Lecture 9

What is that business organizations used to do in order to respond to economic

forces? You have to prepare the response, react to it, be proactive.

Economic Forces:
o Business economist and political scientists (explain about political
environment) predict the environment and business make strategies
accordingly.
o Emphasis now is on interdisciplinary approach. Those who focus on one
area, they remain in the silos within organizations.
o A good business manager should be on top of economics and politics.
To give shape to economic policies

How do you maximize your gain?

Sustainable Protest and Ethics:

o Hardwork
o Honesty
o Frugality
(Common in all religion)
Politics is about allocation or competition of scarce resources. So politics is
not bad coz no politics means no competition which will make it stagnant;
politicking is bad instead i.e. pulling legs of one another for self-gains. If
competition is not there, youll not be able to get ahead.
Opinions can be mobilized by media. E.g. business community in Karachi
lobbied against extortion.

Case of Tractor Industry: (The color issue: They had to import from other country.
Peoples party didnt want to change the color. So government decided to import
and industry started yelling.)

Business decisions should all be apolitical. E.g. Indus motors got the
permission to set up its car plant in the tenure of Benazirs govt. but they
were equally good with Nawazs govt. Be apolitical but youll have to watch
political forces.
If you are into politics and business at the same time, be transparent!
Environment: (industry has suffered because of this)
o Leather, carpet, fisheries industries have suffered because of
environmental forces. Similarly, the soccer ball industry!
o Reaction: Surgical industry also suffered when US industry said that
theyll not import Pakistani Instruments due to sub-standard material.
Then they make a response; looked for materials and started doing
research.

Carpet industry suffered due to child labor. Indias response was that
each carpet was certified that there was no child labor while making it.
o Regulatory environment should be studied and anticipated. E.g. textile
industry did not anticipate.
o Values matter on running the business organizations.
o Pollution is another factor.
Free trade adversely affected the competitiveness of products made in the
west; then they used the term fair trade.
Social-Demographic Forces:
o Labor had low productivity which used to increase the cost.
o There are countries where you cant find the surplus labor. Surplus
labor has zero marginal productivity e.g. Food industry, garments
industry, education has become an industry, mobile phones, the
demand for bank credit for automobiles, surplus extortions (contractual
labor). E.g. no availability of drivers in US (there are very few).
o There should be self-regulations within judiciaries (example of 3 times
increment salaries)
o One should have the intent (niyat) to mobilize political will.
Technological Forces:
o STM: Strategic technology Management
e.g. back in 80s lots of firm bought hardware (mainframe). Then
they hired consultants who suggested to look for the information
requirement first, work backwards to determine your hardwork
requirement. There is no point in buying high tech when it is not
required to be used effectively. So STM should be in line with
your companys objective and mission.
Market requirements can be to have:
Labor-intensive technology
Capital-intensive technology
o SHRM: Strategic Human Resource Management
o St. Mktg: Strategic Marketing
o SIMS: Strategic Information Management System
Cost Reduction Strategy: Costs can be reduced through:
o Process related R&D and not just Product related R&D
o Value chain analysis
o Specialization
o Technology (low cost, low volume)
Outsourcing: When you want to produce the best in class or to get better
quality than what you can produce
Source Out: When you dont have capacity. You may source out to get the
lower cost but then you may not get the best quality.
o

Lateral Thinking
Productive and Proactive
Re-patterning of information (not
necessarily new knowledge but
the same knowledge be used)
Processing the package
Insight restructuring
Concept breaking
Provocative (e.g. Rashid Minhas
left self behind due to missionary
zeal)
Concepts of military be
implemented in business
organizations.
You have an aerial view to
observe (like top of the mountain
and then take the best route
possible)
No Problem means no lateral
thinking
In case of MOUND model, lateral
thinking was thought through by
various members and then it was
implemented
In Kaizen, while continuous
improvement you are doing
lateral thinking
Example: When Bhutto went for
nuclear program (Long-term
Approach)
Being critical based on logical
reasoning doesnt make one
negative.
The problem lies in
implementation, not in the
policies (example of Bhutto)

Vertical Thinking
There is definite point that you
think upon
You have number of directions
but you follow one.
It could have been proactive
Vertical thinking is the
conventional
It can be more tedious and
boring