Blog F The outline of the paper trail for a business March 2025
Here's a simple outline of the booking process for a business, including the relevant books of entry:
I. Source Documents: The booking process starts with source documents. These are the original records of transactions. Examples include:
Sales Invoices: Records of sales made to customers.
Purchase Invoices: Records of purchases made from suppliers.
Receipts: Records of cash received.
Payment Vouchers: Records of cash payments made.
Bank Statements: Summaries of bank transactions.
Credit Notes: Records of returns or allowances given to customers.
Debit Notes: Records of returns or allowances received from suppliers.
II. Books of Original Entry (Journals): Transactions are first recorded in chronological order in journals. These are often specialized:
Sales Journal: Records credit sales.
Purchases Journal: Records credit purchases.
Cash Receipts Journal: Records all cash inflows.
Cash Payments Journal: Records all cash outflows.
General Journal: Records transactions that don't fit into the specialized journals (e.g., depreciation, adjusting entries).
III. Posting to the Ledger: Information from the journals is then transferred (posted) to the ledger. The ledger is the main book of accounts.
General Ledger: Contains all the accounts of the business (e.g., Cash, Accounts Receivable, Inventory, Accounts Payable, Owner's Equity). Each account has a debit and credit side. This is where you see the running balance of each account.
Subsidiary Ledgers (Optional but Recommended): These provide more detail for certain general ledger accounts. For example:
Accounts Receivable Ledger: Details the individual amounts owed by each customer.
Accounts Payable Ledger: Details the individual amounts owed to each supplier.
IV. Trial Balance: A trial balance is a list of all the account balances in the general ledger at a specific point in time. It's used to check if debits equal credits, ensuring the accounting equation (Assets = Liabilities + Owner's Equity) is in balance. Errors are identified at this stage.
V. Adjusting Entries: At the end of an accounting period, adjusting entries are made to account for things like:
Accrued Expenses: Expenses that have been incurred but not yet paid (e.g., salaries owed).
Accrued Revenues: Revenues that have been earned but not yet received (e.g., services performed but not yet billed).
Prepaid Expenses: Expenses paid in advance (e.g., rent).
Depreciation: The allocation of the cost of an asset over its useful life.
Allowance for Doubtful Accounts: An estimate of uncollectible accounts.
These adjustments are first recorded in the General Journal and then posted to the General Ledger.
VI. Adjusted Trial Balance: A trial balance is prepared after the adjusting entries are posted.
VII. Financial Statements: The adjusted trial balance is used to prepare the financial statements:
Income Statement: Reports revenues and expenses for a period, showing the net income or net loss.
Balance Sheet: Reports assets, liabilities, and owner's equity at a specific point in time.
Statement of Cash Flows: Reports the cash inflows and outflows for a period.
VIII. Closing Entries (For the end of an accounting period): Temporary accounts (revenue, expense, and dividend accounts) are closed to the permanent owner's equity account (Retained Earnings). This resets the temporary accounts to zero for the next accounting period.
Simplified Flow:
Source Documents --> Journals --> Ledger --> Trial Balance --> Adjustments --> Adjusted Trial Balance --> Financial Statements --> Closing Entries
This outline provides a basic understanding. In practice, businesses may use more complex systems and software, but the core principles remain the same.
Blog F: Reference reading : A summary from ChatGPT of my 7 page Blog 10 on
Macro Marketing
Summary of Macro Aspects of Marketing Date January 28th Jan 2025
Macro Marketing examines the broader impacts of marketing on society, economies, industries, and consumer behaviour. It addresses how marketing can influence societal growth, economic development, and job creation. The discussion highlights the need for strategic planning, global awareness, and business excellence to create sustainable economic growth and tackle issues like poverty and climate change.
Key Insights:
1. Strategic Focus:
• Marketing aligns with strategic planning through questions like:
• Where are we? Where are we going? How do we get there?
• SWOT analysis is critical in understanding macro opportunities and threats.
2. World Developments:
• Advancements in technology (e.g., AI like ChatGPT) are reshaping marketing
strategies.
• Climate change and sustainability are influencing market demands, requiring
businesses to adopt green and circular economy principles.
3. Role of Marketing in Economic Growth:
• Marketing stimulates innovation, imagination, and investment in new developments.
• Aiming for sustained GDP growth (6–8% annually for 15 years) is necessary to drive
economic transformation.
4. Lessons from Successful Economies:
• Germany, post-WWII, flourished due to free-market principles, constitutional
democracy, and family businesses.
• Marketing needs to learn from such models to adapt strategies for diverse global
markets.
5. Major Industries:
• Core industries like technology, healthcare, manufacturing, and retail are primar
rivers of global economic growth.
• Emerging industries and segments offer new opportunities for job creation and
marketing innovation.
6. Importance of Excellence:
• Excellence in business involves empathy, care, and customer-centric strategies.
• Design is integral to marketing, showcasing thoughtfulness and respect, which
enhances consumer loyalty.
7. Education and Skill Development:
• A skilled workforce is essential to support economic growth.
• Education must prepare individuals for continuous learning in growing industries.
Conclusion:
Macro marketing is not just about promoting products or services but also about driving societal progress, economic growth, and sustainability. Businesses must adopt a philosophy of empathy, care, and excellence to achieve meaningful and lasting impact. Marketing acts as a catalyst for innovation and transformation, shaping the future of industries and economies.
Blog E
Business Management Lessons from Steve Jobs Done in October 2022
By Neil Wright
Taken from the biography of Steve Jobs by Walter Isaacson.
Employ the best people in their field of expertise, this also applies to Steve Jobs’s biography. Walter Isaacson was approached to write this biography.
Steve Jobs is credited for heralding a new era in Information Technology, this began with the launch of the iPod in 2007 soon followed by iPhone. See below the list of Major Hi-tech items. He did not, however, invent anything new, he advanced products from existing technology.
Jobs had a good relationship with his stepfather. His father told him. “Never lie”. He believed in honesty – extreme honesty. This was the most important advice my dad gave me – to never lied, even to this day. Wow! Peter Drucker emphasized the necessity for integrity in business management.
A business Start-up fascination: In his first job, Jobs met a fellow employee who had started his own business, a company that built slot machines. It subsequently failed. Jobs was impressed that a new business could be created – a start-up. He was fascinated by this – one of the first signs of Jobs’s inclination to go into business.
Eastern spirituality including Japanese Zen Buddhism; The search for enlightenment would be important to Jobs for the rest of his life. Suffice it to say meditation, cognitive understanding that is intuitively experienced through concentration of the mind cannot be ignored in modern management.
The Wonder of Marketing: One of the first persons to support Jobs at Apple was Mike Markkula who had been successful in other ventures. He saw the potential for the Apple computer. He underwrote a loan of $250 000 to Apple in return for one-third of the equity in the company. One of the first things he taught Jobs was marketing and sales.
The three most important principles in marketing for Apple.
Markkula wrote “The Apple Marketing Principles” on one page of paper.
1. The first was empathy, an intimate connection with the feelings of the customer. “We will truly understand their needs better than any other company.”
2. The second was the focus. A firm/ business must eliminate all opportunistic distractions and only focus on what is important in building the company.
Jobs was famous for design; his focus on design and simplicity, it was critical for the success of the product. Not just the veneer, but also the inner workings... the power of design.
3. The third and equally important principle was “impute”, People form an opinion about a company by the signals it conveys. Jobs’ launches of new Apple products had a huge impact. Michael Porter is famous for his concept of signalling and user criteria.
Drucker regarded marketing and strategic planning as two of the greatest’s gifts business management gave to society. The word “empathy” is used in marketing; how important this word is for relationships in general. It played its part in the achievements of Apple.
“You have to reinvent the company”. The answer Mike Markkula gave Jobs when asked. “’ What should I do to build a company that survives and thrives?” See below the list of major Hi-Tech items. Timing is also important, new products should be reinvented timeously.
In line with the third Marketing principle above, when Jobs returned to running Apple, he appointed Lee Clow Creative Director of TBWA/Chiat/Day. They came up with the “Think Different” campaign. A brand image campaign captured by what the agency termed a tone poem. Jobs liked and believed it depicted the ethos of Apple.
"Apple’s Tone poem"
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them. Disagree with them, glorify, or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.
Richard Dreyfuss was chosen to be the narrator; however, Lee Clow suggested Jobs himself should do the narration for the launch of the set of adverts. Jobs was hesitant and said he would make up his mind the morning before the presentation, but overnight he decided to use Dreyfuss’ version. Jobs reason – this ad was about Apple not about Steve Jobs.
The Building of a Company: At the age of 12 when he got a summer job at Hewlett-Packard, he learned and valued that a company could spawn innovation far more than any single creative individual. Jobs emphasized the company “Apple” as a separate entity, separate from himself.
Additional Quotes from Steve Jobs:
In focusing, Jobs said deciding what not to do, is as important as deciding what to do. That’s true for companies and its true for products.
“Simplicity is the ultimate sophistication.” Jobs talked about conquering complexities, not ignoring them. “It takes a lot of hard work.” He said.
“In most people’s vocabularies “design” means “veneer”. Not Jobs. Design is the fundamental soul of a man-made creation that ends up expressing itself in successive outer layers.”
In giving the customers what they want, Jobs’ approach.
“Our job is to figure out what the customer is going to want before they do. People don’t know what they want until you show them.” Henry Ford said something similar, he said: “The customer would probably want a faster horse. If you asked them”.
Good companies will meet needs: great companies will create markets. A famous quote from Philip Kotler. Apple certainly created markets.
On Entrepreneurship
“What they’re really trying to do is launch a start-up and then sell or go public, so they can cash in and move on. They are unwilling to build a real company which is the hardest work in business. Walt Disney, Hewlett-Packard, and Intel created companies to last not just to make money. I want Apple to be like them,” said Jobs.
On being mean
Steve Jobs was asked, “Why are you sometimes so mean?” The author Isaacson answered this in his book. “My observation is his generosity was at a higher level when you considered his legacy. His products brought art and science together. In the digital revolution, he moved to perfect the partnership of humans and machines”.
Apart from the above, big-time achievers in business management run a tight ship.
On Strategic Planning
Jobs was a natural strategist in his field of IT, even an enlightened strategist, a term reserved for exceptional persons. These were boom times for Computer Science and his creative genius supplied some of the most ingenious articles in this field. He would instinctively be aware of a SWOT analysis, Strengths, and Weaknesses (internal to a business), Opportunities and Threats (the external environment). He might never, however, have been introduced to the term SWOT analysis.
Summary
Nations worldwide owe a debt of gratitude to Steve Jobs, that he chose business as his career. The result was a massive surge in the generation of capital wealth, he used the concepts and tools of business management to achieve this outcome. His products are used in every corner of the world, assisting mankind in a variety of ways. He shrank the world in communications, presenting opportunities to many, in so doing made his contribution to Worldbuilding.
List of Major Hi-Tech Items: Steve Jobs Was Responsible for in his Lifetime.
· The Apple II, which took Wozniak’s circuit board and turned it into the first personal computer that was not just for hobbyists.
· The Macintosh was a forerunner to the home computer revolution and popularized graphical user interfaces.
· Toy Story and other Pixar blockbusters, which opened up the miracle of digital imagination.
· Apple Stores, which reinvented the role of a store in defining a brand.
· The iPod, which changed the way we consume music.2007
· The iTunes Store, which saved the music industry.
· The iPhone, which turned mobile phones into music, photography, video, e-mail, and web devices.
· The App Store, which spawned a new content-creation industry.
· The iPad, which launched tablet computing and offered a platform for digital newspapers, magazines, books, and videos.
· The iCloud, which demoted the computer from its central role in managing our content and letting all our devices sync seamlessly.
· And the Apple Company itself, which Jobs considered his greatest creation, a place where imagination was nurtured, applied, and executed in ways so creative that it became the most valuable company on earth.
Neil Wright
14th December 2024
Blog D How to Think and Act about South Africa: taken from Adam Grant’s
“Think again”
“THINK AGAIN, the power of knowing what you don’t know” by Adam Grant. Before any of us pontificate on South Africa, we South Africans need to know how to think and act productively about South Africa.
If we are going to think again … it makes sense to have a helpful structure.
Grant divided the way we think and act into four modes, namely, we can either be 1) preaching, 2) prosecuting 3) politicking, or 4) we can act and think like a scientist.
“We go into a scientific mode when we are searching for the truth”. To quote Grant. “This is for all of us not just for people in white coats working in laboratories”.
In thinking and acting like a scientist there are many questions to be asked. The more knowledge we have of something the more questions. In thinking like a scientist, this applies to everything that must function in life – the economy, politics, institutions, etc. There is no room for hocus pocus; there is logic and reason as to why outcomes lead to achievement or disaster.
How the Scientific Mode Differs from the Other Modes
Other Modes Scientific Mode
1) In preaching mode, changing our In scientific mode,
minds it’s a mark of moral weakness. it is a sign of
intellectual integrity
2) In prosecuting mode, allowing In scientific mode,
ourselves to be persuaded is it is a step toward
admitting defeat. the truth.
3) In politicking mode, we flip-flop in In scientific mode,
response to carrots and sticks. we shift in the face
of sharper logic and
stronger doubt
Further Quotes: from Adam Grant
“Thinking like a scientist involves more than reacting with an open mind, it means being actively open-minded, means searching for reasons why we might be wrong, not for reasons why we might be right – and revising our views on what we learn”.
In our politics, I have never heard a politician present an argument testing if they might be wrong.
“Scientific thinking favours humility over pride, doubt over certainty, curiosity over closure.”
Sceptics and Deniers
Sceptics have a healthy scientific stance. They do not believe everything they see, hear, or read. Deniers are in the dismissive camp, having a preacher attitude.
Taking the Emotion Out of Conflict
Conflict should be divided into Relationship Conflict and Task Conflict. from Adam Grant:
The Difference:
Relationship Conflict Task Conflict
· It is personal animosity, friction, It is about ideas,
and emotional. Debate is opinions, and perspectives.
impossible. It can be debated.
· It generates bad performance; it is It is beneficial, it is
destructive and stands in the way linked to higher creativity
of rethinking. and smart choices
· People exhibiting this conflict, Requires open-mindness and
people become, self-righteous, understanding that conflict
preachers of their own views, can be complex. It requires
spiteful prosecutors of the other ability to listen. In seeking
modes, and single-minded to be heard, you have to ask.
politicians, who dismiss opinions “Can we debate and try
that don’t come from their own to find what both parties
side. have common ?”
.
Quote: “If you present information without permission no one will listen to you.” From Adam Grant. Now I know why good communicators project a certain humility and respect for their audiences. Our rabid politicians would never seek their audience’s permission to tell them anything...
In summary the characteristics of thinking like a scientist:
· Many questions arise when formulating a subject to be debated and where a conclusion needs to be drawn.
· Thinking like a scientist raises awareness and observation, it also stimulates the mind to ask questions.
· Science should not be personal or see colour, subjects put on the table should be free from prejudices e.g., racism. It should not matter who said what, it is the content that counts.
· The search for the truth is what counts, it must be done with integrity, and there’s no place for lies and false information. It is rewarding if confessions and admissions can be made, especially powerful is saying “I do not know.”
· As much as we should think and act as a scientist, let us not let others get away with singlemindedness. Have they tested whether they could have been wrong?
· On the way to concluding debates the following play a part: research, (including reports from recognised authorities), testing, and experimenting, doubting, making inferences, establishing hypotheses (a testable statement), and perceptions (including assumptions).
Being open and honest is a precursor in our formulating what is to be done in our country and where possible we should ground our discussions and actions in scientific mode. Doing this, moves us away from the cul de sac of relationship conflict and moves us to task conflict, where workable solutions to our problems can begin.
My understanding of the effectiveness of David Attenborough and Nelson Mandela’s approach to task conflict and in thinking and acting like a scientist.
Attenborough impressed me with his communication on bringing climate change to our urgent attention. Mandela achieved a miracle in the peaceful end to apartheid and the beginning of our constitutional democracy, all equal before the law, and all protected by a Bill of Rights. A contestable statement (hypothesis), of Attenborough’s and Mandela’s attitude. Could be:” Life-changing task conflicts need to be non-adversarial.”
Current comment: If the legacy of our GNU ( Government of National Unity) is going to take us into a positive direction……. where the quality of our standards of living progress, to close that gap……...our political parties need to be serious about what works. Thinking like a scientist should one of the tools to get us there.
A Summary of what should help South Africa based on Adam Grant’s Book
By Neil Wright
Blog C Support information for Blog 11 on Part 3 Micro Marketing 11thDec 2024
The support information is valuable for those looking for more information on Micro Marketing. I especially recommend the Glossary of terms at the end of this blog.
The market mechanism of supply and demand in determining price
The price of a product in the market is driven by supply and demand curves and if graphed…... where they intersect….the equilibrium point, will determine the price of the product. The supply of a product and its price stabilise at this equilibrium point. In perfect market conditions without government interference. This gives an efficient allocation of resources. No wastage of supply and the market gives a stable price.
The assumption is that items are bought on price and not differentiation. To keep a cost down you first must let it go up…often government wants to control prices, mostly to prevent higher prices…. it does not work……. it is the higher prices that lifts production/supply……. Followed by lower prices, this due to the market mechanism.
Cost Drivers
There can be a range of reasons why some suppliers can produce similar articles cheaper than others and stay in business with the product. One group of reasons is called cost drivers. They range from economies of scale to location; Porter identified ten such cost drivers. These cost drivers are separate to the promotional activities of marketing.
Positioning of a business
The positioning of a business is one of the first steps to clarify a business’s target market, In the scope of the market, we either target a narrow market or we target a broad market. We illustrate this by looking at the four quadrants below. We see that there are four possible combinations, four possible positions for a business to use in its marketing strategy.
You either sell on price, low cost or people pay more for something better, differentiation. These two strategies can either be directed at a particular market, “a narrow target” or it can be targeted at a broad market, “broad target”.
You buy your son’s first mountain bike at Game, you are mainly thinking of cost, but when your son has left University has settled down, he buys a quality bike, a well-known brand with state of the art fixtures, gears, brakes – a differentiated product, low price is not so important.
Quad 1
Low Cost and broadly targeted: The low-cost bike is in Quad 1, distributed through a volume sales chain, the branded, high quality bike is in Quad 3, “Differentiated and targeted on narrow Market, and distributed through a specialist dealer. Bic pens are also an example of quad 1, low cost and targeted on abroad market.
Quad 2
Broad target and differentiated: Coca Cola would fall into this Quad, a differentiated product, it has excellent branding, it has a broad target – Coca Cola generally is not known for selling on price. Mercedes Benz vehicles are also this quad.
Quad 3
Differentiated and targeted on a narrow market: as stated an example would be a branded, high quality, hi-tech bike. Cartier watches, Porche cars are also examples.
Quad 4
Low cost and targeted on a narrow market: Low-cost airline no-frills flights. Southwest Airlines in the USA, these airlines target the thrifty passengers who mostly pay their own flights, unlike business or state employers.
The above model comes from one of Michael Porter’s books on competitive advantage. Positioning has become more sophisticated especially firms marketing differentiated products.
Measuring market share in industries or segments of industries
General Electric (GE) under Jack Welch, GE only wanted to be either number One or number Two in their share of world markets, for products they supplied.
Boston Consulting Group (BCG) has matrix to assess market growth and market share. Is your business a cash cow, a star, a dog, or still seeking direction?
The horizontal axis plots market share moving from high to low and the vertical axis moves up from low to high and measure of growth of the firm.
Quad 1 – Cash Cow: high market share opportunity meant they could lead the marketing in pricing. The limited growth opportunity meant they did not have to invest profits in growth opportunities. These are mature industries named cash cows with good cash flows. Coca-Cola would be in this quadrant.
Quad 2 – Dogs: low market share and low growth - these businesses are in saturated, mature and highly competitive markets. Low market share means limited power in influencing prices. Management of these businesses is characterised by ruthless cost cutting to manage cash flow.
Quad 3 –Question marks Labeled? High growth and low market share - these are exciting growth industries, but they have questionable profit margins and cash flows because of low market share. They are cash guzzlers because of the need to grow. In times of high economic growth and low interest rates, they are good businesses, but when the tide turns, when the economy dips, they become riskier They require good management and are vulnerable to take-over.
Quad 4 – Stars: High market share and high growth rate - some cell phone service providers have been in this quad e.g. Vodacom and some mining houses. In a portfolio, Stars represent the best long run opportunities in growth and profitability. What needs watching is that profits generated internally keep up with the required external funding required for the growth.
These frameworks bring insight into a business and give a basis for analysis
Business Model
A business model is about new ways of making money – there is nothing wrong with that. Developing a business model requires innovation, use of new technology, and a major spur is the increasing competition that could come from anywhere around the world.
Xerox Copiers is one classic historic example – they led the way in developing a paper photocopier, long before these became miniaturised and cheap. The sales agents couldn’t or wouldn’t sell the existing big expensive Xerox machines. Xerox’s answer? A new business model: the machines were leased at a reasonable monthly rental which included 2 000 free copies, with a charge levied for copies more than 2 000.
The result? Xerox Copiers sustained an annual compound growth of 41% for a 12-year period – all businesses need to make photocopies, so 2 000 copies was nothing. The money came from the additions. Today, printer and photocopier manufacturers make their money from the ink – a similar business model.
Some features of business models.
Don’t confuse a “business plan” with a “business model”. A business plan might be 50 to 100 pages long. It is full of figures and projections. It is what you need for the bank when you want a loan. Banks would not be interested in the hype around “models”. The most striking business model in SA was pioneered by Raymond Ackerman’s bringing the Supermarket concept to SA. Namely Pick n Pay, low markups/low prices and high turnover with self-service. Apart from the somewhat carnival atmosphere and huge variety of products some stacked high…...a one stop shopping experience. We now cannot imagine the grocery retail trade without Supermarkets
Advertising promotion above and below the line
Above the line is the advertising and promotion that targets a broad or narrow market outside of the firm. It could be on TV, or in the Media, on Radio or presentations…...or on enormous billboards.
Below the line is more personal, handouts, key rings, pens, calendars, items that remind a client of supplier’s product, it is visible and used.
Marketing is about imagination, creativity, innovation and reinventing. The following are part of marketing’s growing arsenal……..in furthering a relationship with the customer
60-second elevator pitch would be an example of delivering “signalling criteria”; making an impression in a very short time requires pressing the right buttons, delivering a message that “strikes and stays”.
A five-minute PowerPoint presentation is another opportunity to signal, to put across your company, products, Unique Selling Proposition
The Firm’s Core Purpose
What is your firm’s core purpose? Has it got one? Does it need one? Do you deserve to exist if you are just aimlessly hanging in there? Tough questions for tough times.
A firm is in trouble if its “core purpose” is just to make money. Research has shown that firms with a real purpose that benefits society are far more profitable than firms whose core purpose is just to make money. Disney’s core purpose was “to make people happy”.
Back to basics a firm’s culture might need revision. Core purpose should be followed by a firm’s values both moral and competency values…. core values and core competencies.
Blue Ocean Strategy
Blue ocean, as opposed to red ocean, is the creation of open space for a product or service that just does not have competition, it is so unique. The red ocean is the confined space of “dog-eat-dog” – zero sum games. Your product is like everyone else’s, so competition means chipping away at the price. The water is bloody – red.
Operational effectiveness means performing similar activities better than rivals. In contrast, strategic positioning means performing activities that are different from those of rivals or similar activities in different ways.
The Japanese were for many years way ahead of their competition because of operational effectiveness, but on strategic positioning they were way behind and failed to come up with innovative new products. Toyota did come up with the hybrid vehicle, but historically the Japanese generally copied the West in this industry. Later their quality standards exceeded the West’s. In another example, it was Apple that ‘produced the iPod, overtaking Sony’s Walkman.
Strategic Trade-offs
This is choosing what not to do – being all things to all people is a recipe for disaster. The trade-off is to get out of the products/services where you can’t win or that are not part of the firm’s core purpose. 3M sold off some operating divisions where they could no longer achieve their core purpose “to solve unsolved problems innovatively”.
Strategic Principle
This term is action-orientated, as opposed to a mission statement which informs on a company’s culture and is aspirational – it gives people something to strive for. A strategic principle enables staff to act quickly by giving them explicit guidance.
Strategic principle is a relatively new term. It comes into existence to bridge the gap that can arise between head-office and decentralised operations. The merit of a decentralised structure can be offset by decision-makers spinning out of control at the decentralised divisions. A company having a set of strategic principle can help to overcome this problem.
This principle has assisted companies like General Electric, Dell, Wal-Mart, Southwest Airlines, and more. In South Africa, companies that would benefit from a strategic principle are Bidvest, Imperial and Pick ’n Pay. Managers are guided by the strategic principle – this allows them to be focused; it empowers staff to be innovative, take risks and seize opportunities.
Glossary of terms in Marketing
Boundaryless thinking: The term coined by Jack Welch, ex-head of General Electric, for unrestricted thinking and developing of ideas and solutions.
Brainstorming or Buzz session: It is a group activity and technique designed to generate many ideas for the solution of a problem. The side effects are a feeling of participation, the enjoyment of group work, and a boosting of morale. The other benefit is how amazing the brain is at coming up with valuable ideas.
Corruption: Open to or involving bribery; morally depraved. The circumstances conducive to corruption are summed up in the following formula:
Power + freedom of action - accountability = corruption.
Whenever people find themselves in circumstances where they can act as they see fit, without being accountable to anything or anyone, there is every opportunity for corruption. Management control systems is what business management offers. Without tight controls you make a criminal of an innocent person.
Culture: Defined as values, attitudes, beliefs, orientations and underlying assumptions prevalent among people in society. This is the definition given by Harrison and Hunting in their book, Culture Matters.
Cynic: One who is disposed to deny and sneer at the sincerity or goodness of human motives and actions of others…… it is negative.
Decentralisation: This is the principle of devolving substantial amounts of managerial power and accountability away from the centre of a large and diverse corporation to semi-autonomous or business units.
Differentiation: A term used in marketing and linked to Michael Porter’s concept of market leadership. It is the process of distinguishing the ways in which a product or service differs from others to make it more attractive to a particular target market. This means differentiating it from competitors’ products or services.
Empowerment: In organisations this term is usually taken to mean increased participation by employees in the enterprise for which they work, with a view to stimulating initiative and entrepreneurism.
Enlightenment
To give light, to import knowledge and wisdom; an enlightened attitude is to be well-informed, free of superstition or prejudice, and have a sense of reason and openness.
Entrepreneur
This is a French term, the name given in economic theory to the owner/manager of a business entity. The functions of the entrepreneur are a) supply the capital of the firm; b) organise production by buying and combining imports; c) decide on the rate of output in the light of expectations about demand; d) bear the risk involved in the activities. The entrepreneur can see opportunity, be innovative and make it happen. Entrepreneurship is not limited to individuals, although that is where the concept started; business entities can be entrepreneurial, with innovative teams, and make this part of the culture of the organisation.
Ethos: The distinctive spirit and attitudes of people or an organisation.
ESOP: Employment Stock Option Plan, this is the plan that allows for staff to become shareholders in the firm they work for .
Goals and Objectives:
Goals are timeless statements of what an organisation wants to achieve.
Objectives are specific statements of what should be achieved in a particular time.
Kaizen: The simple definition of this term is ''improvement''; moreover, it means continuous improvement in small steps in personal life, home life, social life and work life.
Lateral Thinking: Defined by the Oxford English Dictionary as seeking to solve problems by unorthodox or apparently illogical methods. Edward de Bono is famous for this concept and advocated its application in finding management solutions.
Mission Statement: This is the distillation of a company’s philosophy and corporate goals and values, usually said in a few words. If done well it can send out a positive signal to all stakeholders. Most strategic plans would have a mission statement.
Strategic Management: Defined as the set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objectives of an organisation. (Pearce and Robinson, 1985)
Strategic Planning: Determines where an organisation is going over the next year or more (mission, vision and goals) and how it is going to get there (structure, objectives and allocation of resources). It is a formal process and is an applied economic subject.
Strategic Thinking: This focuses on finding and developing unique opportunities to create value by enabling a provocative and creative dialogue among people who can affect a company’s direction. It is the input to strategic planning. Strategic thinking is a way of understanding the fundamental drivers of a business and rigorously and playfully challenging conventional thinking about them.
Structure: The way an organisation is put together to administer the strategic plan, with all the hierarchy and lines of authority which this implies. Strategy comes before structure.
Ubuntu: This is generally held to be a comprehensive and ancient African worldview which pursues primary values of intense humanness, caring, sharing, compassion, and associated values, ensuring a happy and quality human community life in a family spirit or atmosphere. (Broodryk, 2004)
Value-Added: Value-added starts with payments to suppliers (purchases) and stops with charges to the customers (sales). The key theme, therefore, is to maximise the difference (the value added) between purchases and sales. (Shank and Govindarajan, 1993)
Value Chain: The value chain for any business is the linked set of value-creating activities, beginning with basic raw materials, sources from component suppliers, through to the ultimate end-used product delivered into the final consumers’ hands. (Shank and Govindarajan, 1993)
Vision: Vision in leadership of an organisation, be it a business, institution, government, club or society, is part of answering the question, “Where are we going?” and motivating people to get on board. A corporate vision would be part of the strategic plan. Moses’s vision of the Promised Land is an example. If vision is too grand a word and makes the leader look pretentious, then “goal” is a good substitute.
Zero Sum Game: Zero Sum Game is the interaction of two actors. It could be a supplier and his client (user) or management and the union. Whatever is gained by the one actor or organisation is lost by the other. The maths of it is that the sum equals zero, e.g. 10 and -10 = 0. The opposite of this is “positive sum game” where both parties gain. This might also be called a “positive sum opportunity
Neil Wright
Author of Following & Leading in Business Management South Africa
Blog B Market Myopia 2nd November 2024
''Market Myopia'' was an article Theodore Levitt wrote in 1960.
A summary follows: This summary was written some years ago, the article is still relevant.
Levitt’s paper, entitled “Market Myopia” (short-sightedness), written in 1960, has had profound influence on business and continues to do so even today. “What business are you really in?” This is the question that Levitt wants all businesses to ask themselves. Levitt used the downfall of the railroads of America to illustrate his point.
It presents a problem if businesses define themselves too narrowly – they tend to miss out on other opportunities that arise. The railroads of America were overtaken by other developments in transport, such as road, air, waterways and pipelines.
Had the railroads defined themselves as being in the transport business or even the logistics industry, they might have branched out into these new developments.
Levitt published his paper before strategic planning had the emphasis it has today. One of our leading business strategists, Michael Porter, came up with his “Five Competitive Forces” idea, one of them being substitution.
There are many examples where businesses have defined themselves too narrowly: the dry-cleaning industry, where new fabrics and chemicals reduced the need for dry-cleaning; industries producing glass that can be replaced by other materials; the textile industry, where wool/cotton is replaced by nylon fibres, etc. All these industries concentrated on the production of their product as the be all and end all.
Industries should be a customer-satisfying process, not a goods-producing process, was Levitt’s theme on marketing. He saw that businesses that do not concentrate on the needs of the customer but only on producing their product are not sustainable in the long run. It is where many businesses went wrong – they did not have a marketing approach. Levitt was one of the pioneers of marketing.
Levitt’s paper on “Market Myopia” has had many followers. In my business, starting out as I did in 1972, I was made aware of Levitt’s concept. In the 1980s when the transport industry was de-regulated, I expanded into many segments of the road transport industry. Truck hire is where I started (the name of my company was Rent-a-Truck). This was a growth industry until client businesses started outsourcing part, if not all, of their distribution. Truck hire is still there, but it is no longer a growth segment of the industry.
More recently Levitt, commenting on the amazing influence of “Market Myopia”, said some businesses had gone overboard in their enthusiasm to get away from being short-sighted in the market. Levitt called this “Market Mania” – businesses trying to satisfy every whim of the customer. Some businesses have created a wide variety of products or services, some so complex and efficient that the buyers are either too risk averse to adopt them or are incapable of learning how to employ the new technology. In my own business, I might have rushed into new segments without perfecting existing ones. I might have neglected Truck Hire, for example.
More recently American railways have been back in the news; Warren Buffett’s Berkshire Hathaway purchased a major stake, an investment of $34 billion in Burlington Northern Santa Fe (BNSF). This is one of seven main freight companies in America.
Deregulation and the current problems with fossil fuels have placed freight railways firmly back in contention. Intermodal traffic – containers moving from road to rail etc. – has seen significant growth. Since deregulation, freight railways in the USA have cleaned up their act, been innovative, competitive, often working with road-freight companies.
Our SA Transnet operates in a deregulated environment, but many believe it will only get those marketing forces working when there is at least a degree of privatisation….PPP (Private Public Partnership) maybe. We also must see that there is competition between any newly established entities.
The USA has some of the cheapest rail-freight costs in the world. Since rail freight gained its freedom there has been a rise in volumes and productivity, including cost. Costs are down 55% after inflation adjustment since 1981 and market share has climbed to 43%.
In SA, Transnet is like ESCOM, our government did not create a Strategic Management Team…….it would have insisted that these two entities were critical for the competitiveness of businesses using them. Costs had to be at least maintained or lowered like the USA and China. It can only happen if their monopoly ends. It is happening………but so unexciting and undynamic. What can be done? Come on GNU !
In Marketing Imagination, Levitt argues that competitive success
rests on realising five factors:
The purpose of a business is to create and keep customers.
To do this, goods and services that people want, and value must be produced and delivered at prices and conditions that are more attractive than those of competitors.
To continue, enough profits must be made to keep investors.
To achieve this, all companies must clarify their purposes, strategies and plans, and clearly communicate them to the workforce. The larger the enterprise, the greater the need for a clearly written and reviewed set of goals.
All enterprises must have a system of rewards, audits and controls to ensure the proper pursuit of those goals.
There couldn’t be a simpler recipe for a successful business.
Neil Wright
Blog A 23rd October 2024
Written by Neil Wright after reading the book in March 2012
“Tomorrow is Another Country” by Allister Sparks, published 1995
One of the most fascinating books of our history…... giving a detailed account of the transition from F W de Klerk’s epic speech in Parliament on 2 February 1990. Releasing Mandela and un-banning the banned organizations…… to South Africa’s new democracy in 1994 and the coming to power of the ANC government.
The book includes the clandestine discussions Mandela had with members of the Nationalist government at least five years before Mandela was released.
The book is a must for all South Africans – if it is not a prescribed book for our schools, it should be. We all need to build on the miracle of our becoming a democracy.
Sparks was one of our most respected journalists; his recording of the period is an inspiration; he records what Mandela said in his inauguration speech as President on 10 May 1994.
“We enter into a covenant that we shall build a society in which all South Africans both black and white will be able to walk tall, without any fear in their hearts, assured of their inalienable right to human dignity – a rainbow nation at peace with itself and the world.”
The test of any new legislation --- does it create fear in anyone, does it create peace with ourselves in the world --- Is there a thin line between transformation and the imposition of black dominance --- something that Mandela also fought against.
Sparks is a realist, he cautions us on the huge disparity between rich and poor, resulting from the years of apartheid. The gap must be closed, or it will become politically dangerous. Still, today our biggest challenge – poverty and unemployment.
Sparks is no cynic; he always believed that the new South Africa would succeed; it would not become another basket case or Bosnia or slide into disasters like so many African countries did after independence. Sparks gave ten reasons why South Africa would succeed.
1) Being the last country in Africa to achieve liberation, mistakes can be avoided – we can learn by other's mistakes as did Namibia.
2) The lack of racial animosity, apartheid did not leave a legacy of counter-racism and a desire for revenge against the white population. This lack of bitterness is epitomized by Mandela.
3) South Africans share a strong national commitment to South Africa, despite all that divided us. This commitment became evident to everyone during the meetings that took place during the transition.
4) The ANC leadership has developed an essential pragmatism that has ensured sensible policies and credibility. Pragmatism is regarded as an essential requirement to making progress in the modern world.
5) The “brand choice” of the ANC has meant that there has been extensive debate. There is a culture of democracy, and this should counter any authoritarianism tendencies that could arise in the future.
6) There is a culture of negotiation. The hard bargaining that took place during the multi-party convention in drafting a new constitution and all the unifications of labour and business organizations including sport bodies. This has meant that South Africans have acquired an expertise and confidence in resolving even the toughest issues around a table.
7) On the Constitution --- I should quote this verbatim, page 234 ---- his words a workable charter for a co-operative future.
8) The new regime inherited a bureaucracy that had the disadvantage of political incompatibility, but the working together compelled co-operation across racial and political lines. Sparks continues and says the black majority government was backed up by an experienced and efficient service ----- unfortunately we are often only told of what didn’t work. There were some hasty transformation replacements in many municipalities – service delivery has suffered.
9) The civic institutions from independent media and the judiciary to strong labour, business, professions, church, sports, street culture, women’s and a multiple of civic organizations – all with their own constituencies. These institutions with their own constitutions, interests to protect and representation bodies --- arising from freedom of association are a strong part of democracy, preventing government riding roughshod over them.
10) The last point Sparks makes in his book (1995) is that South Africa is the most developed country in Africa, the only one which has undergone a full-blown industrial revolution; it has a sophisticated economic infrastructure. This gives SA a real chance to become the engine of salvation for this mixed continent.
Seventeen years on (when I wrote this) and basically, we are still on track, with some threats. Democracies do survive weak governments and not one of us who cares about this country can relax our vigilance – if major tenets of the Constitution are changed and Information Bills are passed without a public protection clause and the rule of law is not upheld, we might be in trouble.
These words were written in 2012. It is now 2024 our basic freedoms have not changed and yes, we survived the week governments of Zuma and Ramaphosa. Ramaphosa has a second chance with the GNU, now 100 days old. The pause has done us good, lifted our spirits and the new blood and characters in GNU has brought new life into some government departments.
It looks that 70 % at least of the country …... is set on following what works, common sense and being practical…… basic decent conditions for all, fix what’s broken …….it is about growing thriving businesses ……...6 to 8% annual compound growth of GDP for 15 years.
The triparty alliance the ANC, SACP and COSATA does bring some ideological conflict. What we can say, some spoke persons for the SACP and COSTA have been out of touch with the dire straits of our economy and how close we have come to become a failed state. The GNU does provide that breathing space for as all to think again what we need for the country.
It is good to be reminded that the ANC comes from a pragmatic background re 4 above, the ANC also needs to be remined of this. Then authoritarianism re 5 above and democracy. Tito Mboweni in a TV programme shortly before he passed on, stated very definitely that the ANC fought for a democracy……. After 30 years in power, it was a victory for democracy that ANC lost its majority.
Francis Wilson in another essential book “Dinosaurs, Diamonds and Democracy” published in 2009, records six areas for major concerns.
§ Widespread and rising unemployment.
§ Widespread poverty and deep inequality.
§ Lack of organizational capacity; weak local government.
§ Corruption, crime and xenophobia.
§ HIV/AIDS and tuberculosis.
§ Environmental challenges.
Significant Achievements
Negotiated transfer of power
Defusing of potential civil war
Constitution enshrining human dignity, recognising 11 home languages and dismantling of racist legal structure
Abolition of capital punishment
We all need to re-look as Sparks’ 10 reasons why we will succeed. It is a source of inspiration; there is a need for “gratitude” in many respects and then we are a pragmatic nation – lead by the ANC government. Provocative. Land grabbing is not going to happen – that love of country, commitment to South Africa is still very much there. If the ANC does not like some of the media exposure and criticism, it is being given out of deep care and not cynicism.
Please read Allister Spark’s book “Tomorrow is Another Country” (first published 1995)
Neil Wright
