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Postby Glendale » Tue Sep 08, 2015 12:56 pm

s Advertisement Expert: Leo Lingham - 10/8/2012 Dear Sir,

Can you please answer these questions

1.What will your out look towards maintenance of liquid assets to ensure that the firm has adequate cash in hand to meet its obligation at all times ?

2. If you are working in supermarket , what techniques /tools you will use in data collection. How are you going to analysis the data and make inferences? How will you finally apply your market research to improve sales and win over customers?

3.If you are made the campaign leader fro a particular political party. How will your use your leadership skills to motivate your party men to ensure success if the party nominee in election?(Focus on the individual , motivate and apply leadership style)?

4.Suppose the price elasticity of demand for text books is two and the price of the text books is increased by 10% By how much does the quantity demand fall? Inter the results and discuss reasons for the fall in quantity demand?
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Postby Fortunatus » Wed Sep 09, 2015 12:36 am

1.What will your out look towards maintenance of liquid assets to ensure that the firm has adequate cash in hand to meet its obligation at all times ?

'Liquid Asset'

An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market. Liquid assets are cash on hand or any tangible or intangible item that can be converted quickly and easily into cash, typically within 20 days, without losing much of their value. These assets are among the most basic types of financial resources used by consumers, businesses, and investors. Cash and checking accounts are the two most obvious forms of liquid assets.


Legal tender for purchases and to settle outstanding debts, currency remains the most common type of liquid asset used consistently by retail consumers. Money that is deposited into a savings or checking account is considered to be a liquid asset because it is possible to immediately access the funds in order to settle debts. The debit card offers consumers even greater access to immediate liquid assets. Investments

Some interest-bearing investments can be liquidated quickly, qualifying them as liquid assets. Money market fund shares, bonds, mutual funds, and the cash value of a life insurance policy are examples of investments that can provide quick cash when necessary. Certificates of deposit and stocks might also qualify under this definition. While the actual market liquidity of each asset may vary, the key is that there are always people looking to buy these items, so they can be sold relatively easily. In the case of some jointly owned assets, only a percentage of an asset could be considered liquid. Other Assets

The final settlement awarded by a court for damages in a lawsuit could also be considered to be a liquid asset, depending on the terms of payment specified by the court. Tax refunds and the balances of trust funds are often included in the working definition of liquid assets.

Less Liquid and Illiquid Assets

Mortgages are sometimes considered a liquid asset, but they are much less liquid than many other types. Real estate is also more likely to sold at less than its value if it must be liquidated quickly; if the market is unstable, it may be difficult to determine the true value of real estate as well. Since a key part of liquidity is that the asset be sold at or very near its actual value, this means that real estate is often considered "illiquid" or not easy to sell.

Any item for which there is no established value is not considered to be a liquid asset, even if that item might be sold for a high price. When the market for the item is small or uncertain, a sale could significantly affect its value. Even stock, usually considered a liquid asset, could be illiquid if a large block is put up for sale, which could lower its market value.

Business Assets

For businesses, liquid assets can include cash, marketable securities, and receivables. Cash equivalents, which can be quickly converted to cash as needed, are also considered to be liquid. A business needs to be liquid enough to meet expenses, but not have so much cash on hand that short-term investment opportunities are not pursued.

Companies often divide their assets into net liquid, quick, and current assets. Net liquid assets are what would be left if all of the businesses debts were paid off. Quick assets are those that can be converted into cash immediately, while current assets are those that can be converted within a year.

For an asset to be liquid it needs an established market with enough participants to absorb the selling without materially impacting the price of the asset. There also needs to be a relative ease in the transfer of ownership and the movement of the asset. Liquid assets include most stocks, money market instruments and government bonds. The foreign exchange market is deemed to be the most liquid market in the world because trillions of dollars exchange hands each day, making it impossible for any one individual to influence the exchange rate.

Liquid assets include items such as accounts receivable, demand and time deposits, gilt edged securities. In some countries, precious metals(usually gold and silver) are also considered liquid assets.


The price and value of investments and their income fluctuates: you may get back less than the amount you invested. Remember that how an investment performed in the past is not a guide to how it will perform in the future. If you are in any doubt about investing in these types of investments, The firm has to maintain core current assets which is  easily realisable at all times. The laid down bench mark ratio to maintain the ratio of core current assets to Current liablities is 1:1. PROJECTED CASH FLOW STATEMENT BE THE GUIDED STICK. OUR  SALES, REALISATIONS, AND FIXED AND VARIABLE EXPENSES NEED TO BE KEPT IN MIND WHILE JUDGING THE BALANCED NEED OF  LIQUID ASSESTS. WE MAY CONSIDER THE SHORT TERM INVESTMENTS WITH REFERENCE TO INTEREST RATE AND SURPLUS FUNDS. Generally speaking, you must limit expenses and ensure that some of your assets are in the form of short term assets. The higher your short term assets and the less your short  term debt, the better your ability to pay the debt(short term liquidity ratio / liquidity ratio help you determine  this).The ratio analysis will be the guide stick for the liquidity ratio. Maintenance OF LIQUID ASSETS TO ENSURE ADEQATE CASH IN HAND

A common problem for small business owners is the struggle to maintain adequate cash flow levels. Without cash, a business must eventually close its doors. Understanding and managing the company’s cash flow will help to measure the amount of cash on hand and prepare for cash flow shortfalls in the future.

[a] Do the Math

Cash flow is the movement of money in and out of a business. Cash inflow is the movement of money into your business, and most likely comes from the sale of goods or services to your customers. Cash outflow is the movement of money out of your business, and is generally the result of paying expenses. By projecting the inflow and outflow of your businesses cash, you can determine the amount of cash that will be available during a designated period of time.

[b] Prepare Your Profit and Loss Statement Your business plan should contain several financial statements. If you’re a start-up businessman, base your estimates of cash inflow and outflow on the revenues and expenses listed in your profit and loss statements. Complete your profit and loss statement before completing your cash flow statement. Over time, you will be able to base cash inflows and outflows on actual historical data.

[c] Develop a Cash Flow Statement

A cash flow statement measures cash flow over time. During your first year in business, you should include a month-by-month cash flow statement in your business plan. If you’re seeking a loan, an important feature of your cash flow statement is that it will show the lender exactly how you’re going to afford loan payments.

In order for a business to stay afloat, it must maintain an adequate level of cash. These are some which we can apply to improve the cash flow in our organization. Adequate cash means that you can meet your obligations. It is to remember that cash is king and life blood of the organization. The following points help make it easier to maintain the adequate cash level and an improvement in cash position can be seen sooner rather than later:

1. Check Customers’ Credit Histories

Decide the type of customer to whom you want to extend credit. Do you want to have a particular cut-off credit score? If you extend credit to customers with questionable credit histories or low credit scores, you may experience late payments or no payments, which will slow down your cash flow and increase your collection costs.

2. Keep Track of Your Customers’ Payments

Have up-to-date payment records. Keep accurate payments records by using a specialized accounting software program that will keep track of your invoices and when payments are made. If customers are late with their payments, it could cause a cash flow bottleneck for you. Accurate recordkeeping will help solve this problem.

3. Set Appropriate Credit Terms and Offer a Cash Discount

Make sure your customers understand how long they have to pay their bill. In order to speed up the cash they pay, you might want to offer a cash discount to any customer that pays in a short period of time, designated by you, or to a customer who pays cash.

4. Extend Your Timetable for Making Cash Payments

Pay your bills on time and take advantage of any cash discounts your suppliers offer you. However, hold onto your cash as long as possible. Don’t pay bills weeks earlier than they are due. Your company can use that cash balance, rather than letting your supplier use your company’s cash.

5. Cut Back on Spending Wherever Possible

Do you really need to take money out of your business for a Hawaiian vacation right now? Cut back on spending until it is less than your revenue on a month-by-month basis. If an emergency happens, then you will be prepared from a cash standpoint.

6. Increase Your Sales

Make sure you aren’t holding on to obsolete inventory. If you are, mark it down and sell it. Storing it is costing you money and selling it at a lower price is better than not selling it at all. The longer you hold on to obsolete inventory, the less likely it is to sell.

7. Think before investing

The price and value of investments and their income fluctuates: you may get back less than the amount you invested. Remember that how an investment performed in the past is not a guide to how it will perform in the future. ===============

Resource deployment is the most important job of the corporate level strategist. Burning cash quickly through related and unrelated diversification moves does not provide the answer. There is the entry and exit problem with regard to resource commitments. Businesses are not liquid investments and it is difficult to redeploy assets. Second, relatedness is difficult to realize quickly and at the most takes time to develop. Third, investing in high return business is always not easy. Moreover, diversification upsets established power bases within a firm. Redeployment in a way is nothing but relocation of power. Those who have commanded the resources of a unit do not like to part with them without a bitter fight. Power and resources often go hand in glove. Such power struggles compel strategists to pour disproportionate resources into the old businesses and unconsciously restrict investment in new ventures. Inappropriate resources development thus, guarantees failure on every front.

Portfolio strategy pertains to the mix of business units and product lines that fit together in a logical manner to offer synergy and an individual trying to balance his investment portfolio by picking up some high risk stocks, some low-risk stocks and perhaps a few income bonds. In much the same way, diversified corporations like to have a balanced mix of business divisions called Strategic Business Units(SBUs). An SBU is a division of the organization that has a unique business mission product line competitors and markets relative to other SBUs in the same corporation. It can be a single business or a collection of related businesses. Many companies set up SBUs as separate profit centres, sometimes giving them virtual autonomy other companies have tight control over their SBUs, enforcing corporate policies and standards down to the very low levels in the organization.

Corporate Portfolio analysis is an analytical approach which asks managers to view corporations as portfolios of business to be managed for the best possible return. Linking industry characteristics, the company’s competitive strengths and resource deployment patterns, portfolio analysis gives managers an opportunity to see their companies from a different point of view and think about the future implications of their current resource commitments.

Portfolio models present the various alternatives taking a holistic view of several internal and external factors impacting a portfolio of businesses. They present a comprehensive view of a firm’s competitive position in relation to its competitors and provoked questions about the contribution of the firm’s current resource allocations to its long run vitality. The models help management see how its resources are being put to use and offer achievable objectives for each business. This, in turn, enables the management to treat its businesses as profit centres while achieving corporate objectives. In short, portfolio analysis takes the view that a corporation is a portfolio of investments to be managed to produce the total best returns.

The Portfolio Matrix compares various businesses in an organization’s portfolio on the basis of relative market share and market growth rate. Relative market share is determined by the ratio of a business’s market share(in terms of unit volume) compared to the market share of its largest rival. Market growth rate is the growth in the market during the previous year relative to growth in the economy as a whole.


SBU that are stars have a high share of a high growth market and typically require large amounts of cash to support their rapid and significant growth. They have additional growth potential and so profits should be ploughed back into this business for future growth and profits. For example, software entertainment, electronics and telecommunication are some of the industries which have a very high growth rate. The appropriate strategy for stars is to maintain the market share through large doses of investment both internal as well as external.

Cash Cows:

SBUs that are cash cows(provide lot of cash for the firm) have a high market share in a slowly growing market. As a result, they tend to generate more cash than is necessary to maintain their market position. Cash Cows are often former stars and can be valuable in a portfolio because they can be milked to provide cash for other struggling businesses.

SBUs that are question marks have a small share of a high growth market. The question mark business is risky, since there is already a leader in that business. As such it requires lot of funds to invest in plant, equipment and personnel in order to keep pace with the fast growing market. The terms’ question mark is well conceived, because at every stage the organization has to think hard about whether to keep investing funds in the business or to get out.

SBUs that are dogs have a relatively small share of a low growth market. They may barely support themselves or they may even drain cash resources that other SBUs have generated. Usually dogs are harvested divested or liquidated if turnaround is not possible.

After the SBUs of an organization are plotted on the growth share matrix the next steps is to evaluate whether the portfolio is healthy and well balanced. A balanced portfolio obviously has a number of stars and cash cows and not too many question marks or dogs. Depending on the position of each SBU, four basic strategies can be formulated while building a balanced portfolio:

–Heavily invest in Stars. High market share and high industry growth means higher portability of future success.

–Maintain cash cows because they provide resources for future growth investment in wild cats and stars.

–Use selective resource allocation for wildcats to convert them into stars.

– Liquidate or divest dogs that are not worth investing in to improve their positions.


2. If you are working in supermarket , what techniques /tools you will use in data collection. How are you going to analysis the data and make inferences? How will you finally apply your market research to improve sales and win over customers?

Supermarket shopping is often categorized as a self-service retail environment. For supermarket retailers who want to build relationships with their customers, its essential to track their levels of ‘satisfaction’ with the key elements of the supermarket environment. From the retailer’s perspective the aim is to minimize the reasons for complaints and dissatisfaction and establishing a track of direct feedback from customers about their reactions to those key elements.


The type of research would be a descriptive research, which uses survey method. The data used for research is primary data. The data collection could be done using questionnaire as well as schedule method. Leisure shoppers can be given questionnaire where as data can be collected by schedule method. The respondents are those who come for the supermarket for shopping.

An evaluation of supermarket is done using a questionnaire that emphasizes on the key elements of such as :

Ø Accessibility

Ø Customer service

Ø Range of products

Ø Availability of products

Ø Store reputation

Ø Ethical business

Ø Quality of products

Ø Product availability Ø Pricing, enjoyment of shopping

Ø Parking Ø Cleanliness Ø Hygiene

The questionnaire is designed using a five-point scale that ranges from

5-Strongly Agree 4- Agree 3-Neutral 2-Disagree 1-Strongly disagree

The rating of satisfaction with specific attributes can be done by question such as, “How satisfied are you in general with the following aspects of customer service of the supermarket/s where you generally do your shopping?” and Willingness to recommend supermarkets can be got by “Would you recommend the following supermarkets to

your best friend for regular purchases?”. More questions should be framed covering all the key elements and questionnaire should be easy to understand and to fill.

DATA ANALYSIS AND RESULTS What customer data to collect

You need to collect as much of the following as possible:

?   Name and contact details: ?   Allows you to market directly to them.

?   Also lets you make communications personalised.

?   You may also need to contact them if an order is running late.

?   Transaction history: ?   Indicates user preferences - which products they're most inclined to buy, when and how often.

?   Reveals how valuable a customer they are: how much they spend and how often.

?   Communications from you to customers and any response they make: ?   You need to keep records of this to make sure you space out your communications correctly(i.e. not too often).

?   It also lets you monitor how effective different types of communication are and which the customer best respond best to. If you compare their transaction history with the communications record, you may find one method of communication encourage them to buy more than others.

?   Profile: age, gender, profession, income, hobbies, and so on: ?   This information is harder to obtain(see advice below), but can be useful for more advanced marketing strategy.

?   Once you have the info for a number of customers, you can build up clearer picture of who exactly your target customer is.

?   It allows you to better focus your advertising and marketing efforts, as well as affiliate opportunities and sponsorships. If you know your target customer goes to the gym three times a week, it opens up a new place to advertise, a new line of gym-related products and an opportunity to do a deal with the local gym to offer discounted membership if they shop with you X number of times.

?   Knowing their age and profession(and so an idea of their income) helps with pricing strategy.

?   The better and more detailed picture you have of your target customer, the more you can tailor and develop products to please them.

?   Spending habits: how your customers shops - such as impulse buys, considered purchases, comparing the prices from different businesses, always with you on a regular basis, and so on: ?   You can display goods and structure deals around consumers' spending habits - think of how supermarkets put magazines and chocolate bars at the checkout: impulse buys.

?   Can be difficult to assess - you may need the help of a market research agency or detailed surveys with trusted customers. Or you can try out different strategies and see which work. You can also take an educated guess based on your knowledge of the market.

?   Birthdays: ?   Sending out a birthday text or card can add a personal touch and make a customer feel valued.

?   Whether or not they pay on time: ?   This is obviously important for cashflow reasons rather than marketing ones, but it's worth adding to the list anyway if you're thinking about data collection.

How to collect customer data

?   First and foremost, do not harass customers for data. Endless form filling is enough to put a consumer off a purchase. Data collection has to be either unintrusive or incentivised. Collect it bit by bit to build up a fuller picture of your customer gradually and in a non-annoying way.

?   From orders: ?   Obtain contact details and name from orders and begin building a transaction history, whether on or offline(although online makes things even easier as data can automatically be entered into a database).

?   You can add in a birth date as optional.

?   If the transaction is happening online, you can add in an optional section requesting more information. Phrase it in a way that appeals to the customer, such as: "So that we can learn more about you and provide you with a service more suited to your personal needs, please fill in...." You can also use this technique if a customer has to register an account with you at any point.

?   Surveys: ?   If you run a survey on your business, you can obtain a fair amount of information by asking details about their profile(gender, age, etc). While some respondents may be reluctant to give their name, some will. For those that don't, you get a clearer picture of your overall target customer anyway, which is the aim here.

?   Competitions: ?   Run a competition asking for email address and a couple of other details - customers will be more inclined to share personal data when they have something to gain from it.

?   Online: ?   Online can help you track spending habits and user preferences, though you may only be able to get an overall picture of your target customer rather than profiles of specific users - use Google Analytics.

?   Research: ?   Statistics and research already out there can help you build a more detailed picture of your target customer(though of course they won't provide information on individuals).

?   Look at demographic-related reports and spot trends. There's almost certainly other people targeting the same demographic as you, which means you can simply look at the research they've done and any statistics on the matter to find out more about your target audience.

?   A market research agency will be able to provide you with the most detailed picture of your target customer and their habits, but this is quite an expenditure. You probably only need to go into this much depth when you're marketing techniques are very advanced - and you'll recognise your need for an agency as and when that happens.

?   Noticing things when you see customers face-to-face can of course also give you a very general idea about who the bulk of your customer are and what demographic and age group they're part of.

How to store customer data

?   Initially, you can store things on Excel or similar spreadsheet software.

?   But as your data becomes more detailed, you'll need specific database software to manage your customer data.

?   Ask a software and computer shop or supplier to recommend you some software, explaining your needs both present and future to make sure they provide you with the right level of complexity. You don't want to end up with something either far too complicated or far too basic for your needs.

?   Make sure your data collection spans all different departments and members of staff. Everyone should be contributing to the same document. Use CRM software to manage this.

Guidance and the law on storing customer data

?   There are complex laws surrounding business' collection of data.

?   See our guide on the data protection act to find out more and to make sure you don't accidentally break the law.

?   Make sure you ask customers' preferences when you take their contact details. Allow them to opt out of receiving marketing material - you don't want to get on the wrong side of them, after all.

Jargon buster

CRM software: customer relationship management software. Software that allows different departments and members of a company to contribute to individual data files of customers, and track their orders and so on without having to ask other members of the company. An up-to-date, shared database of all customer communications and transactions and other details.














3.If you are made the campaign leader fro a particular political party. How will your use your leadership skills to motivate your party men to ensure success if the party nominee in election?(Focus on the individual , motivate and apply leadership style)?   A  leader is someone who understands and lives life in line with their purpose. Someone who is authentic, who has a clear sense of their own personal values and is seen by others to embody those values. Someone who believes in giving first, with no expectation of a return. Someone who inspires others to follow their example, just by being themselves. T      LEADERS  SHOW      -Drive   -Vision   -Leadership motivation   -Integrity   -Self confidence   -Knowledge  in  some fields   etc      But this  does  not  ensure  success  as  a  leader.      There  are  other  characteristics, that  helps  to  make  a   leader  success, like      -group  leadership   -organizational  talent   -sensitivity   -collaboration   -persuasiveness   -rapport building   -analyzing  situations   -making  judgement   -decision  making   -planning   -delegating   -empowering   -controlling   -appraising   -communicating   -iniating   -flexibility   -adaptability   etc etc      Most  of  these  are  needed  for  managing  situations  and  people.      Most  leaders  are  not  born   with  all  these  factors, but  trained   either  in  classrooms  or  self  taught  on  jobs.      Most  of  the  above  factors  are  learnable.      Hence  leadership   is  a  combination  of  born  talents  and     trained   skills/ knowledge.   Provide team leadership 1   Create an environment oriented to trust, open communication, creative thinking, and cohesive team effort

2   Provide the team with a vision of the project objectives

3   Motivate and inspire team members

4   Lead by setting a good example(role model) - behavior consistent with words

5   Coach and help develop team members; help resolve dysfunctional behavior     *Facilitate problem solving and collaboration

1   Strive for team consensus and win-win agreements

2   Ensure discussions and decisions lead toward closure

3   Maintain healthy group dynamics

4   Intervene when necessary to aid the group in resolving issues

5   Assure that the team members have the necessary education and training to effectively participate on the team

6   Encourage creativity, risk-taking, and constant improvement

7   Recognize and celebrate team and team member accomplishments and exceptional performance     *Focus the team on the tasks at hand or the internal and external customer requirements

1   Coordinate with internal and external customers as necessary

2   Familiarize the team with the customer needs, specifications, design targets, the development process, design standards, techniques and tools to support task performance

3   Assure that the team addresses all relevant issues within the specifications and various standards

4   Provide necessary business information

5   Serve as meeting manager, WHEN  YOU  HAVE  A  MEETING.

6   Initiate sub-groups or sub-teams as appropriate to resolve issues and perform tasks in parallel

7   Ensure deliverables are prepared to satisfy the project requirements, cost and schedule

8   Help keep the team focused and on track    *Coordinate team logistics

1   Work with functional managers and the team sponsor to obtain necessary resources to support the team's requirements

2   Obtain and coordinate space, furniture, equipment, and communication lines for team members

3   Establish meeting times, places and agendas

4   Coordinate the review, presentation and release of design layouts, drawings, analysis and other documentation

5   Coordinates meetings with the product committee, project manager and functional management to discuss project impediments, needed resources or issues/delays in completing the task     *Communicate team status, task accomplishment, and direction

1   Provide status reporting of team activities against the program plan or schedule

2   Keep the project manager and product committee informed of task accomplishment, issues and status

3   Serve as a focal point to communicate and resolve interface and integration issues with other teams

4   Escalate issues which cannot be resolved by the team

5   Provide guidance to the team based on management direction


•   Communicating with Coworkers:  Communicating information using either face-to-face, written, or via telephone or computer.

•   Active Listening:  Listening intently to what others are saying and asking for further details when appropriate.

•   Facilitating Discussion: Promoting the involvement of various individuals and a norm of openness and collegiality during group discussions.

•   Public Speaking:  Vocalizing clearly, maintaining a comfortable pace, and using appropriate non-verbal behaviors during formal presentations. Utilizing visual aids during presentations. Engaging the audience and responding to questions from the audience. •   Developing External Contacts:  Developing portfolio of external contacts within the professional community. •   Communicating Outside the Organization: Exchanging information with others outside the organization(e.g., customers, other organizations) using face-to-face, written, telephonic or electronic means. Transformational Leadership


People will follow a person who inspires them.

A person with vision and passion can achieve great things.

The way to get things done is by injecting enthusiasm and energy.


Working for a Transformational Leader can be a wonderful and uplifting experience. They put passion and energy into everything. They care about you and want you to succeed.

Transformational Leadership starts with the development of a vision, a view of the future that will excite and convert potential followers. This vision may be developed by the leader, by the senior team or may emerge from a broad series of discussions. The important factor is the leader buys into it, hook, line and sinker.

The next step, which in fact never stops, is to constantly sell the vision. This takes energy and commitment, as few people will immediately buy into a radical vision, and some will join the show much more slowly than others. The Transformational Leader thus takes every opportunity and will use whatever works to convince others to climb on board the bandwagon.

In order to create followers, the Transformational Leader has to be very careful in creating trust, and their personal integrity is a critical part of the package that they are selling. In effect, they are selling themselves as well as the vision.

In parallel with the selling activity is seeking the way forward. Some Transformational Leaders know the way, and simply want others to follow them. Others do not have a ready strategy, but will happily lead the exploration of possible routes to the promised land.

The route forwards may not be obvious and may not be plotted in details, but with a clear vision, the direction will always be known. Thus finding the way forward can be an ongoing process of course correction, and the Transformational Leader will accept that there will be failures and blind canyons along the way. As long as they feel progress is being made, they will be happy.

The final stage is to remain up-front and central during the action. Transformational Leaders are always visible and will stand up to be counted rather than hide behind their troops. They show by their attitudes and actions how everyone else should behave. They also make continued efforts to motivate and rally their followers, constantly doing the rounds, listening, soothing and enthusing.

It is their unswerving commitment as much as anything else that keeps people going, particularly through the darker times when some may question whether the vision can ever be achieved. If the people do not believe that they can succeed, then their efforts will flag. The Transformational Leader seeks to infect and reinfect their followers with a high level of commitment to the vision. One of the methods the Transformational Leader uses to sustain motivation is in the use of ceremonies, rituals and other cultural symbolism. Small changes get big hurrahs, pumping up their significance as indicators of real progress.

Overall, they balance their attention between action that creates progress and the mental state of their followers. Perhaps more than other approaches, they are people-oriented and believe that success comes first and last through deep and sustained commitment.


Whilst the Transformational Leader seeks overtly to transform the organization, there is also a tacit promise to followers that they also will be transformed in some way, perhaps to be more like this amazing leader. In some respects, then, the followers are the product of the transformation.

Transformational Leaders are often charismatic, but are not as narcissistic as pure Charismatic Leaders, who succeed through a believe in themselves rather than a believe in others.

One of the traps of Transformational Leadership is that passion and confidence can easily be mistaken for truth and reality. Whilst it is true that great things have been achieved through enthusiastic leadership, it is also true that many passionate people have led the charge right over the cliff and into a bottomless chasm. Just because someone believes they are right, it does not mean they are right.

Paradoxically, the energy that gets people going can also cause them to give up. Transformational Leaders often have large amounts of enthusiasm which, if relentlessly applied, can wear out their followers.

Transformational Leaders also tend to see the big picture, but not the details, where the devil often lurks. If they do not have people to take care of this level of information, then they are usually doomed to fail.

Finally, Transformational Leaders, by definition, seek to transform. When the organization does not need transforming and people are happy as they are, then such a leader will be frustrated. Like wartime leaders, however, given the right situation they come into their own and can be personally responsible for saving entire companies.


EXHIBIT  >>>>>Leadership Competency A competency is defined as a behavior or set of behaviors that describes excellent performance in a particular work context. A competency model is a set of success factors, often called competencies, that include the key behaviors required for excellent performance in a particular role.

•   Leading Change •   Leading People •   Results Driven •   Business Acumen •   Building Coalitions/Communication 1.Leading Change

Continual Learning - Grasps the essence of new information; masters new technical and business knowledge; recognizes own strengths and weaknesses; pursues self-development; seeks feedback from others and opportunities to master new knowledge.

Creativity and Innovation – Develops new insights into situations and applies innovative solutions to make organizational improvements; creates a work environment that encourages creative thinking and innovation; designs and implements new or cutting-edge programs/processes.

External Awareness - Identifies and keeps up to date on key national and international policies and economic, political, and social trends that affect the organization. Understands near-term and long-range plans and determines how best to be positioned to achieve a competitive business advantage in a global economy.

Flexibility - Is open to change and new information; adapts behavior and work methods in response to new information, changing conditions, or unexpected obstacles. Adjusts rapidly to new situations warranting attention and resolution. Resilience - Deals effectively with pressure; maintains focus and intensity and remains optimistic and persistent, even under adversity. Recovers quickly from setbacks. Effectively balances personal life and work.

Service Motivation - Creates and sustains an organizational culture which encourages others to provide the quality of service essential to high performance. Enables others to acquire the tools and support they need to perform well. Shows a commitment to public service. Influences others toward a spirit of service and meaningful contributions to mission accomplishment.

Strategic Thinking - Formulates effective strategies consistent with the business and competitive strategy of the organization in a global economy. Examines policy issues and strategic planning with a long-term perspective. Determines objectives and sets priorities; anticipates potential threats or opportunities.

Vision - Takes a long-term view and acts as a catalyst for organizational change; builds a shared vision with others. Influences others to translate vision into action.

2.Leading People

Conflict Management - Identifies and takes steps to prevent potential situations that could result in unpleasant  confrontations. Manages and resolves conflicts and disagreements in a positive and constructive manner to minimize negative impact.

Leveraging Diversity - Recruits, develops, and retains a diverse high quality workforce in an equitable manner. Leads and manages an inclusive workplace that maximizes the talents of each person to achieve sound business results. Respects, understands, values and seeks out individual differences to achieve the vision and mission of the organization. Develops and uses measures and rewards to hold self and others accountable for achieving results that embody the principles of diversity.

Integrity/Honesty - Instills mutual trust and confidence; creates a culture that fosters high standards of ethics; behaves in a fair and ethical manner toward others, and demonstrates a sense of corporate responsibility and commitment to public service.

Team Building - Inspires, motivates, and guides others toward goal accomplishments. Consistently develops and sustains cooperative working relationships. Encourages and facilitates cooperation within the organization and with customer groups; fosters commitment, team spirit, pride, trust. Develops leadership in others through coaching, mentoring, rewarding, and guiding employees.

3.Results Driven

Accountability - Assures that effective controls are developed and maintained to ensure the integrity of the organization. Holds self and others accountable for rules and responsibilities. Can be relied upon to ensure that projects within areas of specific responsibility are completed in a timely manner and within budget. Monitors and evaluates plans; focuses on results and measuring attainment of outcomes.

PEOPLE Service - Balancing interests of a variety of clients; readily readjusts priorities to respond to pressing and changing client demands. Anticipates and meets the need of clients; achieves quality end-products; is committed to continuous improvement of services.

Decisiveness -  

Exercises good judgment by making sound and well-informed decisions; perceives the impact and implications of decisions; makes effective and timely decisions, even when data is limited or solutions produce unpleasant consequences; is proactive and achievement oriented.

Entrepreneurship - Identifies opportunities to develop new  services within or outside of the organization. Is willing to take risks; initiates actions that involve a deliberate risk to achieve a recognized benefit or advantage.

Problem Solving - Identifies and analyzes problems; distinguishes between relevant and irrelevant information to make logical decisions; provides solutions to individual and organizational problems.

Technical Credibility - Understands and appropriately applies procedures, requirements, regulations, and policies related to specialized expertise. Is able to make sound hiring and capital resource decisions and to address training and development needs. Understands linkages between administrative competencies and mission needs.

4.Business Acumen

Financial Management - Demonstrates broad understanding of principles of financial management  expertise necessary to ensure appropriate funding levels. Prepares, justifies, and/or administers the budget for the program area; uses cost-benefit thinking to set priorities; monitors expenditures in support of programs and policies. Identifies cost-effective approaches. Manages procurement and contracting.

Human Resources Management - Assesses current and future staffing needs based on organizational goals and budget realities. Using merit principles, ensures staff are appropriately selected, developed, utilized, appraised, and rewarded; takes corrective action.

Technology Management - Uses efficient and cost-effective approaches to integrate technology to Improve program  effectiveness. Develops strategies using new technology to enhance decision making. Understands the impact of technological changes on the organization.

5.Building Coalitions/Communications

Influencing/Negotiating - Persuades others; builds consensus through give and take; gains cooperation from others to obtain information and accomplish goals; facilitates "win-win" situations.

Interpersonal Skills - Considers and responds appropriately to the needs, feelings, and capabilities of different people in different situations; is tactful, compassionate and sensitive, and treats others with respect.

Oral Communication - Makes clear and convincing oral presentations to individuals or groups; listens effectively and clarifies information as needed; facilitates an open exchange of ideas and fosters an atmosphere of open communication.

Partnering - Develops networks and builds alliances, engages in cross-functional activities; collaborates across boundaries, and finds common ground with a widening range of stakeholders. Utilizes contacts to build and strengthen internal support bases.

Political Savvy - Identifies the internal and external politics that impact the work of the organization. Approaches each problem situation with a clear perception of organizational and political reality; recognizes the impact of alternative courses of action.

Written Communication - Expresses facts and ideas in writing in a clear, convincing and organized manner.


4.Suppose the price elasticity of demand for text books is two and the price of the text books is increased by 10% By how much does the quantity demand fall? Inter the results and discuss reasons for the fall in quantity demand? If Ped > 1, then demand responds more than proportionately to a change in price i.e. demand is elastic. For example a 20% increase in the price of a good might lead to a 30% drop in demand. The price elasticity of demand for this price change is –1.5 elasticity of demand

Ped measures the responsiveness of demand for a product following a change in its own price. The formula for calculating the co-efficient of elasticity of demand is:

Percentage change in quantity demanded divided by the percentage change in price

Since changes in price and quantity nearly always move in opposite directions, economists usually do not bother to put in the minus sign. We are concerned with the co-efficient of elasticity of demand.

Understanding values for price elasticity of demand

•   If Ped = 0 then demand is said to be perfectly inelastic. This means that demand does not change at all when the price changes – the demand curve will be vertical •   If Ped is between 0 and 1(i.e. the percentage change in demand from A to B is smaller than the percentage change in price), then demand is inelastic. Producers know that the change in demand will be proportionately smaller than the percentage change in price •   If Ped = 1(i.e. the percentage change in demand is exactly the same as the percentage change in price), then demand is said to unit elastic. A 15% rise in price would lead to a 15% contraction in demand leaving total spending by the same at each price level. •   If Ped > 1, then demand responds more than proportionately to a change in price i.e. demand is elastic. For example a 20% increase in the price of a good might lead to a 30% drop in demand. The price elasticity of demand for this price change is –1.5 =========================================



2==% CHANGE  IN QUANTITY      --------------------------------------      % CHANGE  IN  PRICE

2==% CHANGE  IN QUANTITY          ?      --------------------------------------==_________      % CHANGE  IN  PRICE          10%




What Determines Price Elasticity of Demand?

Demand for rail services

At peak times, the demand for rail transport becomes inelastic – and higher prices are charged by rail companies who can then achieve higher revenues and profits

•   The number of close substitutes for a good / uniqueness of the product – the more close substitutes in the market, the more elastic is the demand for a product because consumers can more easily switch their demand if the price of one product changes relative to others in the market. The huge range of package holiday tours and destinations make this a highly competitive market in terms of pricing – many holiday makers are price sensitive •   The cost of switching between different products – there may be significant transactions costs involved in switching between different goods and services. In this case, demand tends to be relatively inelastic. For example, mobile phone service providers may include penalty clauses in contracts or insist on 12-month contracts being taken out •   The degree of necessity or whether the good is a luxury – goods and services deemed by consumers to be necessities tend to have an inelastic demand whereas luxuries will tend to have a more elastic demand because consumers can make do without luxuries when their budgets are stretched. I.e. in an economic recession we can cut back on discretionary items of spending

•   The % of a consumer’s income allocated to spending on the good – goods and services that take up a high proportion of a household’s income will tend to have a more elastic demand than products where large price changes makes little or no difference to someone’s ability to purchase the product.

•   The time period allowed following a price change – demand tends to be more price elastic, the longer that we allow consumers to respond to a price change by varying their purchasing decisions. In the short run, the demand may be inelastic, because it takes time for consumers both to notice and then to respond to price fluctuations

•   Whether the good is subject to habitual consumption – when this occurs, the consumer becomes much less sensitive to the price of the good in question. Examples such as cigarettes and alcohol and other drugs come into this category

•   Peak and off-peak demand - demand tends to be price inelastic at peak times – a feature that suppliers can take advantage of when setting higher prices. Demand is more elastic at off-peak times, leading to lower prices for consumers. Consider for example the charges made by car rental firms during the course of a week, or the cheaper deals available at hotels at weekends and away from the high-season. Train fares are also higher on Fridays(a peak day for travelling between cities) and also at peak times during the day

•   The breadth of definition of a good or service – if a good is broadly defined, i.e. the demand for petrol or meat, demand is often fairly inelastic. But specific brands of petrol or beef are likely to be more elastic following a price change

Demand curves with different price elasticity of demand

Elasticity of demand and total revenue for a producer The relationship between price elasticity of demand and a firm’s total revenue is a very important one. The diagrams below show demand curves with different price elasticity and the effect of a change in the market price.

When demand is inelastic – a rise in price leads to a rise in total revenue – for example a 20% rise in price might cause demand to contract by only 5%(Ped = -0.25)

When demand is elastic – a fall in price leads to a rise in total revenue - for example a 10% fall in price might cause demand to expand by only 25%(Ped = +2.5)

The table below gives a simple example of the relationships between market prices; quantity demanded and total revenue for a supplier. As price falls, the total revenue initially increases, in our example the maximum revenue occurs at a price of £12 per unit when 520 units are sold giving total revenue of £6240. Price   Quantity   Total Revenue   Marginal Revenue

£ per unit   Units   £s   £s

20   200   4000   

18   280   5040   13

16   360   5760   9

14   440   6160   5

12   520   6240   1

10   600   6000   -3

8   680   5440   -7

6   760   4560   -11

Consider the price elasticity of demand of a price change from £20 per unit to £18 per unit. The % change in demand is 40% following a 10% change in price – giving an elasticity of demand of -4(i.e. highly elastic). In this situation when demand is price elastic, a fall in price leads to higher total consumer spending / producer revenue

Consider a price change further down the estimated demand curve – from £10 per unit to £8 per unit. The % change in demand = 13.3% following a 20% fall in price – giving a co-efficient of elasticity of – 0.665(i.e. inelastic). A fall in price when demand is price inelastic leads to a reduction in total revenue.

Change in the market   What happens to total revenue?

Ped is inelastic and a firm raises its price.    Total revenue increases

Ped is elastic and a firm lowers its price.    Total revenue increases

Ped is elastic and a firm raises price.    Total revenue decreases

Ped is -1.5 and the firm raises price by 4%    Total revenue decreases

Ped is -0.4 and the firm raises price by 30%    Total revenue increases

Ped is -0.2 and the firm lowers price by 20%   Total revenue decreases

Ped is -4.0 and the firm lowers price by 15%    Total revenue increases

Elasticity of demand and indirect taxation

Many products are subject to indirect taxation imposed by the government. Good examples include the excise duty on cigarettes(cigarette taxes in the UK are among the highest in Europe) alcohol and fuels. Here we consider the effects of indirect taxes on a producers costs and the importance of price elasticity of demand in determining the effects of a tax on market price and quantity.

A tax increases the costs of a business causing an inward shift in the supply curve. The vertical distance between the pre-tax and the post-tax supply curve shows the tax per unit. With an indirect tax, the supplier may be able to pass on some or all of this tax onto the consumer through a higher price. This is known as shifting the burden of the tax and the ability of businesses to do this depends on the price elasticity of demand and supply.

Consider the two charts above. In the left hand diagram, the demand curve is drawn as price elastic. The producer must absorb the majority of the tax itself(i.e. accept a lower profit margin on each unit sold). When demand is elastic, the effect of a tax is still to raise the price – but we see a bigger fall in equilibrium quantity. Output has fallen from Q to Q1 due to a contraction in demand. In the right hand diagram, demand is drawn as price inelastic(i.e. Ped
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