Trade is the activities concerned with the buying and selling of goods and services. The objectives of trade is to make the goods available to those persons who need them and are willing to pay for them. Trade is classified into to broad categories:
- Internal trade
- External trade
Aids to Trade:
Generally all goods are not consumed at the same place as they are produced, hence, they need to be moved from the place of production to where they are in demand. This is what we term as transportation. Transportation may be via Land transportation (Road or Rail), Air transport (Airplanes) or Water transport (Boats or Ships).
Usually, good are not sold or consumed immediately after their production and are held in stock till such time they are needed . In such cases special arrangements are needed for storage of goods to prevent damage or loss. Warehousing helps the business firms to overcome the problem of storage and facilitates the availability of goods as and when required! Prices are thereby maintained at reasonable rate through continuous supply of goods.
Business involves various risks. Factory buildings, machinery, furniture, data etc need to be protected against fire, theft, natural calamities and many other threats. Materials and goods, in transit or in stock are subjected to risk of loss or damage. Employees are also required to be protected against the risk of occupational hazards and accidents. Insurance provides financial protection in all such cases. On payment of a nominal premium , the amount of loss or damage and compensation for injury, if any , can be recovered from the insurance agency.
It is one of the most important methods of promoting the sale of products and services, particularly consumer goods (Electronics, automobiles, Soaps etc.). Most of these goods are manufactured and supplied in the market by numerous firms – big and small. It is practically impossible for traders and manufacturers to contact each and every customer. Thus for sales promotion and information about the goods, their pricing, features , quality etc., to reach the potential buyers, advertising is essential!
The communication channel selected for transmitting a message plays a significant role in maintaining the quality of the original message in its passage from the sender to receiver. The sender, given the opportunity to weigh the merits of using an oral or written communication, or a combination of the two, selects the most effective for the situation. Regardless of the communication channel selected, the sender will encounter obstacles. Considering the possible barriers, the sender must choose the channel which he feels will best guarantee transfer of the essence and meaning of his message without misunderstanding or distortion.
- To counteract possible interference in the communication channel, the message should attract attention, contain redundancy, continue repetition, or use a combination of these approaches.
- To attract attention, the message must be different from others competing for the recipient’s time. A short handwritten message instead of the usual typed message is one method that can attract attention.
- To provide redundancy, the message must be rephrased several times (the technique used in newspaper articles), and/or summarized in the final paragraph. The sender should avoid too much redundancy because this tends to clutter the communication channel.
- To provide repetition, the message must be transmitted through more than one channel, as in spoken and written form, or transmitted more than once through the same channel, as in TV advertising.
Now, let’s turn our attention to the basic communication channels within an organization. There are three channels: formal, informal, and unofficial.
1. Formal. The communication within the formal organizational structure that transmits goals, policies, procedures, and directions.
2. Informal. The communication outside the formal organizational structure that fills the organizational gaps, maintains the linkages, and handles the one-time situations.
3. Unofficial. The interpersonal communication within (or among) the social structure of the organization that serves as the vehicle for casual interpersonal exchanges, and transmittal of unofficial communications.
A more detailed examination of each of these communication channels will provide a better understanding of these functions.
- Formal communication – written or oral – follows the chain of command of the formal organization; the communication flows from the manager to his immediate subordinates. Each recipient then re-transmits the message in the selected form to the next lower level of management or to staff members, as appropriate. The message progresses down the chain of command, fanning out along the way, until all who have a need to know are informed.
- Formal communication also flows upward through the organization on the same basis.
- Formal communication normally encompasses the transmittal of goals, policies, instructions, memoranda, and reports; scheduled meetings; and supervisory-subordinate interviews.
No organization operates in a completely formal or structured environment. Communication between operations depicted in an organizational chart do not function as smoothly or as trouble-free as the chart may imply. In most organizations operating effectively, channels of communication have developed outside the hierarchical structure.
- The informal communication process supplements the formal process by filling the gaps and/or omissions. Successful managers encourage informal organizational linkages and, at the same time, recognize that circumvention of established lines of authority and communication is not a good regular practice. When lines of authority have been bypassed, the manager must assume responsibility for informing those normally in the chain of command of the action taken.
- There is a fine line between using informal communications to expedite the work of the organization and the needless bypassing of the chain of command. The expediting process gets the job done, but bypassing the chain of command causes irritation and can lead to hard feelings.
To be effective, the manager must find a way to balance formal and informal communication processes.
Astute program and functional managers recognize that a great deal of communication taking place within their organizations is interpersonal. News of revised policies and procedures, memoranda, and minutes of meetings are subjects of conversation throughout the organization. These subjects often share the floor with discussions of TV shows, sports news, politics, and gossip.
The “grapevine” is a part of the unofficial communication process in any organization. A grapevine arises because of lack of information employees consider important: organizational changes, jobs, or associates. This rumor mill transmits information of highly varying accuracy at a remarkable speed. Rumors tend to fall into three categories: those reflecting anxiety, those involving things hoped for, and those causing divisiveness in the organization. Some rumors fade with the passing of time; others die when certain events occur.
Employees take part in the grapevine process to the extent that they form groups. Any employee not considered a part of some group is apt to be left out of this unofficial communication process.
The grapevine is not necessarily good or bad. It serves a useful function when it acts as a barometer of employees’ feelings and attitudes. Unfortunately, the information traveling along the grapevine tends to become magnified or exaggerated. Employees then become alarmed unnecessarily by what they hear. It is imperative that a manager be continually alert to the circulation of false information. When discovered, positive steps should be taken to provide the correct information immediately.
For manager – employee relations:
Effective communication of information and decision is an essential component for management-employee relations. The manager cannot get the work done from employees unless they are communicated effectively of what he wants to be done? He should also be sure of some basic facts such as how to communicate and what results can be expected from that communication. Most of management problems arise because of lack of effective communication. Chances of misunderstanding and misrepresentation can be minimized with proper communication system.
For motivation and employee morale:
Communication is also a basic tool for motivation, which can improve morale of the employees in an organization. Inappropriate or faulty communication among employees or between manager and his subordinates is the major cause of conflict and low morale at work. Manager should clarify to employees about what is to be done, how well are they doing and what can be done for better performance to improve their motivation. He can prepare a written statement, clearly outlining the relationship between company objectives and personal objectives and integrating the interest of the two.
For increased productivity:
With effective communication, you can maintain a good human relation in the organization and by encouraging ideas or suggestions from employees or workers and implementing them whenever possible, you can also increase production at low cost.
It is through the communication that employees submit their work reports, comments, grievances and suggestions to their seniors or management. Organization should have effective and speedy communication policy and procedures to avoid delays, misunderstandings, confusion or distortions of facts and to establish harmony among all the concerned people and departments.
Communication may be made through oral or written. In oral communication, listeners can make out what speakers is trying to say, but in written communication, text matter in the message is a reflection of your thinking. So, written communication or message should be clear, purposeful and concise with correct words, to avoid any misinterpretation of your message. Written communications provides a permanent record for future use and it also gives an opportunity to employees to put up their comments or suggestions in writing.
So, effective communication is very important for successful working of an organization. Business writing software with grammar checker and text enrichment tool, which enhances a simple sentence into more professional and sophisticated one, can be used for writing effective business communications.
The steps progress logically &should be departed from only to return to a previous step as a means to enhance the relationship & increasing understanding. Skipping steps reduces the chance for collaborative agreement and should be avoided. The six steps are as follows:
The Six Steps of Collaboration
1. Prepare for the Interaction.
2. Initiate the Exchange.
3. Facilitate the Relationship.
4. Understand the Interests.
5. Examine the Solutions.
6. Reach Consensus
The conflict resolution requires great managerial skills. Here we are trying to give a solution to a conflict turning it in a constructive side.
If one party exercises the principles of interaction, listens, and us the six steps of collaborative resolution, that party may be able to end the conflict constructively. At the very least, he or she may be able to prevent the conflict from turning into a fight by choosing an alternative to destructive interaction?”
There is a difference between resolving a conflict and managing conflict. Resolving a conflict ends the dispute by satisfying the interests of both parties. Managing a conflict contains specialized interaction that prevents a dispute from becoming a destructive battle. Managing a conflict attends to the personal issues so as to allow for a constructive relationship, even though the objective issues may not be resolvable. For example, the former Soviet Union and the United States managed their conflict during the Cold War by using a variety of mechanisms. The objective issues in the dispute were not resolved, and neither were the personal issues, which contained significant perceptual differences. However, both sides attended significantly to the relationship to keep the disagreement from turning into a destructive battle.
Our goal in conflict always should be to seek a resolution based on mutual gain. Realistically, however, resolution is not always possible. When this is the case, we must manage the conflict to ensure that the relationship is constructive and that open communication is maintained. We Listen to Conflict to understand the other party and demonstrate the acceptance required to maintain the relationship
1. The Framework for conflict resolution
When conflicts arise, we assess a variety of factors before selecting our approach to the situation. We may choose to compete, or dominate, where we try to impose our will on the other side through physical or psychological means, or we may choose to accommodate, or surrender, and cede victory to the other side.
Likewise, we may decide to withdraw by either doing nothing or refusing to participate in the conflict altogether, or we may collaborate and reach a constructive and mutually acceptable solution. And if none of those approaches proves effective, we might choose third-party intervention, a form of collaboration in which an individual or group external to the conflict intercedes to move both parties toward agreement.
While each of the above orientations represents a way to manage conflict, only two collaboration and third-party intervention-are, by definition, focused on mutual gain and resolution. These two approaches consider the interests of both parties and are most likely to use empathic listening as the primary tool to enhance understanding. The other methods deal unilaterally with the conflict and fail to manage the interdependence of the dispute.
In order to understand the mechanisms behind the four orientations to conflict, it is useful to examine how these orientations can be applied. The study of negotiation, one form of conflict resolution, provides two opposite approaches for dealing with disputes. Most often, we think of negotiation in the formal sense seen in the business or diplomatic environment, where two or more parties bargain to reach agreement. However, two types of negotiation, competitive bargaining and collaboration, also provide good models for understanding different ways of resolving our conflicts.
2. Competitive Bargaining
When most people think of negotiation, they think of competitive bargaining. In this type of negotiation, a seller asks for more than he expects and a buyer offers less than she is willing to pay. Then, through a series of concessions, the two sides meet somewhere in the middle where each side is reasonably satisfied. This form of negotiation also is frequently called distributive bargaining or concession-convergence. It maintains a competitive, win-lose orientation, with the goals of one party and the attainment of those goals in direct conflict with the goals of the other party. In other words, competitive bargaining is a positional conflict in which “winning” is determined by how much of the original position was obtained. The parties believe that resources are fixed and limited, and that they must battle to maximize their share of the wealth.
In competitive bargaining, each party uses strategy, tactics, and tricks to achieve its objective, and whether one of both parties will achieve their goal depends upon their ability to “play the game.” Each party seeks to extract information from the other party that will help in identifying appropriate counteroffers, while revealing as little accurate information as possible about its own preferences. The final agreement often depends on the willingness of one party to stake out a tough and extreme position that causes the other party to make concessions. Labor management disputes and international negotiations often use this model of conflict resolution.
The competitive bargaining process is unappealing to many of us and often produces unwise agreements. Some of us simply do not have the skills or the temperament to play the game. We see the process as being unnecessary tough, deceitful, or manipulative. Perceptions of power & control also are a significant factor in the effectiveness of competitive bargaining. If you do not have the power in the relationship, or if you perceive that you do not, you are more likely to obtain an unsatisfactory resolution. Your lack of power will prevent you from using authority or aggression to resolve, or win, the dispute. In competitive bargaining this form of aggression is often played as a trump card to achieve the win for the party who is able to acquire the most power.
The positional approach of competitive bargaining also causes unnecessary issue rigidity. Our egos become so invested in our positions that we are prevented from accepting alternatives. Therefore, even if a better solution is created, it is unlikely that we will back down. Another problem with competitive bargaining is that it often ignores the personal issues that affect the resolution process. In competitive bargaining, we care about the other party’s needs only as a means to identify an opportunity for trade. For example, we will trade one day at the beach (the other party’s need) for one day visiting museums (our need). But even if the trade satisfies one need, competitive bargaining still requires some amount of persuasion, deception, and manipulation if we are going to resolve all of the objective issues in a satisfactory manner. Over time, this usually breaks down the trust between the parties and places a significant strain on the relationship.
Competitive bargaining tends not to resolve conflict. It merely manages it for his short term. It is based on an attitude of limits and is fundamentally a process of reaching a settlement within a bargaining range. Both parties know that they are going to have to settle for something less than they would prefer, but they each hope that the deal will be better than their bottom line. Parties who do not think they got the best deal possible or who believe that they “lost” typically try to find ways to recoup their losses later. Even if one party believes that it “won,” it still knows that it left something on the bargaining table and will try to acquire it in future negotiations. Labor and management, for example, may reach an agreement, but it is not long before they are back at the bargaining table, renegotiating issues that one or both sides thought had been settled previously.
There is an alternative that breaks the destructive cycle of competitive bargaining. It builds relationships and opens the door to constructive resolution. The alternative not only helps you correctly identify the objective issues, but also manages, if not resolves, the personal issues in the dispute. It is based on principles of interaction that endeavor to understand all of the underlying interests that must be satisfied to reach sustained agreement.
The collaborative approach to conflict resolution, also called mutual gains or integrative bargaining, argues for the possibility of solutions that all sides find acceptable. It embodies the notion of “win-win,” a core component of our principle of mutual gain. Collaboration is about identifying a common, shared, or joint goal and developing a process to achieve it. It is a process in which both parties exchange information openly, defines their common problems, and creates options to solve these problems. And while the collaborative process cannot guarantee that agreement will always be reached, more often than not, the analysis of interests, needs, and desires helps the resolution process and ultimate agreement.
There are many reasons why people don’t pursue this model of conflict resolution. First, people in conflict often do not recognize the potential for collaboration. This often is the result of an attitude of limits, either-or thinking, or a fixed-pie mentality. When parties remain positional or see only a limited number of solutions that will satisfy their interests, they do not use their creativity to solve the problem.
The history of the relationship between the two parties also can prevent collaboration. Over time, destructive conflict can build resentment, if not contempt. And, as John Gottman notes in Why Marriages Succeed or Fail (1994), contempt breeds the intent to “insult and psychologically abuse” the other party. This is not always major abuse; it may be small, nit-picking criticisms that add up over time. The personal issues become so overwhelming that the objective issues of the conflict cannot be examined, and parties often cannot be in the same room together, let alone identify ways of resolving the conflict.
Another barrier to collaboration relates to the complexity of most conflicts. Some elements are conducive to collaboration, and some elements require competitive bargaining. Each mode of conflict resolution requires different skill sets, and you can send mixed messages unless you handle them carefully.
Finally, people often have a lack of faith in their problem-solving ability. Parties that enter the resolution process believing that they can work together usually find a way to collaborate. Those who do not have a solid self-concept will be less willing to follow the Principles of interaction& use listening to seek collaborative resolution.
There are many obstacles that make collaboration more difficult. Given our inherent competitiveness and the various factors that surround many of our disputes, it is a wonder that constructive collaboration occurs at all. However, it does occur if one or both of the parties in conflict outcomes, the following conditions must be established at some point during the process:
- Face-to-face interaction: The Listening to Conflict approach to dispute resolution requires developing an understanding of the total message another party is trying to communicate. The most effective way to accomplish this is through face-to-face interaction, where we can see the nonverbal expressions that give us clues to underlying emotional needs.
- High acquaintance potential: Without the ability to accept and have positive regard for the other party, collaboration will not be possible. We have to like the person as a person and be willing to establish a relationship that goes beyond the issues of the dispute. This will allow the personal issues to be dealt with separately from the objective issues in the particular conflict so that we can explore options for mutual gain.
- Constituency support: The parties in conflict will not be able to collaborate if outside constituencies try to force competitive and positional norms. Third parties must be supportive of the collaborative process or risk nullifying the positive steps taken toward collaboration by reneging on constructive agreements established between the two interacting parties. We must prevent or resolve any conflict with our constituencies prior to interacting with the other party in the primary dispute.
- Cooperative tasks: Acceptance goes a long way toward diffusing head-to-head competition in conflict, but unless a joint or mutual task is established, there will be no need to collaborate. We at least must frame the conflict as a problem to be solved together in order to establish a collaborative environment.
- Shared exploration: Sharing in the process of understanding the problem and creating solutions keeps both parties involved. This saves one party from the trap of inventing all of the solutions, and the inevitable dependence and resentment that accompanies that responsibility. When both parties are involved, there will be stronger commitment to the final solutions.
- No fixed agenda: An agenda creates a positional interaction that is based on satisfying the needs of one party without understanding how the interests of both are related. Having an agenda sends the message that you are not interested in the other party’s issues and needs issues and needs. The only agenda should be to follow the steps of collaboration and work toward mutual gain.
Adherence to collaborative process steps. Successful resolution requires that we follow the steps of collaboration. If we skip a step, we risk sending the other party mixed signals that will; propel that party toward a defensive, competitive mode.
Effective managers are tasked with making decisions ranging from large to small on a daily basis. An effective organization employs managers who are problem-solvers and who can make decisions constantly.
It is critical to first prioritize issues and problems based on the issues potential effect on the organization. Those that stand to have the greatest impact should be dealt with first, and all problems need to be addressed in a systematic way prior to a decision being made.
Because a first impression is just that, and does not necessarily reflect the entire situation, a manager must avoid jumping to conclusions. Collecting information from more than one source to avoid bias, and completely assessing all pertinent (and verifiable) information prior to rendering a decision is strongly recommended.
Collecting information in order to obtain a complete understanding of the issue is only the first step, however. Once the information is available, then it is wise to brainstorm different solutions and possible options in order to get more than one perspective. Such options can start out as wide-ranging, and then can be narrowed down to fit the scope of the problem.
Having identified a set of options and solutions, feedback and suggestions on them, along with alternatives, should be sought from consultations with others. For the most part, group decisions (particularly where the group contains people who the end decision will affect) are preferable to those made by individuals as a pool of knowledge, skills and experience can be drawn upon.
Tools, techniques and analysis methods (such as: Pareto Analysis; Paired Comparison Analysis; Grid Analysis; PMI; Six Thinking Hats; Starbursting; Decision Trees) can then be applied. These are not conclusive, but they do offer an objective and somewhat scientific approach to decision making. Theyre particularly useful when the decision-makers judgment is liable to be clouded by being too closely involved with the issue at hand.
Then comes the time to weigh the pros and cons of a decision. Which option or solution gives most to the organization whilst taking least from it? Few decisions will be as clear cut to hold no drawbacks. Negatives are acceptable though, so long as the positives sufficiently outweigh them.
The ability to take timely, clear and firm decisions is an essential quality of leadership, but the type of decision needed, varies according to the circumstances. Learning to recognize the implications of taking each type of different decisions leads to error minimization.
1. Being Positive
Taking decisive action does not mean making decisions on the spur of the moment. Although, it may be necessary in emergencies and as also occasionally desirable for other reasons. A true leader approaches the decisions confidently, being aware of consequences and fully in command of the entire decision–making process.
2. Making Fast Decisions
It is important to be able to assess whether a decision needs to be made quickly or it can wait. Good decision-makers often do make instant decisions – but they then assess the long-term implications.
3. Identifying issues
It is crucial to diagnose problems correctly. Before any decision is made identifying and defining the issue removes the criticality. This also means deciding who else needs to be involved in the issue, and analyzing the implication of their involvement.
4. Prioritizing factors
While making a decision, a manager needs to prioritize on important factors. Some factors in a process are more important than others. The use of Pareto’s rule of Vital Few and Trivial may help in setting up of the priorities. Giving every factor affecting a decision equal weight makes sense only if every factor is equally important. The Pareto rule concentrates on the significant 20 percent and gives the less important 80 percent lower priority.
5. Using advisers
It is advisable to involve as many people as are needed in making a decision. In making collective decisions, specific expertise as well as experience of a person both can be used simultaneously. The decision-maker, having weighed the advice of experts and experienced hands, must then use authority to ensure that the final decision is seen through.
6. Whetting decisions
If one does not have the full autonomy to proceed, it is advisable to consult the relevant authority – not just for the final go, but also for the input. It is always in the interest of the subordinate to have the plans whetted by a senior colleague whose judgment is trusted and who is experienced. Even if there is no need to get the decision sanctioned, the top people are likely to lend their cooperation well if they have been kept fully informed all the way long, of the decision path.
These are type of decisions, which if made once cannot be undone. Whatever is decided would then have its repercussions for a long time to come. It commits one irrevocably when there is no other satisfactory option to the chosen course. A manager should never use it as an all-or-nothing but instant escape from general indecision.
These are the decisions that can be changed completely, either before, during or after the agreement of taking action. Such types of decisions allows one to acknowledge a mistake early in the process rather than perpetuate it. It can be effectively used for changing circumstances where reversal is necessary.
These types of decisions are not final until the first results appear and prove themselves to be satisfactory. It requires positive feedback before one can decide on a course of action. It is useful and effective when correct move is unclear but there is a general clarity regarding the direction of action.
4. Trial and Error
In this type of decision making, knowledge is derived out of past mistakes. A certain course of action is selected and is tried out, if the results are positive, the action is carried further, if the results appear negative, another course is adopted. And so on and so forth a trial is made and an error is encountered. Till the right combination takes place, this situation continues. It allows the manager to adopt and adjust plans continuously before the full and final commitment. It uses both, the positive and negative feedback before selecting one particular course of action.
5. Made in stages
Here, the decisions are made in steps until the whole action is completed. It allows close monitoring of risks as one accumulates the evidences from out-comes and obstacles at every stage. It permits feedback and further discussion before the next stage of the decision is made.
It allows time for contingencies and problems that may crop up later at the time of implementation. The decision-makers hedge their best of efforts to adopt the right course. It helps to limit the risks that are inherent to decision-making. Although this may also limit the final gains, it allows one to scale down those projects which look too risky in the first instance.
Such type of decisions can be altered if certain foreseen circumstances arise. It is an ‘either / or’ kind of decision with all options kept open. It prepares one to react if the competition makes a new move or if the game plan changes radically. It enables one to react quickly to the ever changing circumstances of competitive markets.
Such decisions are put on hold till the decision–makers feels that the time is right. A go-ahead is given only when required elements are in place. It prevents one from making a decision at the wrong time or before all the facts are known. It may, at times result into forgoing of opportunities in the market that require prompt action.