5 P rule

The 5 P's Model from Dr. Mildred Golden Pryor, J. Chris White, and Dr. Leslie A. Toombs is a Strategic Management Model which requires the alignment of 5 variables to improve organizations and their operations: Purpose, Principles, Processes, People, and Performance.

Purpose involves all the elements that constitute the intention of the organization. This includes the organization's mission, vision, goals and objectives, and strategies.

Principles are the guiding philosophies, assumptions, or attitudes about how the organization should operate and how it should conduct its business. This variable includes the integrity base, ethics, and core values to which employees are expected to make a commitment when they are hired

Processes are the organizational structures, systems, and procedures that are used to make the products or perform the services that the organization provides, as well as the infrastructure and rules that support these systems and procedures.

People are the individuals (and teams of people) who perform work that is consistent with the Principles and Processes of an organization to achieve its purpose. They are the active components who accomplish work results.

Performance encompasses all the metrics, measurements, and expected results that indicate the status of the organization, and are used as criteria for decision making. Performance results are fed back into the strategic management process to provide a means of feedback and control.

Origin of the 5 P's Model. History

The 5 P's Model was developed by Pryor, Toombs “Strategic Quality Management” The originators of the 5 P's Model studied under Dr. W. Edwards Deming, Dr. Joseph Juran, Dr. Peter Senge.

The following steps are a simplified description:

For PURPOSE:

• Identify strengths and weaknesses, threats and opportunities, mission, vision, goals and objectives, and strategies.

• Identify core leadership competencies.

For PRINCIPLES:

• use a team to develop core values.

For PROCESSES:

• List all processes.

• Document the processes using flowcharts, process maps and/or checklists.

• List process owners. If owners are not identified, designate process owners who will do the process documentation and improvement.

For PEOPLE:

• Determine the extent to which people are empowered, teams are in place.

• What is the level of self direction in teams.

• What training is needed.

• Other things that relate to employees.

For PERFORMANCE:

• Identify what measurements are in place/should be in place

• Establish key performance indicators (KPI's) and baselines.

• Set up a metrics system with targets for improvement.

• Track KPI's over time.

Strengths of the 5 P's Model. Benefits

- The 5 P's Model can be used at the corporate level and throughout every level of the organization.

- The 5 P's Model is applicable to all types and sizes of organizations.

- The 5 P's Model can be applied along with a variety of other leadership and management theories, concepts, and tools.

- The 5 P's Model is timeless. It will not become "out of date" just because other theories are introduced.

Limitations of the 5 P's Model. Disadvantages

People applying the 5 P's Model need to individually or as a team understand not only basic leadership and management concepts, but also strategic management, organizational development, process management, and systems thinking.

UNIT 13 THREE M RULE

Different people buy things for very different reasons. Market research has to take 'market segments' into account, and find out what each one wants. A segment is a group of customers with something in common, and that's different from other groups.

For instance, if you sell boxes of tissues, there's the retail market - supermarkets and shops. They buy your tissues to sell at a profit and they want to know they'll sell well. So you provide TV advertising, make the price attractive and offer special deals to the retailers. This helps them make the profit they need.

Hotel chains, though, want something different. They're not selling tissues, but providing them as a service for guests. So quality matters - nice colours and an attractive scent - because it gives a good impression of the hotel. And a quick delivery is important so they don't run out of something basic.

Then there are hospitals, which provide tissues for patients. They want hygiene, not colour or scent. Their requirement is for strong, cheap, white tissues that do the job and come with no frills.

So Three M Rule consists of Market, Message, Medium

• Market - who is in the market segment aimed at?

• Message - what information does this group need, to get them to buy?

• Medium - which medium should be used to get the message across?

A medium is the type of advertising or promotion. Some examples are local papers, TV, specialist magazines, exhibitions, leaflets, or doorstep and telephone canvassing.

Table 12.1 presents the example of promoting such commodity as tissues to different groups according to 3 M rule. The information shows the four market segments. For each segment there are separate messages and media (plural of medium) that will best get the message across.

Information like this helps target the right message to each segment. It ensures that promotional activities - like exhibitions, posters, mail shots and advertising- say the right things, to the right people, in the right way.

So the only time TV and national papers are the right medium is when the message is aimed at the general public, to get them to buy the product from their local store On the other hand, going to catering exhibitions is an excellent way of reaching a high percentage of professional buyers in that segment.

Table 12.1

Market	Message	Medium
Retailers - shops selling products on to the public	Good profit margins and promotions (buy five cases, get one free) High sales Strong advertising support to push sales	Trade papers (magazines only aimed at retailers) Personal contact (sales representatives, direct mail, telephone calls)
General public (to support retailers)	Strong, soft and good value	TV, national newspapers and magazines
Hotels	Top quality Good contract prices Reliable delivery as and when needed Free holders	Trade papers (catering magazines) Personal contact (sales representatives, direct mail, telephone calls) A stand at catering exhibitions
Hospitals	Hygienic (pure white) Best prices Discounts for bulk delivery Free holders	Trade papers (hospital management) Personal contact (sales representatives, direct mail, telephone calls)

The example of promotion of towels according to 3 M rule

Q uestions to UNIT

1. What is the main idea of three M rule?

2. What types of media can be used for different customers? What message should be presented in certain case?

Activity. Choose one of two of the offered product and work out possible market segments for them: towels, push-up bra, paint, toilet paper, wall-papers. List them in a table, then try to decide what each segment wants (the message) and how you would promote the products to each segment (which media).

UNIT 14 DESIGN AND DEVELOPMENT

Design involves the appearance of a product - its form. But it also has a great deal to do with practicality and the way a product works - its function.

Form

This is the shape and appearance of the product - the right image, colours, size and shape. There's no doubt that a good-looking product can sell for more money than one that looks less attractive. And it can sell more quickly. Attractive design makes a product stand out in a highly competitive market where it's not always easy to spot real differences between one product and another.

However great it looks, though, the product also has to do the job. It has to function.

Function

This is about the way the product performs - what it does and to what quality standards. Unless it can do what customers want, it won't sell. When a designer is involved from the beginning, they can advise on how the product will work, and help plan the way it is made.

Ideally, designers are given a design brief or specification that sets out the standards and criteria for the product. But the chances are that the brief will ask for everything to be perfect. And that's not always possible, so the designer has to blend the various elements of the design mix - performance, quality, cost, durability, style and appearance - to meet customer requirements. So it's always a compromise, which is why product design and development isn't just left to an individual designer.

Getting the balance right involves finance (for the cost), marketing (to make sure it gives customers what they want) and production (to check they can make it) along with other people and departments as well, when they have a contribution to make.

The designer works with these people in a team because no one person - whether they're a brilliant inventor or a production wizard - knows everything or can do it all themselves. As industrial engineering, electronics and manufacturing become more complex, there has to be a team that includes everyone who has a part to play

ROLE OF INNOVATIONS

Once, innovation was essential for growth. Today we know it's essential for survival. When there were only a few companies competing in various markets, it was easy to tell them and their products apart. There were three or four companies manufacturing TV sets, a few tape recorder companies and a handful of serious radio makers. There was little or no international competition and their products all looked quite different.

But today there are dozens of international companies competing for the same markets. There's a huge range of products and something to suit everyone's needs. So business is faced with the challenge of trying to work out what customers want, before they know they want it. A large part of the design brief comes from the research into customer requirements. So it sounds simple - find out what sells, then design it, make it and sell it. But things are never that straightforward

UNIT 15 PRODUCT LIFE CYCLE

The life cycle is the reason that design and development happens all the way through a product's life, and not just at the start. The life cycle applies to every product, from the most technical to the simplest.

Every product is born, developed and launched. And then sales grow - if the company got the research and the design right! Sales then level off, as it settles down and matures. This is the place where there is already a great deal of competition, so the company has to work hard to keep sales of the product steady, if not actually growing.

The UK economy depends more than ever on service businesses. These are companies that do not make anything, but provide a service to other companies, or direct to the public. Holiday firms, restaurants, train companies, banks, dry cleaners, television and entertainment, telephone companies, insurance firms and Internet providers - they're all service companies. And their services don't appear by magic; someone has to design them in the same way as they would a new product. It's possibly even more difficult to design a successful service, because there's nothing to look at, touch or hold, like there is with a product.

So in service design the emphasis is on providing an experience the customer will want, will value and will be happy with. In a competitive market there's often very little to choose between one service company and another, so it's the small things that make them stand out, that really make the difference.

Image 15.1. The development of the product on product life cycle

As it is seen from the image 15.1 there are 5 stages of product life cycle: development, launch, growth, maturity and decline.

Development – technical innovation, research and development. Firm will decide if it is worthwhile continuing with the new product.

Launch – most expensive phase. Costs of R&D, production, and marketing not yet recovered. Informative advertising used. Firm will assess commericial viability of product.

Growth – product establishes its position in the market and the retail outlets become easier to obtain as sales increase. There is a shift from informative to persuasive advertising. Competitors begin to enter the field and prices fall.

Maturity – product reaches its peak. More competitors enter and market reaches saturation point. Increased advertising needed to maintain market share. Efforts made to maintain product’s position by adopting extension strategies.

Decline – sales fall dramatically. Efforts may be made to slow down this process or product may be milked, if the firm has new products to take over from it. Product may be taken off the market if it starts to damage the company’s image and prejudice the introduction of new products.

Questions to UNIT

1. What is product life cycle?

2. W hat stages are there?

3. What is the main idea of development stage?

4. Describe the product position on launch stage

5. What characteristics are there of the maturity stage?

6. What is decline stage? What are the possible future of the product on this stage?

Using main idea of product life cycle give specific examples of product development in the market such as:

- floppy disks,

- cell phone Nokia,

- tape cassettes

Make the presentations showing the product life cycle of these commodities.

UNIT 16 CUSTOMER REQUIMENTS: PUSH AND PULL SYSTEM

Operations management is the skill of organising all the business's inputs, so they add value and produce what customers want. Operations can be organised in all sorts of ways, but the bottom line is about the balance between satisfying market demand and the need to make a profit.

Customer requirements

When customers have little choice and there's not much of a competitive market, business can ignore customers. It's not a good strategy, but many companies still do. They make or do what they want to do, rather than what the customers want. And they make as much as they can and then try to sell it, rather than produce the right quantities and quality. But today there's more choice than ever, in a sharply competitive global market. So industry now concentrates on delivering what customers want. Modern business operations are driven by customer demand.

The customer drives the operations

Push systems

Some companies operate a push system. This is where each process makes as much as it can and shoves it on to the next stage. In the shirt factory, a sleeve is made by joining a cuff to the rest of the sleeve. Everyone works as fast as they can, to earn bonuses. The cuffmakers are faster than the sleevemakers, who can't keep pace. So huge mounds of cuffs build up, which have to be moved, checked, stored, counted and recorded. And storing goods means renting warehouse space, keeping the place dry and warm, paying storekeepers and stock controllers and probably paying interest on the bank loan that paid for the materials.

This push system isn't based on customer demand. So, if they make 20,000 shirts that nobody has ordered, the stockpile in the warehouse keeps on growing and costing.

Pull systems

In a pull system it's customer demand that pulls production through the process. The Just In Time (JIT) system is a classic example. JIT is often explained as a system for keeping stock levels low, but there's much more to it than that. The power behind JIT is the customer. And the customer isn't just the end buyer; it's anyone working to add value inside the process. Each stage in production is the customer of the stage before. So the sleevemaker is the cuffmaker's customer. They order supplies from the cuffmakers, and expect top quality goods to be delivered.

In this factory, when the sleevemaker needs more cuffs they order them from the cuffmaker. They don't actually say, 'I want 50 pairs of cuffs,' but there's a system that makes it crystal clear. On a table between the two sets of workers are two painted squares. Each square holds 50 pairs of cuffs. When a square is empty it counts as an order. The cuffmakers see it, understand what it means and produce the 50 sets needed to fill the square. But all the time there are still cuffs in both squares, they don't make cuffs. They do something else to help out someone who's under pressure.

This operates all the way down through the production flow. So customer demand pulls goods through the process at every stage. There's always just enough going through to let everyone do their job properly, without there being stockpiles, shortages and bottlenecks. Everyone is working far more productively and there are lower stocks sitting around, costing money. There isn't always a table and two squares, but the principle is basically the same across all pull systems.

And companies pull their raw materials from their suppliers as well. Instead of buying huge amounts of raw materials or parts every couple of weeks, they order just enough for a day or a few hours, then order again and expect small and very fast deliveries. It isn't just the overdraft, either. There are all the storage and handling costs to consider as well. However you look at it, it's a very important saving.

UNIT 17 WAYS OF RUNNING OPERATIONS

Working together to satisfy the customer

The trouble is that it's not always easy to set up the operations so they reflect what customers want. But industry has worked hard to develop the sort of culture and environment that puts the customer first. There's a focus on teamwork, flexibility and involvement at all levels. Some traditional operations are particularly difficult to work with and change. Piecework and quality inspection are a couple of cases in point.

• Piecework encourages individuals to turn out quantity. Pay cuffmakers more for producing more and they'll make cuffs fast, whether or not they're needed at the next stage. We know how this adds to the waste. If everyone is to concentrate on customer demand in a pull system, people have to co-operate more and work as a team.

• When people are paid for quantity, they rush to make more. If there's a quality target - like 95 per cent - then everyone aims for 95 per cent of all goods to be free from defects or mistakes. But the other side of that target is that 5 per cent failure is OK. Add the negative message that, 'nearly good enough is good enough' to the positive message that we pay you more for making more, and all the emphasis is on quantity. So there are mistakes, but there's always the team of inspectors in white coats who find the faulty goods after they're made. The trouble is that these inspectors do not add value; they're a waste cost.

So modern quality management looks at getting it right first time, every time. It concentrates on people taking responsibility for their own quality, rather than leaving it to an inspector. And it encourages the people doing the job to find possible improvements, and make them for themselves.

Different ways to run the operations

There are several ways to organise the operations, depending on the sort of business and the type of customer.

Take a bakery as an example. They make a special order wedding cake to the bride's specifications. This is job production. It's a one-off approach that fits software design and shipbuilding, top-class clothing manufacture or even the services of a personal trainer. It's an operation that tailors the outputs to a customer's specific order, so it generally needs a lot of human resources.

The same bakery also makes three types of bread - each with its own recipe. It makes white loaves, brown loaves and bread rolls. So it makes all the white loaves together first, using batch production. So the bakers mix the dough for the white loaves and put it in to bake. While it's baking they make the brown dough. That goes in the oven as the first batch finishes. Then they move on to the bread rolls. In batch production there's more of a pattern than there is in the one-off, so people can make more.

The bakery is so successful that it has to buy two more ovens - so there's one each for white, brown and rolls. Now it's flow production, with a constant stream of ingredients going into mixing machines, coming out and dropping onto conveyor belts that run through the ovens. A steady flow of finished loaves comes out at the end. This is a production line, with only a few people, more machines and almost mass production techniques.

UNIT 18 TIGHT FISCAL POLICY

In economics and political science, fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy.[1]

Fiscal policy can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and spending. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact the following variables in the economy:

• Aggregate demand and the level of economic activity;

• The pattern of resource allocation;

• The distribution of income.

Tight fiscal policy involves increasing the rate of taxation and / or cutting government spending. It is sometimes known as deflationary fiscal policy