.

 Extent of Market Complexity

Three characteristics of markets capture a large portion of the variation in their
complexity:
(1) the functions or uses of the product needed by the customer,
(2) the technology used in the product to provide the desired function, and
(3) the different customer segments using the product to perform a particular
function.
Customer function considers the role or purpose of the good or service. It is the
value provided to the customer. Thus, the function performed may be
entertainment for the household, information search, Internet purchasing, or the
performance of various business functions.
Different technologies may satisfy the use situation of the customer. Steel and
aluminum materials meet a similar need in various use situations. The technology
consists of the materials and designs incorporated into products.
Customer segment recognizes the diversity of the needs of customers in a
particular product-market such as automobiles. A specific brand and model won’t
satisfy all buyers’ needs and wants.
It is important to focus on the consumer (or organizational) end-user of the
product when defining the market, since the end-user drives demand for the
product. When the end-users’ needs and wants change, the market changes

 Illustrative Product-Market Structure

Life, Product 19, and Special K compete for sales to people that want nutritional
benefits from cereal.
a person may decide to eat a Kellogg’s Nutri-Grain cereal bar instead of a bowl of
cereal, and the consumer may want to vary the type of cereal, eating a natural or
regular type of cereal.
product types and variants competing for the same needs and wants, the cereal
brand manager should develop a picture of the product-market structure within
which her/his brand is positioned.

Describing and Analyzing End-Users

After determining the product-market structure it is useful to develop profiles of
end-user buyers for the generic, product-type, and product-variant levels of the
product-market.

 Identifying and Describing Buyers

Characteristics, such as family size, age, income, geographical location, sex, and
occupation are often useful in identifying buyers in consumer markets. Illustrative
factors used to identify end-users in organizational markets include type of
industry, company size, location, and types of products.
  How Buyers Make Choices
Often, simply describing buyers does not provide enough information to guide
market targeting and positioning decisions. We also need to try to find out why
people buy products and specific product brands. In considering how customers
decide what to buy, it is useful to analyze how they move through the sequence
of steps leading to a decision to purchase a particular brand.

 Environmental Influences
The fi nal step in building customer profi les is to identify the external
environmental factors that infl uence buyers and thus impact the size and
composition of the market over time. These infl uences include government
actions (e.g., tax cuts), social change, economic shifts, technology, and other
factors that may alter buyers’ needs and wants
 Building Customer Profiles
Describing customers begins with the generic product-market. At this level
customer profi les are likely to describe the size and general composition of the
customer base. The product-type and variant profi les are more specifi c about
customer characteristics such as needs and wants, use situations, activities and
interests, opinions, purchase processes and choice criteria, and environmental
influences on buying decisions

Analyzing Competition

Competitor analysis considers the companies and brands that compete in the
productmarket of interest. Step 1 we determine the competitive arena in which
an organization competes and describe the characteristics of the competitive
space. Steps 2 and 3 identify, describe, and evaluate the organization’s key
competitors. Steps 4 and 5 anticipate competitors’ future actions and identify
potential competitors that may enter the market.
Defining the competitive Arena:
Competition often includes more than the fi rms that are direct competitors, like
Coke and Pepsi. The product variant is the most direct type of competition. Since
competition often occurs within specifi c industries, study of the industry
structure is useful in defi ning the competitive arena, recognizing that more than
one industry may be competing in the same product-market, depending on the
complexity of the product-market structure.

 Indystry analysis:
the industry analysis is horizontal and covers similar types of fi rms (e.g., soft drink
producers), whereas the value chain analysis considers the vertical network of fi
rms that supply materials and/ or parts, produce products (and services), and
distribute the products to end-users. The industry analysis includes:
(1) industry characteristics and trends, such as sales, number of fi rms, and
growth rates; and
(2) operating practices of the fi rms in the industry, including product mix, service
provided, barriers to entry, and geographical scope.
 The industry identifi cation is based on product similarity, location at the same
level in the value chain (e.g., manufacturer, distributor, retailer) and geographical
scope. The industry analysis considers:
• Industry size, growth, and composition.
• Typical marketing practices.
• Industry changes that are anticipated (e.g., consolidation trends).
• Industry strengths and weaknesses.
• Strategic alliances and potential mergers/acquisitions among competitors.

 Analysis of the Value-Added Chain

The study of supplier and distribution channels is important in understanding and
serving product-markets. While some producers may go directly to their end-
users, many work with other organizations through distribution channels. The
extent of vertical integration by competitor backward (supply) and forward
toward end-users is also useful information. The types of relationships
(collaborative or transactional) in the distribution channel should be identifi ed
and evaluated. The extent of outsourcing activities in the value chain is also of
interest. Different channels that access end-user customers should be included in
the channel analysis. Value chain analysis may also uncover new market
opportunities that are not served by present channels of distribution. Finally,
information from various value chain levels can help in forecasting end-user sales.
By outsourcing an organization may gain strategic advantage by focusing on its
core competencies, while outsourcing other necessary business functions to
independent partners. Thus, analysis of outsourcing activities may be an
important aspect of competitor analysis.

 Competitive Forces
Different competitive forces are present in the value-added chain. The traditional
view of competition is expanded by recognizing Michael Porter’s fi ve competitive
forces that impact industry performance:
1. Rivalry among existing fi rms.
2. Threat of new entrants.
3. Threat of substitute products.
4. Bargaining power of suppliers.
5. Bargaining power of buyers.
 The first force recognizes that active competition among industry members
helps determine industry performance, Rivalry may occur within a market
segment or across an entire product-market.
 The secondly, Existing firms may try to discourage new competition by
aggressive expansion and other types of market entry barriers.
 The third force considers the potential impact of substitutes. New
technologies that satisfy the same customer value requirement are
important sources of competition.
 The fourth force, Companies may pursue vertical integration strategies to
reduce the bargaining power of suppliers. Collaborative relationships are
useful to respond to the needs of both partners.
 Finally, buyers may use their purchasing power to infl uence their
suppliers. Wal-Mart, for example, has a strong infl uence on the suppliers of
its many products. Understanding which organizations have power and infl
uence in the value chain provides important insights into the structure of
competition.
Key Competitor Analysis
Competitor analysis is conducted for the fi rms directly competing with each
other (e.g., Nike and Reebok) and other companies that management may
consider important in strategy analysis (for example, potential market entrants).
We now look at two major aspects of competitor analysis:
(1) preparing a descriptive profi le for each competitor; and
(2) evaluating the competitor’s strengths and weaknesses

Analyzing Competition
 1 and 2 Describing and Evaluating the Competitor
A key competitor is any organization going after the same market target as the fi
rm conducting the analysis. American and Southwest Airlines are key competitors
on many U.S. routes. Key competitors are brands that compete in the same
product-market or segment(s) within the market (Motorola, Nokia, and Samsung
cell phones). Different product types that satisfy the same need or want may also
actively compete against each other.
It is important to gain as much knowledge as possible about the background,
experience, qualifi cations, and tenure of key executives for each major
competitor. This information includes the executives’ performance records, their
particular areas of expertise, and the fi rms where they were previously
employed. These analyses may suggest the future strategic initiatives of a key
competitor.
 Business scope and objectives
 Management experience, capabilities, and weaknesses
 Market position and trends
 Market target(s) and customer base
 Positioning strategy for each target
 Distinctive capabilities
 Financial performance (current and historical)
how well competitors meet customer value requirements requires finding out
what criteria buyers use to rate each supplier Measurement methods include
customer comparisons of value attributes of the firm versus itscompetitors,
customer surveys, loyalty measures.

Anticipating Competitors’ Actions

Steps 4 and 5 in competitor analysis
 Estimating Competitors’ Future Strategies
Competitors’ future strategies may continue the directions that they have
established in the past, particularly if no major external infl uences require
changing their strategies. Nevertheless, assuming an existing strategy will
continue is not wise.
 Identifying New Competitors
New competitors may come from four major sources:
(1) companies competing in a related product-market;
(2) companies with related technologies;
(3) companies already targeting similar customer groups with other products;
and/or
(4) companies competing in other geographical regions with similar products.
Market entry by a new competitor is likely under one or more of these conditions:

 High profi t margins are being achieved by market incumbents.

 Future growth opportunities in the market are attractive.
 No major market-entry barriers are present
 Competition is limited to one or a few competitors.

Market Size Estimation

An important part of market opportunity analysis is estimating the present and
potential size of the market. Market size is usually measured by dollar sales
and/or unit sales for a defi ned product-market and specifi ed time period. Other
size measures include the number of buyers, average purchase quantity, and
frequency of purchase. Three key measures of market size are: market potential,
sales forecast, and market share.
 Market Potential
Market potential is the maximum amount of product sales that can be obtained
from a defi ned product-market during a specifi ed time period. It includes the
total opportunity for sales by all fi rms serving the product-market. Market
potential is the upper limit of sales that can be achieved by all fi rms for a specifi
ed product-market over an indicated time period. Often, actual industry sales in a
specifi ed year fall somewhat below market potential because the production and
distribution systems are unable to completely meet the needs of all buyers who
are both willing and able to purchase the product during the period of interest.
 Sales Forecast
The sales forecast indicates the expected sales for a defi ned product-market
during a specifi ed time period. A forecast can be made for total sales at any
product-market level (generic, product type, variant) and for specifi c subsets of
the product-market (e.g., market segments). A company sales forecast can also be
made for sales expected by a particular firm. Time-series analysis is popular for
projecting future sales but is very dependent on the stability of historical trends.
 Market Share
Company sales divided by the total sales of all fi rms for a specifi ed product-
market determines the market share of a particular fi rm. Market share may be
calculated on the basis of actual sales or forecasted sales. Market share can be
used to forecast future company sales and to compare actual market position
among competing brands of a product. Market share may vary depending on the
use of dollar sales or unit sales due to price differences across competitors.

 Evaluating Market Opportunity

Since a company’s sales depend, in part, on its marketing plans, management’s
forecasts and marketing strategy are closely interrelated. Forecasting involves
“what if” analyses. Alternative positioning strategies (product, distribution, price,
and promotion) need to be evaluated for their estimated effects on sales. Because
of the marketing effort/sales relationship, it is important to consider both market
potential (opportunity) and planned marketing expenditures in determining the
forecast. Sales forecasts of target markets are needed so that management can
estimate the fi nancial attractiveness of both new and existing market
opportunities.
 Developing a Strategic Vision About the Future
Market development and competitive space may not follow clearly defi ned and
predictable paths. Nonetheless, signals can be identifi ed that are useful in
pointing to possible market changes.
 Phases of Competition
It is useful to distinguish between different phases in the development of
competition. In the initial stage, companies compete in identifying product
concepts, technology choices, and building competencies. This phase involves
experimentation with ideas, and the path to market leadership is not clearly defi
ned.
Phase 2 may involve partnering of companies with the objective of controlling
industry standards, though these fi rms eventually become competitors. Finally,
as the market becomes clearly defi ned and the competitive space established,
the competitors concentrate on market share for end products and profi ts. The
personal computer market is currently in this stage.
 Anticipating the Future
Increasingly, we fi nd that change and turbulence, rather than stability,
characterize many product-markets. Moreover, as discussed above, it is often
possible to determine the forces underway that will alter product-market
structure. Though these infl uences are not easily identifi ed and analyzed, the
organizations that choose to invest substantial time and effort in anticipating the
future create an opportunity for competitive advantage.
 BRM
Chapter 1

Business research
Business research can be described as a systematic and organized effort to
investigate a specific problem encountered in the work setting, which needs a
solution. It comprises a series of steps that are designed and executed with the
goal of finding answers to the issues that are of concern to the manager in the
work environment. This means that the first step in research is to know where the
problem areas exist in the organization, and to identify as clearly and specifically
as possible the problems that need to be studied and resolved. Once the problem
is clearly defined, steps can be taken to determine the factors that are associated
with the problem, gather information, analyze the data, develop an explanation
for the problem at hand and then solve it by taking the necessary corrective
measures. The entire process by which we attempt to solve problems is called
research.
Research encompasses the processes of inquiry, investigation, examination, and
experimentation. These processes have to be carried out systematically,
diligently, critically, objectively, and logically. The expected end result would be a
discovery that helps the manager to deal with the problem situation. Identifying
the critical issues, gathering relevant information, analyzing the data in ways that
help decision making, and implementing the right course of action, are all
facilitated by understanding business research. After all, decision making is simply
a process of choosing from among alternative solutions to resolve a problem and
research helps to generate viable alternatives for effective decision making.
We can now define business research as an organized, systematic, data‐based,
critical, objective, inquiry or investigation into a specific problem, undertaken
with the purpose of finding answers or solutions to it.
In essence, research provides the necessary information that guides managers to
make informed decisions to successfully deal with problems. The information
provided could be the result of a careful analysis of primary data gathered first‐
hand or of secondary data that are already available (in the company, industry,
archives, etc.). These data can be quantitative (quantitative data are data in the
form of numbers as generally gathered through structured questions) or
qualitative (qualitative data are data in the form of words) as generated from the
broad answers to questions in interviews, or from responses to open‐ended
questions in a questionnaire, or through observation, or from already available
information gathered from various sources such as the Internet.

The role of theory and information in research

 There are different types of questions research projects can address and
there are many different approaches to collecting and analyzing different
types of data. What’s more, some research is aimed at building theory,
whereas other research is designed to test a theory or to describe what is
going on, using an existing framework, instrument, or model.
 a theory is any concept, instrument, model, or framework that helps them
to think about or solve a problem, to describe a phenomenon, or to better
understand a topic of interest, such as competitive advantage, portfolio
management, or the sociology of Canadian donut shops. To a scientist, a
theory explains a certain phenomenon, and the idea is that this explanation
will hold in a wide range of settings.
 For instance, expectancy theory proposes that people will choose how to
behave depending on the outcomes they expect as a result of their
behavior. In other words, people decide what to do based on what they
expect the outcome to be. At work, for example, it might be that people
work longer hours because they expect an increase in pay. Like this, a
theory may generate testable – and sooner or later, tested – predictions.

Research and the manager

 In business, research is usually primarily conducted to resolve problematic
issues in, or interrelated among, the areas of accounting, finance,
management, and marketing.
  In accounting, budget control systems, practices, and procedures are
frequently examined. Inventory costing methods, accelerated depreciation,
time‐series behavior of quarterly earnings, transfer pricing, cash recovery
rates, and taxation methods are some of the other areas that are
researched.
 In finance, the operations of financial institutions, optimum financial ratios,
mergers and acquisitions, leveraged buyouts, intercorporate financing,
yields on mortgages, the behavior of the stock exchange, the influence of
psychology on the behavior of financial practitioners and the subsequent
effect on markets, and the like, become the focus of investigation.
 Management research could encompass the study of employee attitudes
and behaviors, human resources management, the impact of changing
demographics on management practices, production operations
management, strategy formulation, information systems, and the like.
 Marketing research could address issues pertaining to consumer decision
making, customer satisfaction and loyalty, market segmentation, creating a
competitive advantage, product image, advertising, sales promotion,
marketing channel management, pricing, new product development, and
other marketing aspects.
 External environment For example, economic, political, demographic,
technological, competitive, and other relevant global factors.
More Examples of Research Areas in Business
 Absenteeism
 Communication
 Motivation
 Consumer decision making
 Customer satisfaction
 Budget allocations
 Accounting procedures

TYPES OF BUSINESS RESEARCH: APPLIED AND BASIC

Research can be undertaken for two different purposes. One is to solve a current
problem faced by the manager in the work setting, demanding a timely solution.
For example, a particular product may not be selling well and the manager might
want to find the reasons for this in order to take corrective action. Such research
is called applied research.
Types of Applied Research
There are 3 types of applied research. These are evaluation research, research
and development, and action research.
1) Evaluation Research
Evaluation research is a type of applied research that analyses existing
information about a research subject to arrive at objective research outcomes or
reach informed decisions. This type of applied research is mostly applied in
business contexts, for example, an organisation may adopt evaluation research to
determine how to cut down overhead costs.
2) Research and Development
Research and development is a type of applied research that is focused on
developing new products and services based on the needs of target markets. It
focuses on gathering information about marketing needs and finding ways to
improve on an existing product or create new products that satisfy the identified
needs.
3) Action Research
Action research is a type of applied research that is set on providing practical
solutions to specific business problems by pointing the business in the right
directions. Typically, action research is a process of reflective inquiry that is
limited to specific contexts and situational in nature.
Examples
 Applied research to improve an organization’s hiring process.
 Applied research to improve workplace efficiency and organizational
policies.
 Applied research to bridge skill gaps in the workplace.
The other is to generate a body of knowledge by trying to comprehend how
certain problems that occur in organizations can be solved. This is called basic,
fundamental, or pure research. The main motivation in basic research is
to expand man’s knowledge, not to create or invent something. The term ‘basic’
indicates that, through theory generation, basic research provides the foundation
for applied research. This approach of research is essential for nourishing the
expansion of knowledge. It deals with questions that are intellectually interesting
and challenging to the investigator.
Example:An investigation looking at whether stress levels influence how often
students engage in academic cheating.

MANAGERS AND RESEARCH

Why managers need to know about research
Managers with knowledge of research have an advantage over those without.
There are several other reasons why professional managers should be
knowledgeable about research and research methods in business. First, such
knowledge sharpens the sensitivity of managers to the myriad variables operating
in a situation and reminds them frequently of the multicausality and multifinality
of phenomena, thus avoiding inappropriate, simplistic notions of one variable
“causing” another. Second, when managers understand the research reports
about their organizations handed to them by professionals, they are equipped to
take intelligent, educated, calculated risks with known probabilities attached to
the success or failure of their decisions. Research then becomes a useful decision‐
making tool rather than generating a mass of incomprehensible statistical
information. Third, if managers become knowledgeable about scientific
investigations, vested interests inside or outside the organization will not prevail.
Being knowledgeable about research and research methods helps professional
managers to:
 Identify and effectively solve minor problems in the work setting.
  Know how to discriminate good from bad research.
 Appreciate and be constantly aware of the multiple influences and multiple
effects of factors impinging on a situation.
 Take calculated risks in decision making, knowing full well the probabilities
associated with the different possible outcomes.
 Prevent possible vested interests from exercising their influence in a
situation.
 Relate to hired researchers and consultants more effectively.
 Combine experience with scientific knowledge while making decisions.

The manager and the consultant–researcher

 the manager must not only interact effectively with the research team, but
also explicitly delineate the roles for the researchers and the managers.
 Managers must inform to the researcher what kind of information may be
provided to them and what kind of information they may not be provided.
Such information contains – personal files of employees and the trade
secrets. This will help to minimize the frustration between both the parties.
 The manager who has the knowledge about the research can foresee more
easily about what kind of information that might require by the researcher
while doing research.
 Beyond this, the manager should also make sure that there is congruence in
the value system of management and the consultant.
To summarize, while hiring researchers or consultants the manager should
make sure that:
1. The roles and expectations of both parties are made explicit.
2. Relevant philosophies and value systems of the organization are clearly
stated and constraints, if any, are communicated.
3. A good rapport is established with the researchers, and between the
researchers and the employees in the organization, enabling the full
cooperation of the latter

INTERNAL VERSUS EXTERNAL CONSULTANTS/RESEARCHERS

Internal consultants/researchers
Some organizations have their own consulting or research department, which
might be called the Management Services Department, the Organization and
Methods Department, R&D (research and development department), or some
other name. This department serves as the internal consultant to subunits of the
organization that face certain problems and seek help.
Advantages of internal consultants/researchers
There are at least four advantages in engaging an internal team to do the
research project:
1. The internal team stands a better chance of being readily accepted by the
employees in the subunit of the organization where research needs to be done.
2. The team requires much less time to understand the structure, the philosophy
and climate, and the functioning and work systems of the organization.
3. They are available to implement their recommendations after the research
findings have been accepted. This is very important because any “bugs” in the
implementation of the recommendations may be removed with their help. They
are also available to evaluate the effectiveness of the changes, and to consider
further changes if and when necessary.
4. The internal team might cost considerably less than an external team for the
department enlisting helpin problem solving, because they will need less time to
understand the system due to their continuous involvement with various units of
the organization. For problems of low complexity, the internal team would be
ideal.
Disadvantages of internal consultants/researchers
There are also certain disadvantages to engaging internal research teams for the
purposes of problem solving. The four most critical ones are:
1. In view of their long tenure as internal consultants, the internal team may quite
possibly fall into a stereotyped way of looking at the organization and its
problems. This inhibits any fresh ideas and perspectives that might be needed to
correct the problem. This is definitely a handicap for situations in which weighty
issues and complex problems are to be investigated.
2. There is scope for certain powerful coalitions in the organization to influence
the internal team to conceal, distort, or misrepresent certain facts. In other
words, certain vested interests could dominate, especially in securing a sizable
portion of the available scant resources.
3. There is also a possibility that even the most highly qualified internal research
teams are not perceived as “experts” by the staff and management, and hence
their recommendations may not get the consideration and attention they
deserve.
4. Certain organizational biases of the internal research team might, in some
instances, make the findings less objective and consequently less scientific.
External consultants/researchers
The disadvantages of the internal research teams turn out to be the advantages
of the external teams, and the former’s advantages work out to be the
disadvantages of the latter. However, the specific advantages and disadvantages
of the external teams may be highlighted.
Advantages of external consultants/researchers
The advantages of the external team are:
1. The external team can draw on a wealth of experience from having worked
with different types of organizations that have had the same or similar types of
problems. This wide range of experience enables them to think both divergently
and convergently rather than hurry to an instant solution on the basis of the
apparent facts in the situation. They are able to ponder over several alternative
ways of looking at the problem because of their extensive problem‐solving
experience in various other organizational setups. Having viewed the situation
from several possible angles and perspectives (divergently), they can critically
assess each of these, discard the less viable options and alternatives, and focus on
specific feasible solutions (think convergently).
2. The external teams, especially those from established research and consulting
firms, might have more knowledge of current sophisticated problem‐solving
models through their periodic training programs, which the teams within the
organization may not have access to. Because knowledge obsolescence is a real
threat in the consulting area, external research institutions ensure that their
members are conversant with the latest innovations through periodic organized
training programs. The extent to which internal team members are kept abreast
of the latest problem‐solving techniques may vary considerably from one
organization to another.
Disadvantages of external consultants/researchers
The major disadvantages in hiring an external research team are as follows:
1. The cost of hiring an external research team is usually high and is the main
deterrent, unless the problems are critical.
2. In addition to the considerable time the external team takes to understand the
organization being researched, they seldom get a warm welcome, nor are readily
accepted by employees. Departments and individuals likely to be affected by the
research study may perceive the study team as a threat and resist them.
Therefore, soliciting employees’ help and enlisting their cooperation in the study
is a little more difficult and time‐consuming for external researchers than for
internal teams.
3. The external team also charges additional fees for their assistance in the
implementation and evaluation phases.
Keeping in mind these advantages and disadvantages of internal and external
research teams, the manager who desires research services has to weigh the pros
and cons of engaging either before making a decision.

KNOWLEDGE ABOUT RESEARCH AND MANAGERIAL EFFECTIVENESS

 Managers are responsible for the final outcome by making the right
decisions at work.
 Knowledge of research heightens the sensitivity of managers to the
innumerable internal and external factors operating in their work and
organizational environment. It also helps to facilitate effective interactions
 with consultants and comprehension of the nuances of the research
process.
 A multitude of instruments and theories, (big) data, and sophisticated
technology is available to model and analyze a wide range of issues such as
business processes, consumer behavior, investment decisions, and the like.
 Even superficial knowledge of research helps the manager to deal with the
consultant/researcher in a mature and confident manner, so that dealing
with “experts” does not result in discomfort.
 Remaining objective, focusing on problem solutions, fully understanding
the recommendations made, and why and how they have been arrived at,
make for good managerial decision making.

ETHICS AND BUSINESS RESEARCH

 Ethics in business research refers to a code of conduct or expected societal

norms of behavior while conducting research. Ethical conduct applies to the
organization and the members that sponsor the research, the researchers
who undertake the research, and the respondents who provide them with
the necessary data.
 The observance of ethics begins with the person instituting the research,
who should do so in good faith, pay attention to what the results indicate,
and, surrendering the ego, pursue organizational rather than self‐interests.
 Ethical conduct should also be reflected in the behavior of the researchers
who conduct the investigation, the participants who provide the data, the
analysts who provide the results, and the entire research team that
presents the interpretation of the results and suggests alternative
solutions.
 Ethical behavior pervades each step of the research process – data
collection, data analysis, reporting, and dissemination of information on the
Internet, if such an activity is undertaken.
 How the subjects are treated and how confidential information is
safeguarded are all guided by business ethics.
 Business journals such as the Journal of Business Ethics and the Business
Ethics Quarterly that are mainly devoted to the issue of ethics in business.
  The American Psychological Association has established certain guidelines
for conducting research, to ensure that organizational research is
conducted in an ethical manner and the interests of all concerned are
safeguarded.
Chapter 2

Scientific research
Scientific research focuses on solving problems and pursues a step‐by‐step logical,
organized, and rigorous method to identify the problems, gather data, analyze
them, and draw valid conclusions from them. Thus, scientific research is not
based on hunches, experience, and intuition (though these may play a part in final
decision making), but is purposive and rigorous. Because of the rigorous way in
which it is done, scientific research enables all those who are interested in
researching and knowing about the same or similar issues to come up with
comparable findings when the data are analyzed. Scientific research also helps
researchers to state their findings with accuracy and confidence.

Scientific investigation
scientific investigation tends to be more objective than subjective, and helps
managers to highlight the most critical factors at the workplace that need specific
attention so as to avoid, minimize, or solve problems. Scientific investigation and
managerial decision making are integral aspects of effective problem solving. The
term scientific research applies, therefore, to both basic and applied research.

THE HALLMARKS OF SCIENTIFIC RESEARCH

The hallmarks or main distinguishing characteristics of scientific research may be

listed as follows:
1. Purposiveness. 2. Rigor. 3. Testability. 4. Replicability. 5. Precision and
confidence. 6. Objectivity. 7. Generalizability. 8. Parsimony.
Each of these characteristics can be explained in the context of a concrete
example. Let us consider the case of a manager who is interested in investigating
how employees’ commitment to the organization can be increased. We shall
examine how the eight hallmarks of science apply to this investigation so that it
may be considered “scientific.”
1. Purposiveness
The manager has started the research with a definite aim or purpose. The focus is
on increasing the commitment of employees to the organization, as this will be
beneficial in many ways. An increase in employee commitment will translate into
lower turnover, less absenteeism, and probably increased performance levels, all
of which will definitely benefit the organization. The research thus has a
purposive focus.
2. Rigor
A good theoretical base and a sound methodological design add rigor to a
purposive study. Rigor connotes carefulness, scrupulousness, and the degree of
exactitude in research investigations. Rigorous research involves a good
theoretical base and a carefully thought‐out methodology. These factors
(IT)enable the researcher to collect the right kind of information from an
appropriate sample with the minimum degree of bias, and facilitate suitable
analysis of the data gathered.
3. Testability
Testability is a property that applies to the hypotheses of a study. a hypothesis as
a tentative, yet testable, statement, which predicts what you expect to find in
your empirical data. Hypotheses are derived from theory, which is based on the
logical beliefs of the researcher and on (the results of) previous, scientific
research. A scientific hypothesis must be testable. Not all hypotheses can be
tested. Non‐testable hypotheses are often vague statements, or they put forward
something that cannot be tested experimentally.
4. Replicability
Replication demonstrates that our hypotheses have not been supported merely
by chance, but are reflective of the true state of affairs in the population. The
results of the tests of hypotheses should be supported again and yet again when
the same type of research is repeated in similar circumstances. To the extent that
this does happen (i.e., the results are replicated or repeated), we will gain
confidence in the scientific nature of our research. Replication is made possible by
a detailed description of the design details of the study, such as the sampling
method and the data collection methods that were used.
5. Precision and confidence
In management research, we seldom have the luxury of being able to draw
“definitive” conclusions on the basis of the results of data analysis. Precision
refers to the closeness of the findings to “reality” based on a sample. In other
words, precision reflects the degree of accuracy or exactitude of the results on
the basis of the sample, to what really exists in the universe.
Confidence refers to the probability that our estimations are correct. That is, it is
not merely enough to be precise, but it is also important that we can confidently
claim that 95% of the time our results will be true and there is only a 5% chance
of our being wrong. This is also known as the confidence level.
6. Objectivity
The conclusions drawn through the interpretation of the results of data analysis
should be objective; that is, they should be based on the facts of the findings
derived from actual data, and not on our own subjective or emotional values.
For example, if the hypothesis relating to organizational commitment in our
previous example was not supported, considerable time and effort would be
wasted in finding ways to create opportunities for employee participation in
decision making. We would only find out later that employees still kept quitting,
remained absent, and did not develop any sense of commitment to the
organization. The more objective the interpretation of the data, the more
scientific the research investigation becomes. Though managers or researchers
might start with some initial subjective values and beliefs, their interpretation of
the data should be stripped of personal values and bias.
7. Generalizability
Generalizability refers to the scope of applicability of the research findings in one
organizational setting to other settings. Obviously, the wider the range of
applicability of the solutions generated by research, the more useful the research
is to the users. The more generalizable the research, the greater its usefulness
and value. For wider generalizability, the research sampling design has to be
logically developed and a number of other details in the data‐collection methods
need to be meticulously followed.
8. Parsimony
Simplicity in explaining the phenomena or problems that occur, and in generating
solutions for the problems, is always preferred to complex research frameworks
that consider an unmanageable number of factors. P It can be introduced with a
good understanding of the problem and the important factors that influence it.
Such a good conceptual theoretical model can be realized through unstructured
and structured interviews with the concerned people, and a thorough literature
review of the previous research work in the particular problem area.

THE HYPOTHETICO DEDUCTIVE METHOD

Scientific research pursues a step‐by‐step, logical, organized, and rigorous method
(a scientific method) to find a solution to a problem. The scientific method was
developed in the context of the natural sciences, where it has been the
foundation of many important discoveries.
The seven-step process in the hypothetico-deductive method
The hypothetico‐deductive method involves the seven steps listed and discussed
next.
1. Identify a broad problem area. 2. Define the problem statement. 3. Develop
hypotheses. 4. Determine measures. 5. Data collection. 6. Data analysis. 7.
Interpretation of data.
1) Identify a broad problem area
A drop in sales, frequent production interruptions, incorrect accounting results,
low‐yielding investments, disinterestedness of employees in their work, customer
switching, and the like, could attract the attention of the manager and catalyze
the research project.
2) Define the problem statement
Scientific research starts with a definite aim or purpose. To find solutions for
identified problems, a problem statement that includes the general objective and
research questions of the research should be developed.
Gathering initial information about the factors that are possibly related to the
problem will help us to narrow the broad problem area and to define the problem
statement. Preliminary information gathering involves the seeking of information
in depth, of what is observed (for instance, the observation that our company is
losing customers)
This could be done by a literature review (literature on customer switching) or by
talking to several people in the work setting, to clients (why do they switch?), or
to other relevant sources, thereby gathering information on what is happening
and why.
3) Develop hypotheses
In this step, variables are examined to ascertain their contribution or influence in
explaining why the problem occurs and how it can be solved. The network of
associations identified among the variables is then theoretically woven, together
with justification as to why they might influence the problem. From a theorized
network of associations among the variables, certain hypotheses or educated
conjectures can be generated.
we might hypothesize that specific factors such as overpricing, competition,
inconvenience, and unresponsive employees affect customer switching.
4) Determine measures
Unless the variables in the theoretical framework are measured in some way, we
will not be able to test our hypotheses. To test the hypothesis that unresponsive
employees affect customer switching, we need to operationalize
unresponsiveness and customer switching.
5) Data collection
After we have determined how to measure our variables, data with respect to
each variable in the hypothesis need to be obtained. These data then form the
basis for data analysis.
 6) Data analysis
In the data analysis step, the data gathered are statistically analyzed to see if the
hypotheses that were generated have been supported. For instance, to see if
unresponsiveness of employees affects customer switching, we might want to do
a correlational analysis to determine the relationship between these variables.
7) Interpretation of data
hypotheses are supported or not by interpreting the meaning of the results of the
data analysis. Hypotheses that are not supported allow us to refine our theory by
thinking about why it is that they were not supported. We can then test our
refined theory in future research.
Review of the hypothetico-deductive method
The hypothetico‐deductive method involves the seven steps of identifying a broad
problem area, defining the problem statement, hypothesizing, determining
measures, data collection, data analysis, and the interpretation of the results.
The scientific method uses deductive reasoning to test a theory (recall that, to a
scientist, a theory is an organized set of assumptions that generates testable
predictions) about a topic of interest. In deductive reasoning, we work from the
more general to the more specific.
Inductive reasoning works in the opposite direction: it is a process where we
observe specific phenomena and, on this basis, arrive at general conclusions.
Hence, in inductive reasoning, we work from the more specific to the more
general. The observation of a first, second, and third white swan (this is a very
famous example) may lead to the proposition that “all swans are white.”

Some obstacles to conducting scientific research in the

management area
In the management and behavioral areas, it is not always possible to conduct
investigations that are 100% scientific, in the sense that, unlike in the physical
sciences, the results obtained will not be exact and error‐free. This is primarily
because of difficulties likely to be encountered in the measurement and collection
of data in the subjective areas of feelings, emotions, attitudes, and perceptions.
These problems occur whenever we attempt to measure abstract and subjective
constructs. Difficulties might also be encountered in obtaining a representative
sample, restricting the generalizability of the findings. It is not always possible to
meet all the hallmarks of science in full. Comparability, consistency, and wide
generalizability are often difficult to obtain in research.

ALTERNATIVE APPROACHES TO RESEARCH

I will briefly discuss the most important perspectives for contemporary research
in business.
Positivism
 In a positivist view of the world, science and scientific research is seen as
the way to get at the truth – indeed, positivists believe that there is an
objective truth out there – to understand the world well enough so that we
are able to predict and control it.
 Positivists are concerned with the rigor and replicability of their research,
the reliability of observations, and the generalizability of findings.
 The key approach of positivist researchers is the experiment, which allows
them to test cause‐and‐effect relationships through manipulation and
observation.
Constructionism
 Constructionists hold the opposite view, namely that the world (as we
know it!) is fundamentally mental or mentally constructed.
 constructionists do not search for the objective truth. Instead, they aim to
understand the rules people use to make sense of the world by
investigating what happens in people’s minds.
 Constructionists are particularly interested in how people’s views of the
world result from interactions with others and the context in which they
take place. The research methods of constructionist researchers are often
qualitative in nature.
Critical realism
Critical realism is a combination of the belief in an external reality (an objective
truth) with the rejection of the claim that this external reality can be objectively
measured; observations (especially observations on phenomena that we cannot
observe and measure directly, such as satisfaction, motivation, culture) will
always be subject to interpretation. The critical realist is thus critical of our ability
to understand the world with certainty.
Pragmatism
The focus of pragmatism is on practical, applied research where different
viewpoints on research and the subject under study are helpful in solving a
(business) problem. Pragmatism describes research as a process where concepts
and meanings (theory) are generalizations of our past actions and experiences,
and of interactions we have had with our environment. Pragmatists thus
emphasize the socially constructed nature of research; different researchers may
have different ideas about, and explanations for, what is happening around us.
Chapter 3

Defining and refining the problem

Introduction:
business research as a systematic and organized effort to investigate a specific
problem encountered in the work setting. Indeed, managers have to be alert and
responsive to what is going on, both within their organization and in its
environment in order to take effective decisions and develop effective courses of
action. The origin of most research stems from the desire to get a grip on issues,
concerns, and conflicts within the company or in its environment. In other words,
research typically begins with a problem.
Three important first steps in the research process
 1. THE BROAD PROBLEM AREA
A “problem” does not necessarily mean that something is seriously wrong with a
current situation that needs to be rectified immediately. A problem could also
indicate an interest in an issue where finding the right answers might help to
improve an existing situation. Thus, it is fruitful to define a problem as any
situation where a gap exists between an actual and a desired ideal state.
EXAMPLES OF PROBLEMS
1. Long and frequent delays lead to much frustration among airline passengers. Th
ese feelings may eventually lead to switching behavior, negative word‐of‐mouth
communication, and customer complaints.
2. Staff turnover is higher than anticipated.
3. Th e current instrument for the assessment of potential employees for
management positions is imperfect.
4. Minority group members in organizations are not advancing in their careers.
5. Th e newly installed information system is not being used by the managers for
whom it was primarily designed.
6. Th e introduction of flexible work hours has created more problems than it has
solved.
7. Young workers in the organization show low levels of commitment to the
organization.
these problems also have in common is that they still have to be transformed into
a researchable topic for investigation. Indeed, once we have identified the
management problem, it needs to be narrowed down to a researchable topic for
study.
1. PRELIMINARY RESEARCH
Once we have identified the broad problem area preliminary research should help
the researcher to gain a better understanding of the problem and to narrow the
problem down to a researchable topic for study. Preliminary research should help
the researcher to find answers to questions such as: “What is the problem?”;
“Why does the problem exist?”; “Is the problem important?”; and “What are the
benefits of solving the problem?” Although the exact nature of the information
needed for this purpose depends on the type of problem one is addressing, it may
be broadly classified under two headings:
1. Information on the organization and its environment – that is, the contextual
factors.
2. Information on the topic of interest.

Nature of information to be gathered

 Background information on the organization
Information gathered on relevant contextual factors will be useful in talking
knowledgeably with managers and other employees in the company and raising
the appropriate issues related to the problem. Along these lines, an
understanding of these factors might be helpful in arriving at a precise problem
formulation. Background information might include, among other things, the
contextual factors listed below, which may be obtained from various sources.
1. The origin and history of the company – when it came into being, business it is
in, rate of growth, ownership and control, and so on.
2. Size in terms of employees, assets, or both.
3. Charter – purpose and ideology.
4. Location – regional, national, or other.
5. Resources – human and others.
6. Interdependent relationships with other institutions and the external
environment.
7. Financial position during the previous five to ten years, and relevant financial
data.
8. Information on structural factors (for instance, roles and positions in the
organization and number of employees at each job level, communication
channels, control systems, workflow systems).
9. Information on the management philosophy.
Depending on the situation, the type of problem investigated, and the nature of
some initial responses received, certain aspects may have to be explored in
greater depth than others.

Secondary data are data that have been collected by others for another
purpose than the purpose of the current study. Some secondary sources of data
are statistical bulletins, government publications, published or unpublished
information available from either within or outside the organization, company
websites, and the Internet. The nature and the value of secondary data should be
carefully evaluated before it is used.
CRITERIA FOR EVALUATING SECONDARY DATA
Timeliness of the data. When were the data collected? It is important that the
data are up‐to‐date. Check the dates on all of your secondary data to make sure
that you have the newest information available.
Accuracy of the data. What was the purpose of (presenting) the data? Web
pages are created with a specific purpose in mind. Commercial organizations
often post information online that might favor them in some way or represent
their own interests. Who collected the data? How were the data collected?
What is the author’ s credentials on this subject? Th e accuracy of data can be
impacted by who collected it and how the data were collected. Are the data
consistent with data from other sources? If specific information varies from
source to source, you need to find out which information is more accurate.
Relevance of the data. Not all of the secondary data you find will be relevant to
your particular needs. Data may be accurate and up‐to‐date but not applicable to
your research objective(s) and research questions.
Costs of the data. H ow much do the data cost? Do the benefits outweigh the
costs? Are you better off collecting other data? Are you better off using other
(primary?) methods of data collection?
The collection of secondary data is very often quite helpful in the early stages of
the research process, but in some cases, information is best obtained by other
methods such as interviewing people, observation, or by administering
questionnaires to individuals. Such data that the researcher gathers first hand for
the specific purpose of the study are called primary data. Four principal
methods of primary data collection (interviews, observation, administering
questionnaires, and experiments)
 Information on the topic or subject area
The literature – the body of knowledge available to you as a researcher – may also
help you to think about and/ or better understand the problem. This helps you to
structure your research on work already done and to develop the problem
statement with precision and clarity.

DEFINING THE PROBLEM STATEMENT

After gathering preliminary information, the researcher is in a position to narrow
down the problem from its original broad base and define the issues of concern
more clearly. As we have explained earlier, it is critical that the problem
statement is unambiguous, specific, and focused, and that the problem is
addressed from a specific academic perspective. No amount of good research can
find solutions to the situation if the critical issue or the problem to be studied is
not clearly pinpointed.
What makes a good problem statement?
good problem statement includes both a statement of the research objective(s)
and the research question(s). the purpose of fundamental (or basic) research in
business is related to expanding knowledge (of processes) of business and
management in general, the ultimate aim of applied research is often to change
something in order to solve a specific problem encountered in the work setting.
For instance, a manager might be interested in determining the factors that
increase employee commitment to the organization, since an increase in
employee commitment may translate into lower staff turnover, less absenteeism,
and increased performance levels, all of which will benefit the organization.
The research question(s) specify what you want to learn about the topic. They
guide and structure the process of collecting and analyzing information to help
you to attain the purpose of your study. In other words, research questions are
the translation of the problem of the organization into a specific need for
information.
Research Question:
The research objective and the research questions are strongly related; it would
have been impossible to adequately detail the research questions if the research
objective had been unclear, unspecified, or ambiguous.
Example:
 What are the factors that affect the perceived waiting experience of airline
passengers to what extent do these factors affect the perception of waiting
times?
 What are the affective consequences of waiting and How does affect
mediate the relationship between waiting and service evaluations?
 How do situational variables (such as filled time) influence customer
reactions to the waiting experience?

Characteristics:
 A problem statement is relevant if it is meaningful from a managerial
perspective, an academic perspective, or both.
 A good problem statement is relevant but also feasible. A problem
statement is feasible if you are able to answer the research questions
within the restrictions of the research project.
 A third characteristic of a good problem statement is that it is interesting to
you. Research is a time‐consuming process and you will go through many
ups and downs before you present the final version of your research report.

Basic types of questions: exploratory and descriptive

Exploratory research questions
Exploratory research questions are typically developed when:
a) not much is known about a particular phenomenon;
b) existing research results are unclear or suffer from serious limitations;
c) the topic is highly complex; or
d) there is not enough theory available to guide the development of a theoretical
framework.
Exploratory research often relies on qualitative approaches to data gathering such
as informal discussions (with consumers, employees, managers), interviews, focus
groups, and/or case studies, as a rule, exploratory research is flexible in nature.

Descriptive research questions

Descriptive studies are often designed to collect data that describe characteristics
of objects (such as persons, organizations, products, or brands), events, or
situations. Descriptive research is either quantitative or qualitative in nature. It
may involve the collection of quantitative data such as satisfaction ratings,
production figures, sales figures, or demographic data, but it may also entail the
collection of qualitative information. For instance, qualitative data might be
gathered to describe how consumers go through a decision‐making process or to
examine how managers resolve conflicts in organizations.
Causal research questions
In a causal study, the researcher is interested in delineating one or more factors
that are causing a problem. Typical examples of causal research questions are:
“What is the effect of a reward system on productivity?” and “How does
perceived value affect consumer purchase intentions?” The intention of the
researcher conducting a causal study is to be able to state that variable X causes
variable Y.

THE RESEARCH PROPOSAL

The research proposal drawn up by the investigator is the result of a planned,
organized, and careful effort, and basically contains the following:
1. A working title.
2. Background of the study.
3. The problem statement:
a. The purpose of the study
 b. Research questions.
4. The scope of the study.
5. The relevance of the study.
6. The research design, offering details on:
a. Type of study – exploratory and descriptive
b. Data collection methods
c. The sampling design
d. Data analysis.
7. Time frame of the study, including information on when the written report will
be handed over to the sponsors.
8. The budget, detailing the costs with reference to specific items of expenditure.
9. Selected bibliography.
Such a proposal containing the above features is presented to the manager, who
might seek clarification on some points, want the proposal to be modified in
certain respects, or accept it in toto.

Purpose of the study

To find a solution to the recurring problem of 40% employee turnover within the
first three years of their recruitment, and more specifically to:
1. Draw up a profile of the employees who quit;
2. Assess if there are any special needs of the new recruits that require to be met;
and
3. Determine the reasons for employees leaving the organization in the first three
years.
Research question
How can small to medium‐sized firms increase the organizational commitment of
their employees?
Scope of the study
This research analyzes the problem of high turnover of employees within small to
medium‐sized firms.
The relevance of the study.
The cost of employee turnover to firms has been estimated to be up to 150% of
the employees’ remuneration package (Schlesinger & Heskett, 1991). There are
both direct and indirect costs involved. Direct costs relate to leaving costs,
replacement costs, and transition costs, while indirect costs relate to the loss of
production, reduced performance levels, unnecessary overtime, and low morale.
The results of this study provide managers with the means to decrease the costs
of employee turnover.
The research design (i.e., details of the study)
Survey instruments. First, we will interview a small number of employees who
have joined the company in the previous three years. Based on these exploratory
findings, we will administer a questionnaire to all of the employees who have
joined the company in the past three years.
Data collection. The interviews will be conducted during office hours in the
conference hall of the organization at a prearranged time convenient to the
interviewees. The questionnaire will be given to the employees to be completed
by them in their homes and returned anonymously to the box set up for the
purpose by the specified date. They will all be reminded two days before the due
date to return their questionnaires, if not already done.
Time frame
The time frame necessary for completion of this research project is
approximately five months. During these five months, periodic reports will be
provided on the progress being made.
Budget
The budget for this project is in Appendix A.1
Selected bibliography
 Bateman, T. S. & Strasser, S. (1984) A longitudinal analysis of the antecedents of
organizational commitment. The Academy of Management Journal, 27(1), 95–
112. Lachman, L. & Aranya, N. (1986) Evaluation of alternative models of
commitments and job attitudes of professionals. Journal of Occupational
Behavior, 7, 227–243. Meyer, J. & Allen, N. (1997) Commitment in the Workplace:
Theory, research and application. Thousand Oaks: Sage.

MANAGERIAL IMPLICATIONS
Managers sometimes look at the symptoms in problematic situations and treat
them as if they are the real problems, getting frustrated when their remedies do
not work.
Managers’ inputs help researchers to define the broad problem area and to
narrow down the broad problem into a feasible topic for research. Managers who
realize that correct problem definition is critical to ultimate problem solution do
not begrudge the time spent in working closely with researchers, particularly at
this stage.
A well‐developed research proposal allows managers to judge the relevance of
the proposed study. However, to make sure that the objectives of the study are
actually being achieved, managers must stay involved throughout the entire
research process. Information exchange between the manager and the researcher
during all the important stages of the research process will definitely enhance the
managerial relevance and the quality of the research effort.

ETHICAL ISSUES IN THE PRELIMINARY STAGES OF INVESTIGATION

Preliminary information is gathered by the researcher to narrow the broad
problem area and to define a specific problem statement. In many cases, the
researcher interviews decision makers, managers, and other employees to gain
knowledge of the situation so as to better understand the problem.
if the researcher does not have the skills or resources to carry out the project, he
or she should decline the project. If the researcher decides to carry out the
project, it is necessary to inform all the employees particularly those who will be
interviewed for preliminary data gathering through structured and unstructured
interviews
It is also necessary to assure employees that their responses will be kept
confidential by the interviewer/s and that individual responses will not be
divulged to anyone in the organization. These two steps make the employees
comfortable with the research undertaken and ensure their cooperation.
Employees should not be forced to participate in the study. When employees are
willing to participate in the study, they have the right to be protected from
physical or psychological harm.
Supply Chain Management:
Chapter 1

Objectives of supply chain management:

Service Orientation – (i.e., services to customers) the very basis of supply chains
have been to provide superior customer service. Service is all about the value that
the customer gets, which in turn depends upon his own perception about what
constitutes value. The design, the alignment, the integration of the companies on
the supply chain and the co-ordination between them are all for the customer-
the ultimate customer, and these are performed as such.
System Orientation- system orientation is at the existence of any supply chain.
Synergy due to co- operation and coordination is the main gain of a supply chain.
This entails that while getting optimal results for the chain as a whole, results for
the partners on the chain may not necessarily be optimal, these could be less than
optimal.
Competitiveness and Efficiency – Supply chain is a business organization. It
provides value to the customers while being competitive. Competitiveness is
essential for it to healthy sustain itself in order to be able to provide increasing
value to its customer. Efficiency is an important element of competitiveness.
Minimizing the time – efficient supply chain is an organization reduces the time
required for converting orders into cash. So, there is minimal time lag and
increase in productivity of the organization.
 Minimizing Work in Progress- supply chain minimizes total work in process in
supply chain.
Improving Pipeline Visibility – efficient supply chain improves the visibility of
each one of the activities of the supply chain by each one of the partners.
Improving visibility Demand- Efficient supply chain improves visibility of demand
by each one of the partners.
Improving Quality- Efficient supply chain management helps in improving the
quality of operation of the organization. TQM has become a major commitment
throughout all facet of industry. Overall commitment to TQM is one of the major
commitments throughout all facets of industry.

Why is Supply Chain Management So

Important?
Today, more than ever before, supply chain management has become an integral part of
business and is essential to any company’s success and customer satisfaction. Supply
chain management has the power to boost customer service, reduce operating costs and
improve the financial standing of a company, but how does this work?

IMPROVE CUSTOMER SERVICES

 Customers expect to receive the correct product mix

and quantity to be delivered on time. For example, if you
buy five books from Amazon and only two of the actual titles
arrive, one is an entirely different book and two are missing,
the customer will lose faith in Amazon, prompting them to
leave a bad review and hinder them from returning to the
platform.
 Products need to be on hand in the right
location. Customer satisfaction is tarnished if your car’s
brake pads fail and the auto repair shop is delayed in making
the repairs because parts are not available in-house.
  Follow up support after a sale must be done
quickly. When an appliance store sells a furnace with a
warranty and it breaks down when temperatures are below
freezing, it is a great possibility the customer will be irate if
the heating unit cannot be fixed immediately.

REDUCE OPERATING COSTS

 Decreases Purchasing Cost - Retailors depend on supply
chains to quickly distribute costly products to avoid sitting on
expensive inventories.
 Decrease Production Cost - Any delay in production can
cost a company tens of thousands of dollars. This factor
makes supply chain management ever more important.
Reliable delivery of materials to assembly plants avoids any
costly delays in manufacturing.
 Decrease Total Supply Chain Cost - Wholesale
manufacturers and retailer suppliers depend on proficient
supply chain management to design a network that meets
customer service goals. This gives businesses a competitive
edge in the marketplace.

IMPROVE FINANCIAL POSITION

 Insert Profit Leverage - Businesses value supply chain
managers because they help control and decrease supply
chain expenditures.
 Decrease Fixed Assets - Supply chain managers decrease
the use of large fixed assets such as plants, warehouses
and transportation vehicles, essentially diminishing cost.
 Increases Cash Flow - Firms appreciate the added value
supply chain management contributes to the speed of
product flows to customers.
 Supply Chain Management - Decision Phases
Decision phases can be defined as the different stages involved in supply chain
management for taking an action or decision related to some product or services.
Successful supply chain management requires decisions on the flow of
information, product, and funds that fall into three decision phases.
Here we will be discussing the three main decision phases involved in the entire
process of supply chain. The three phases are described below –

1. Supply Chain Strategy

In this phase, decision is taken by the management mostly. The decision to be
made considers the sections like long term prediction and involves price of goods
that are very expensive if it goes wrong. It is very important to study the market
conditions at this stage.
These decisions consider the prevailing and future conditions of the market. They
comprise the structural layout of supply chain. After the layout is prepared, the
tasks and duties of each is laid out.
All the strategic decisions are taken by the higher authority or the senior
management. These decisions include deciding manufacturing the material,
factory location, which should be easy for transporters to load material and to
dispatch at their mentioned location, location of warehouses for storage of
completed product or goods and many more.
there are some strategic decisions that a company should decide.
 In-house vs. outsource – managing order, subcontracting
 Location &capacities – production cost plus warehouse
 Transportation networking
 Strategic change – brick mortar vs. online
 Strategic change = supply chain surplus

2. Supply Chain Planning

Supply chain planning ought to be finished by the demand and supply see. So as
to understand clients' demands, a statistical surveying ought to be finished. The
second thing to consider is mindfulness and refreshed information about the
contenders and methodologies utilized by them to fulfill their client demands and
necessities. As we probably are aware, diverse markets have distinctive demands
and ought to be managed an alternate approach.
This phase incorporates everything, beginning from anticipating the market
demand to which market will be given the completed goods to which plant is
planned in this stage. Every one of the members or representatives required with
the organization should make endeavors to make the whole procedure as
adaptable as possible. A supply chain configuration phase is viewed as fruitful on
the off chance that it performs well in here and now planning.
Planning includes subcontracting of manufacturing, inventory policies, timing, and
size of marketing and price promotions.
 Demand forecasting
 Procurement planning and control
 Production planning and control

3. Supply Chain Operations

The third and last decision phase consists of the various functional decisions that
are to be made instantly within minutes, hours or days. The objective behind this
decisional phase is minimizing uncertainty and performance optimization. Starting
from handling the customer order to supplying the customer with that product,
everything is included in this phase.
For example, imagine a customer demanding an item manufactured by your
company. Initially, the marketing department is responsible for taking the order
and forwarding it to production department and inventory department. The
production department then responds to the customer demand by sending the
demanded item to the warehouse through a proper medium and the distributor
sends it to the customer within a time frame. All the departments engaged in this
process need to work with an aim of improving the performance and minimizing
uncertainty.
During this phase, companies do-

 Inventory management
 Transportation management
 Customer order processing
 Relationship management

Supply Chain Process in a Firm

Supply Chain Process View
A supply chain is a sequence of processes and flows that take place within and
between different stages and combine to fill a customer need for a product. Two
ways to view the processes performed in a supply chain
 Cycles view and
 Push/pull view
It defines the processes involved and the owners of each process. Process in a
supply chain is divided into a series of cycles. Cycles are performed at the
interface between two successive stages of a supply chain
Supply chain process can be broken down into four process cycles such as
 Customer order cycle
 Replenishment cycle
 Manufacturing cycle
 Procurement cycle

 A customer order cycle takes place when orders are processed, prepared,

and shipped. For retail, the customer is often picking his order from the
store inventory (shelves), which represents the point of final demand. In
a pull logistics system, customer order cycles are particularly important
since they are the driver of further cycles upstream of the supply chain.
 The replenishment cycle concerns the steps involved to re-supply outlets
from distribution centers and wholesalers. Each outlet places orders to
distributors based upon its own fluctuation of the demand.
  The manufacturing cycle concerns the scheduling of production in light of
the demand from distributors.
 The procurement cycle involves the scheduling of the components required
in the manufacturing of a good.

Push/Pull View
Categorizes processes in a supply chain based on whether they are initiated in
response toa customer order (pull) or in anticipation of a customer order (push).
Categorization is based on the timing of process execution relative to end
customer demand.
At the time of execution of a pull process customer demand is known with
certainty. In case of push process at the time of execution of a process demand is
not known and must be forecasted.
Hence,
Pull process – reactive process
Push process – speculative process
Push/pull boundary in a supply chain separates push process from pull process.
Very useful when considering strategic decisions relating to supply chain. Forces
more global consideration of supply chain processes as they relate to a customer
order. More the pull process better the supply chain.