Risk Management
Posted by Admin in Management on October 13, 2009
Every time an entrepreneur want to do an new business or expanding their business, they always face risk of lose, that’s why an entrepreneur must know how to run calculated risks. Do not refuse the challenge, but it’s not a player. He avoids the situations in which the risk is very small, because they do not involve any challenge and they do not promise great thing. He also knows to avoid situations where the risk is excessive, because he wants to succeed. Therefore evaluated must know realistically assess the risks worth taking.
Being an entrepreneur means taking risks, so it must work under the pressure of the necessity to assume risks, having of including/understanding that the possibility of a failure always exists.
“There is a risk when you have two or more options from which to choose, without being able to know in advance the results that lead each. All risks involves, therefore, the chance to win or lose, the greater the loss, the greater the risk. ”
Like all that one that accepts risks, the entrepreneur or manager it will have to make decisions from uncertain result, evaluating the possibilities of gain in relation to the loss possibilities. That it is decided finally chosen a risky or prudent alternative will depend on:
- The attractions of each.
- Their degree of willingness to accept the possible loss.
- The possibilities of success or failure of each alternative, and
- The extent they may find practicable in each case to increase the likelihood of success and decrease the odds of failure by their own efforts.
The above merits further explanation. So when we talk about the attractiveness of a proposal or business opportunity, we must analyze how profitable can be the same (Example: return of between 20% and 25% per annum on invested capital) in terms of willingness to accept potential losses must consider both the psychological capacity to assume the same, but also in relationship to the previous patrimonial capacity to deal with it (Example: not the same losing $ 20,000 for those who have a heritage of a million dollars, to lose the same amount for those with $ 50,000 .-; also is not the same losing a separate business when other businesses are owned generating utilities, which lost in the business that absorbs all our heritage and dedication).
In relation to the possibilities of success or failure of business to address, it is likely percentage, such as a 50% chance to achieve a yield of 20% or 5% to reach break even. Where such data are taken? It is best to consult with a consultant who count on statistical reports and business experience to know and can guide the entrepreneur in business analysis or activity. The fourth and last point replies to the extent that the employer thinks it can take measures to facilitate the achievement of the objectives or avoid potential losses, a clear example of this is the person who engaged in agricultural work out insurance against hail losses avoid par or intended to lock in profits by selling their crop to the future.
To the extent that the results depend on factors not controllable by the employer decrease your chances of success and will increase their risk levels, a clear example of this are the activities of a stock, especially in emerging countries.
It’s worth noting that this risk analysis should not only be made before undertaking a new activity or investment, but at all times, because if environmental conditions change or the employer’s own conditions, which until yesterday had certain levels of probability, profitability and risk, today may cease to be such.
Therefore reason and permanently monitor the situation regarding the risk levels is essential and is part of strategic thinking.
Two essential qualities of all business is that it is willing to take risks and are creative. If you have creativity, you will think better ideas, he can choose between several good ideas, it’s easier to take the risks necessary to implement the one that seems more promising.
The capacity of each individual to take risks depends to some extent the degree to which it is influenced by others, their experience, their current situation and their expectations for the future.
Before undertaking any activity or investment, the entrepreneur needs to analyze systematically whether or not involves risks. When he reaches the conclusion that certain alternatives entail certain risks, their determination to assume them or not becomes crucial. The ability of an entrepreneur to take risk increases if:
- Have self-confidence.
- Is willing to jeopardize their full capacity to maximize their chances of success.
- Knows realistically assess both the risks and their own ability to influence these probabilities, and.
- Considers the risks from the standpoint of the goals proposed.
Taking risks is an essential function of every entrepreneur. The same should be set worthwhile goals, and then use all its capacity to achieve them. Naturally, the more ambitious goals, both must be greater risks.
So, thanks to innovations which have better products and services are the result of the actions of entrepreneurs who have managed to overcome considerable difficulties and take calculated risks.
THE EXOTIC MODELS OF REPLICA WATCHES OMEGA
The replica watches Omega models are the carbon copies of the original Omega brand re-introduced into the watch world by the famous Swatch Group which is the leading watch firm in Switzerland. The Group is actually very dynamic and it is actually dominating the Swiss world. This is because of the various watch models it is currently re-producing in the watch world. The Omega brand is one of its most exciting models. Today, the Omega replica watches models are also available. They arrived as a result of the expensive character of the original brand.
The Exotic Models
The Replica watches Omega models come in very fantastic models that have real semblance with the original versions. The major ones include:
- Replica Omega Seamaster
- Replica Omega Speedmaster
- Replica Omega Constellation
- Replica Omega Deville and others
All these Replica watches Omega models and indeed so many others have the official Omega symbol in their facial arenas. They are also known for the quality gold and stainless bracelets that adorn their wonderful appearances.
Replica watches Omega models have precise model and serial numbers well engraved in their back covers. Their front facial glasses are usually very transparent and glossy as they are made from the lustrous mineral crystal element.
Quality self winding feature is also used in the building of the Replica watches Omega models. They also have the setting knobs which are used in the adjustment processes of the watch models. Replica watches Omega models are known to be water resistant and water proof up to 30 meters. Hence, they could be used in the Minor Ocean, and high sea dealings.
Finally, the Replica watches Omega models are very unique, solid, efficient and also durable. They have real time second hand values.
Key questions for preparing the sales budget
In this time of year so many of us are responsible to the sales budget for next year, we sat down to produce it without realizing how important it is and not just because we are going to measure against him, but because this is the fuel that drives the engine of decision making and that if not properly made, we are losing market opportunities.
The first problem we face is: what is the method we use to generate the budget and how accurate is it? But regardless of what will be the method, we should consider the following questions before developing to find out if we have solid foundations, so the information we deliver is best for the performance of the company.
1. Are explicit plans?
2. Do you accept the plans within the company?
3. The plans are flexible?
4. Are the plans and objectives consistent with internal and external constraints?
5. Plans are measurable?
6. Is expanding or reducing the level of activity of the company?
7. Has been evaluated consumer needs?
8. Who will be affected by future plans?
9. How can these people be affected?
10. employees fully understand the impact their work has cost?
11. Do the objectives are reasonably achievable budget targets?
12. Do you use the budget as a planning and operational control instead of using it as an inflexible instrument of dominance?
13. Do the budgetary control reports in addition to the reasons the results?
14. “budgets to motivate the people in the right direction?
After answering these questions we hope you have a clearer picture of where your budget goes.
What is a diagram of relationships?
Posted by Admin in Management on September 23, 2009
Relations Diagram is a technique that allows us to understand the cause-effect relationships between the different causal factors of a problem, is also known as Interrelationships Diagram or Cause Effect Diagram Multidirectional.
When a team is faced with a complex problem, which is not easily available and require quantitative data to test the relative contributions of the causes of a problem, we must use this technique because it allows us to observe the relationships between causes in a complete map. This type of diagram allows you to acquire a thorough knowledge of the different variables involved in the problem and how they relate to one another. This technique can be applied when:
- An issue is complex and there is dependency between the different causes.
- It has been noticed that the topic of studies is not a cause but a symptom.
- When you believe that there is a root cause has not been identified.
- When there are many opinions on the subject and verb needs to prioritize these inputs.
The construction of relationship map must include the following:
Step 1: Construction of Affinity Diagram. (This is explained in the previous post).
Step 2: Preparation of the Affinity Diagram.
Step 3: You have been selected and distributed the cards starts comparing titles. The questions that can be performed to see if there really is a relationship between them are:
Is there a causal link between the two titles?
If so, what is the cause and which effect?
These questions are repeated for the comparison of all cards together, but always, always must be partners. If there is a causal relationship between a pair of cards, an arrow is drawn out of the card will considered as a cause and effect to the card.
Step 4: Interpretation: One needs to identify cards with the highest number of arrows coming and these cards will be called main effects.
We must also indicate the card with the highest number of arrows coming out and these will be called central cause or password.
Another way of presenting this information is a table summarizing the relationships between the various cards. Also from this matrix can rearrange the diagram of relationships to develop a final presentation to management.
Finally, add the arrows coming out of each title (horizontal) and reaching (vertical). And you already have your chart Relations, at first it can entangle many arrows but it comes with practice is very successful.
What is CRM?
Posted by Admin in Management on September 2, 2009
The relationship management (CRM) is a model of the activities of the company seeking to increase revenue and profits by focusing on customers. In particular, CRM is defined as “.. any application or initiative designed to help companies optimize their interactions with customers, suppliers through one or more contact points with the purpose of acquiring and retaining customers.
PricewaterhouseCoopers defines as “a journey of changes in strategies, processes, and technical aspects organization by which the company seeks to better manage their activities around customer behaviors. This involves acquiring knowledge about customers and displays this information at every point of contact to obtain more revenue and efficiencies of operations. Means contact point as the place where the customer touches seller somehow, giving rise to the possibility of collecting information about it.
The CRM is a long-range philosophy that places the customer at the heart of strategic decisions is, the enterprise becomes focused towards the customer through a comprehensive system deployment and software that involves a series of channels and suppliers that interact to contribute to providing customer value.
Today many companies are redesigning their internal and external processes and related information systems with the aim of providing customers the ability to do business with them.
As the object of CRM systems is to align the organization to focus on customers, marketing becomes a key contributor to the success of the CRM under their disciplinary expertise lies with customers.
What is stagflation?
If any of you hear the news few weeks ago, it said the United States is going through a crisis caused by the “stagflation” and said what is that? So I gave myself the task of investigating and this is what I found.
Stagflation indicates the time or economic conditions that, in an inflationary situation there is a stagnation of the economy and the pace of inflation low.
This term was created in 1965 by Ian Mc Leod British Prime Minister who in a speech said “We now have the worst of both worlds: not just inflation on one side or stagnation on the other, we have something like stagflation.”
Stagflation is characterized by both higher prices, increased unemployment and economic stagnation, crises or even entering a recession. It is said that a recession when the national income declines for two consecutive quarters.
Stagflation is considered one of the worst possible economic scenarios for the difficulty of handling and correction, since monetary and fiscal policies that energize recessive economy worsen inflation and restrictive monetary policies that are used to combat inflation tend to deepen recession.
While recessions may have internal or external causes, stagflation is of domestic origin as the component of inflation is always a monetary phenomenon and domestic monetary policy in each country.
Why do market research?
In business, a decision changes the course of an organization, a person or a group of people. Put your own business is a big decision that will change your life in more ways than one. You’re hoping that the consequences are pleasant in the medium and long term and away you risk, the best way is using market related tools.
The four basic variables that are investigated in a market study include: The products on the market where the buyers are, at what price and buy the products they use media to publicize.
There are different approaches to research, this I propose is just one of them.
The first question you have to do is Does this product on the market? Recognize the direct competitors and substitute products. For what is necessary to identify the offer that exists, the relationship between quality and price.
I mean a direct competing product, which is intended for use and perhaps differing only in presentation, entertainment and so forth. For example, competing products are different brands of ice cream at a mall there. That is, all are frozen, although they differ in price, taste, etc.. A substitute product is one that covers the needs of consumers, without having the same use or purpose that the product we are investigating. Continuing the example above, a substitute in a shopping center ice may be the coffee. It covers the need for a “dessert” within a similar range of price, but the most important thing is to replace the purchase of one for another. In the event that a person has a certain amount of money intended for the term “candy” will decide between an ice cream or coffee. I should make an extension on his budget to buy both.
The importance of evaluating competing products and substitutes is that the market has a certain capacity, the entry of a new product will alter the relationship that existed and is likely to make it unprofitable for all who offer the type of product. What is going to generate a competition to win to survive.
In subsequent deliveries will continue to speak of the importance of market research in the choice of your business.
What is a supply chain
Posted by Admin in Management on July 4, 2009
The sales ratio vs. logistics is not always as smooth as we want, the sales must reach a budget and this causes them to commit to deadlines that can not be met and in turn the distribution center has different priorities and can not deliver in time how customers want, creating frictions between the two sides when both are key parts of the company.
The importance of distribution centers to send the product and received on time is the difference between doing business with your company or that of your competition, but what is a supply chain?
A supply chain is a chain link (processes and actors) who want to satisfy customer needs. Each link produces a part of the final product, whether transported, stored or shipped, each of activities that add costs to the chain.
If one link fails, the entire chain fails and the customer does not matter which link was delayed, it affects the image of the company in general and at times it is to have a less severe punishment by the client, since there are cases where it may even change suppliers for not having the required specifications.
The supply chain starts with suppliers and ends with our customers, including intermediate points as the logistics of product distribution, sales planning or production.
The first recommendation for an executive who seeks to improve the performance of your supply chain is simplified. The critical points to follow are:
1. Simplify.
2. Collaboration between trading partners.
3. Serving the customer.
4. Domain processes.
5. Chain strategy.
6. Supports technology.
As we see the distribution is a super important area and is a better investment and providing it with resources to take our customers happy.
What should you include in a business plan?
When we need to apply a credit to our company we call a business plan and we deliver and we respond that it is not complete and then will list the minimum requirements that must contain the plan.
1. Feasibility study and project description: Have extensive information on the project and its characteristics, evaluate the potential of the project and decide whether or not to invest in it.
- Description of project: what it is, need it originates, geographic location, what the required capital will be used.
- Strengths and weaknesses.
- Opportunities and threats.
- Curriculum of entrepreneurs, owners and shareholders.
2. Market research, technical and financial economic:
In the market study:
- Analysis of demand and supply
- Identification of potential demand
- Imports and exports
- Price Analysis
- Marketing the product (or service)
- Competition, who are, competitive advantages and potential competitors
In the technical study:
- Location of the plant or company
- Availability of raw material, personnel, transportation, supplies, debris removal, utilities.
- Costs: land, location, services, labor, transportation.
- Type of plant or company to build, size.
- Market characteristics of raw material supply.
- Production technology.
- Distribution of plant machinery and equipment.
- Setup and operation.
- Organization technical, administrative and corporate legal.
In the financial study:
- Budgets: investment (fixed assets and working capital, deferred), financing, income, costs and expenses.
- Pro forma Financial Statements: Cash flows, income statement, balance sheet.
- Evaluation of investment project:
- Return on Investment.
- Internal Rate of Return (IRR).
- Period of investment recovery.
- Net Present Value, NPV or NPV.
- benefit-cost ratio.
- Cost of project, resource, funding required
Environmental impact and recommendations.
What is financial planning?
Planning is not just a business tool, but something that transcends what is operational and that has more to do with strategy. It is a balance between all levels of the enterprise, to respond in a more balanced and efficient manner to the challenges of its business base and the environment in which it lies.
Our focus is not to develop an organizational chart with clearly established hierarchies, but an operational structure based on their involvement with the strategy. Thus we have two types of areas:
1. Strategic Areas:
In this division we have two areas: Marketing and Finance. Marketing is responsible for developing and proposing strategic business alternatives, focusing on a marketing plan. Finance is responsible for quantifying the strategy or the alternatives proposed by marketing, so that would build up in Financial Planning. With this information the general direction would make a decision of “where the company should go,” and agree with this, make the company’s strategic plan.
2. Operating Areas:
This division is up production, logistics, sales, administration, etc.., which are responsible for policy in actions of the strategic plan.
The objective of any financial planning is to give the company a structure consistent with its business base, which is achieved by:
- Deployment in the company of a cost accounting system.
- The design of the financial statements that the company requires.
Good planning should allow quantifying the different strategic alternatives for marketing proposals, this will help us assess the impacts generated in the financial statements of the company.
The instruments are suitable planning:
- Strategic plan : it should detail the objectives, actions and resources needed for each variable of the marketing mix.
- Analytic Annual budget: it must project the company’s accounting result, compromise or quantitatively to all staff responsible and feeding cash budget accounting.
- The cash budget used to know in advance what will be the scenarios that will move the cash position of the company (payment policy, sales policy).
In the next installment we’ll continue talking about this useful tool in business.