Richard's life&thought

    In these two days, I had a training about the improvement of the administration power. The time of two days’ training is too short for mastering how to manage employees and how to become a good administrator. But I knew about some theories about administration.

    1. In the past, people usually like to study real management cases, which is called case study. But now, people point out we should become simulation which is participant-centered.

    2. The four elements of the organization include goal, members, structure and value. The best function of the organization is that having reduced internal bargaining cost and improved external bargaining cost. So, flat management mode should make an enterprise’s internal border bargaining cost weak. The second effect of the organization is depersonalized, which means make people become members in the organization instead of in the society.

    3. The development of the administration science come through three phases, which is classical administration, deed administration and contingent administration. Classical administration seeks efficiency. Deed administration seeks humanity. Contingent administration seeks both efficiency and humanity, which is determined by some parameters.

    4. Clear goal will stimulate employees’ enthusiasm. And not only this, a good administrator should wake up employees’ motivation of achievement to lead them keeping on seeking different goals.

    5. There are three study theories about administrators’ style. In the past people like to study great or successful persons’ common characteristics. And then people turn to study the administrators’ trend about task and humanity. And then, people think administrators should take different means according to many parameters, such as employees’ ability and enthusiasm, enterprise’s development phases. But this kind theory is too complicated to be used effectively.

    6. Tasks conflict is connected with inhuman relations conflict. If conflicts don’t be transacted well, they will change each other. The good teams don’t think conflicts are not good things. But on the contrary, bad teams always avoid conflicts.  Abilene paradox is the famous case to illustrate this theory.

    7. For avoiding mass thought, an administrator should not indicate his standpoint as the first person.

    8. A good administrator should be a good listener.

    9. A good administrator should not take sides any employee.

    WAL-MART EFFECT is appraised as the best business book in 2006 by FT (Financial Times). This book disclosed the low-down of low price everyday in WAL-MART stores and analyzed WAL-MART stores are how to affect American, and even more wide, the world’s economy.

    WAL-MART was founded by Sam Walton. And through about 40 years’ development, WAL-MART has become the biggest chain retailer in the world. Nowadays, WAL-MART has opened more than 7,000 stores and owned more than 1,900,000 employees in 14 countries. WAL-MART entered China in 1996, and has opened more than 104 stores in 55 cities. Although I often shop in WAL-MART, I don’t think the commodity sold by WAL-MART are cheaper than other supermarkets, such as Carrefour, Jusco, Rainbow, Renrenle, etc. But  after I read this book, I was convulsed by the power of WAL-MART effect and understand many things.

    1. The first step to success is greatly cutting down cost. Sam Walton has a well-known saying that is I maybe not the best chop price person because I can not cut down the last $1. WAL-MART asks its all suppliers must reduce price to enhance itself competition, and even more exaggerated, reducing 5% price per year has been a fixed rule of WAL-MART. WAL-MART not only greatly reduces merchandize’ cost, but also greatly depresses human resource cost. WAL-MART usually forces its employees work late without any allowance, and even more egregious, WAL-MART sometimes locks its employees in the stores to fore them work. And for making the best of the employees, WAL-MART asks its cashiers help salespeople to do something when they are free. And WAL-MART lets its suppliers to many sell service and analysis work which should belong to WAL-MART.

    2. Innovation and challenge is a prerequisite to success. WAL-MART is brave to challenge any competitor. And for success, it always keeps on innovating. For example, WAL-MART sells not only commodities, but also medicine and car service. For improve efficiency of logistics, WAL-MART usually change goods package amount and distribution forms. For improve sold effect, WAL-MART usually adjust all kinds of goods’ amount and position on the shelves, and it also adjusts shelves’ position in the sell field. For example, it designed a kind of shelf which can be placed directly on the aisle of sell field by the crane, without traditional transferring goods by salesmen. WAL-MART create a cooperation management mode, which is called WAL-MART unit. In this mode, every supplier dispatches their employees to WAL-MART working place and work with WAL-MART employees. Besides all of these, WAL-MART owns a famous huge strong computer network, which can supervise any goods’ transporting process and sell amount. Through the network, WAL-MART share sell data with its suppliers. And through analyzing these data, WAL-MART can master market’s pulse.

    3. WAL-MART is also harming American and world’s people while it takes benefit for people. WAL-MART’s slogan is Save money and Life better. And WAL-MART always publicizes that it provided many job opportunities for people and alleviated the society unemployment. When we visit the website http://www.walmart.com/ , we can see a jumping number which describes the amount of money WAL-MART has saved American families since January 1, 2008. Is that true? Nobody knows except WAL-MART, because WAL-MART has exited all kinds of economic statistic since July, 2001. But we know two things. One thing is WAL-MART provides a lot of job opportunities on the surface, but it also makes many stores bankrupt and leads to those employees lost their original jobs. So the unemployment of society don’t decrease, and maybe even worse. The second things is unreasonable low price will lead to bad quality. The strategy by price driving sell will force suppliers to save materials and cut down cost, which will no doubt cause quality problem and damage the suppliers’ brand and report. Of course, finally, that will harm the consumers.

    4. I understand a reason why some countries dislike China. Although many years ago, I have known that China has become the world’s factories because of low worker salary, I don’t understand why some advanced countries people dislike Chinese. Now, I understand. Economy integration just like making all of the world’s rivers connective. Capital flow to the countries which have cheap labour force from advanced countries just like water flow to the lower rivers from higher rivers. Facing water becoming less and less, would people living near higher rivers like people living near lower rivers? But is that the fault of the people living near lower rivers?  In one corner of the world, Chinese workers work in the dirty disorderly working places and have to work day and night just for earning pitiful salary, and in the other corner of the world, the advanced countries’ workers have to accept reduced salary and even loosing their jobs. The most influential magazine Fortune has recently published the 500 strongest companies in the world in 2007. WAL-MART got the champion by earning more than 351.139 billion dollars operating income. What has this explained? Now that WAL-MART always says the reason that it cuts down suppliers’ price and pays little salary to its employees is for selling the cheapest goods to customers, why we can’t feel the big price difference between it and the other supermarkets? Why it can earn a lot of money which is even more than some monopolization enterprises such as petroleum enterprises and telecom enterprises?

    But the book WAL-MART Effect don’t explain WAL-MART is how to become a retailer magnate from a small goods store, why the suppliers is so scared about WAL-MART, WAL-MART is how to manage and inspirit its employees, and so on. Yesterday, I found the autobiography written by WAL-MART founder Sam Walton in a book store and prepare to read it. I am very curious and eager to know the answers about questions mentioned above. Maybe, I have a chance to write my sentiment about that book in my later blog article.

    In the past few days, I have read a book which is talking about how to improve the store’s performance for a manager.

    I summarized the contents of the book as followed 4 points, which are how to develop the customers, how to design the advertisements, how to do sales promotion and how to assess the store’s performance.

    Firstly, how to develop the customers. There are 3 methods to develop the customers, which are distributing leaflets, introducing new customers and allying with other stores. Distributing leaflets is the most popular method, especially for those new small-scale stores. We can easily meet some people who stand around the crossroads or places passed by many people. This method has the merits of spreading fast and cost low. Of cause, locking the target customers is the key. As the most important thing, the design of the leaflet must be simple and clear. And to compare with the first method, the follow two methods can’t be applied so easily. Introducing new customers depends on attraction of the award in return to the old customers by the store. And not only this, it will embarrass the manager if he doesn’t give some discount to the new customers introduced by his friends or relatives. And now, for protecting the personal private information, people don’t like to disclose the friends’ information. Allying with other stores needs the manager to take a lot of time and idea to find the appropriate stores and appropriate partners. Besides this, they must think out a whole operation mechanism. For keeping and developing customers, actualizing leaguer plan is a good choice. Through discount, cumulating points or special services, the store can maintain and increase customers.

    Secondly, how to design the advertisements. For the store’s sale place, there are mainly two kinds of ads, which are POP ads and shopwindow ads. POP is the abbreviation of the point of purchase advertising. And it has many forms, such as by printing, by handcraft and by turning over cards  having been made. The key point for the POP ads is words and color. The manager must keep the ads simple, beautiful and novel. It must have bright theme and can express the merchandises’ brand and characteristic. Besides all of these, the manager must regard the position of the POP ads placed. Comparing with the POP ads, shopwindow ads need more professional knowledge. The whole design need integrate merchandizes, backdrop, properties, lamplight, etc.

    Thirdly, how to do sales promotions. Nowadays, there are three kinds of sales promotion ways, which are discount promotion, largess promotion and voucher promotion. Although the customers like discount promotion, a great discount will make them be doubtful of the quality of the merchandize. And besides this, discount promotion is going to harm the brand of the merchandize. So it is necessary to avoid frequent discount promotion and explain clearly the reason of discount promotion. For largess promotion, The good and banausic largess is the key. When the manager choose largess, he must regard its cost, value, appearance, using frequency and relationship with the merchandize. Doing voucher promotion must pay attention to and define the voucher’s using condition.

    Finally, how to assess the store’s performance. For assessing store’s performance, getting merchandizes’ information is the first step. POS system is the abbreviation of point of sales system, which can manage the deal of the merchandizes. And through deal information, POS system can analyze the merchandizes’ sales status and customers’ information. The manager must master clearly the gross profit, net profit and yield. Besides the POS system’s help, the manager needs arrange underlings to research the competitors’ information, which include location, acreage, circumstance, merchandizes’ kinds and qualities, price, turnover, sales service and efficiency, etc. And so, with the competitors’ information and his own operation information, the manager can make the goal and the plan of the store.