• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Business
  • Commerce
  • Management
  • Insurance
  • Banking Finance
  • Marketing & Advertising
  • Tech

Business Finance Articles

Your First Financial Choice....

  • Education
  • Career
  • Investment & Money
  • Accounting & Taxation
  • Transportation & Logistics
  • Industries

Methew Harbor

Signs of a Bad Manager

Last Updated on February 2, 2023 By Methew Harbor Leave a Comment

It’s no surprise that a study comprising LinkedIn participants showed that 88% of them were happy when their boss was absent from work. A bad manager is everyone’s nightmare! We often think that getting into a multinational is the most important goal in one’s professional life. But, working in an esteemed organization with a bad manager is worse.

You do not need a magnifying glass to spot a bad manager in your organization. You can easily point out the signs of a bad manager. Here are a few to help you understand if you are working under a toxic boss.

Over-Work is Routine

Good bosses realize the importance of work-life balance in their employee’s life. Thus, if your boss keeps asking you to stay for a longer time in the office or adds more workload without considering your health they are not a good boss.

Sometimes, a project may require long sittings. However, it must not be a norm in the workplace.

Regular Outbursts

One of the most common traits of a stressful boss is their continuous yelling. Some managers believe that shouting at their employees will gain more respect. On the contrary, it shows that they want to exhibit their power. Yelling in the workplace is a big no.

Does Not Give You Credit

You worked day and night for a project your boss had to present to the CEO. But, he did not credit you for your research and composition.

Haven’t we all experienced it?

It is common for toxic bosses not to credit their teammates. They believe that the employees are working for them and there is no need to give credit. Although, considerate leaders make sure that they provide credit to their team where due.

No Empowerment

Many organizations play a significant role in grooming their employees to excel in their professional life. One of them includes empowering them. Bad managers usually do not want to distribute power as they fear being taken over. While your boss may think otherwise, empowering talented individuals increases growth rates and revenue.

Does Not Support You

If you have not had a great boss, you may not relate. But, let us tell you that supportive bosses make sure to be your best advocate. They understand the strengths and weaknesses of their team and defend them in front of other managers. They do not let others degrade you and emphasize your strong points. Unfortunately, bad bosses with a coercive mindset often lack advocacy. They think it will reduce their authority over the employees.

Micromanagement

There is nothing worse than having to report every moment to your boss. We all expect our managers to trust us a little, right?

If your boss wants to know everything you are doing in the project, they might not have good intentions. Sometimes it is habitual, while managers often want to take credit for the work done. Linked In reports show that 79% of employees have been micromanaged at least once in their careers. It reduces innovation and interest in giving the best.

No Feedback

While bad managers may believe in micromanagement, they often forget about the feedback. They fail to conduct one-on-one meetings for their team. How does one improve their performance without constructive feedback from the leaders?

Favoritism

Favoritism is a common issue in workplaces where bosses like to divide and rule. Managers may choose a few favorites in the office and assign important responsibilities to them only. They justify this irrational delegation of tasks by overstating their favorite’s abilities. This behavior in an office is quite unprofessional and must be conveyed to higher management or the HR department.

Innovation is Not Welcome

How many times has your boss rejected an efficient working strategy? Uncountable times? Don’t worry. You are not alone in this boat.

Autocratic leaders with an authoritative mindset are often against innovation in functioning. They prefer giving strict instructions to comply with. An unappreciative manager neither encourages your ideas nor conveys them to higher management.

Lack of Clarity

As opposed to authoritative leaders, some bosses are not interested in the company’s benefit. They do not clarify the objective, mission, strategy, or expected outcomes. They might not give clear instructions about the task or change their mind too often. It is one of the most alarming signs of a bad manager. Influential leaders always have a game plan and clear goals communicated to their team.

Insulting Employees

Man pointing as blaming

Insulting someone publicly is the worst thing to do. Yet, some bosses do it intentionally. It could be due to favoritism in the department or a minor mistake. Many bosses exhibit their authority by publicly criticizing an employee over a slight error or miscommunication. Run away from such a boss immediately.

Under Delivering

A good boss always calculates and promises only what is possible. Alternatively, toxic managers do not consider the possibilities beforehand and usually overpromise. It leads to mistrust and an inability to deliver work on time.

Demotivating

It is a given with bad managers that they fail to motivate their employees. Laissez-faire leaders encourage their teams to innovate and give their best. However, self-centered bosses do not care about the morale of their employees and want to use them as much as possible. This work environment can be mentally and physically draining for the employees.

Lacks Ownership

Lack of ownership is among the most prominent signs of a bad leader. Typically such bosses hold the team for blunders regardless of their mistakes. While they fail to give credit for success and offer feedback, they also lack ownership of mistakes.

Ungrateful

If your boss says Thank you to you for staying extra hours, you are lucky. And your boss is definitely not a bad manager. However, it’s a rare sight.

Most people encounter toxic managers in their careers who are never thankful to their employees. They do not care if you work from home, stay extra hours in the office, or sacrifice your weekend. They believe that they are entitled to these services because they are an employee.

Does Not Say “No”

These managers are difficult to classify as bad or good managers because they are good for some and bad for others. For example, your boss’s boss asks for a presentation due next week. He might know that it is impossible to give it to him by the deadline but commits anyhow. Overpromising and the inability to say “no” increase your workload. Such a boss can be huge trouble sometimes.

Gossips

While leaders usually stay out of politics within the department, some enjoy the gossip. Your toxic manager may indulge in office gossip, leading to miscommunication and trust issues. It is preferable to avoid giving personal information to employers who do not respect your privacy.

Over-Dependent

Managers who lack clarity are more liable to over-dependence on their employees. They might look to their team to perform the tasks independently without proper guidance. The lack of direction in the team may cause distress and failure to meet deadlines.

Fails to Resolve Conflict

Affiliate leaders are well-known for their ability to resolve conflict and promote harmony within the company. But, your manager might not have the same mindset and fail to resolve conflict among team members. Prolonged resentment within the team may lead to issues in work processes.

Poor Listening

A bad manager is not only bad at resolving conflicts but also does not listen to their employee’s concerns. The inability to listen to and understand the team’s problems discourages the team from putting their input toward the functioning.

No Team Building

The lack of listening, miscommunication, and favoritism in the organization causes problems among the workers. They do not appreciate each other’s roles and try to be among their boss’s favorites. This tug-of-war between employees disturbs the working atmosphere and lacks teamwork.

Unprofessional Behavior 

A less-talked-about crucial element of having a bad boss is unprofessional and unethical behavior. Some bosses are evil beyond the functional issues and try to hit on or date their staff. They do not only ask to date but also threaten job security and make false allegations when refused. It’s a sad aspect of working under a toxic boss.

High Turnover Rate

Before you join a company, you must check the turnover rate. The retention or leaving of employees speaks a lot about the management and the bosses. A high turnover rate within the department is a critical sign of a bad manager. Supportive managers usually make an effort to keep their employees instead of letting them go immediately.

How to Survive a Bad Manager?

Once you know the signs of a bad manager, you can beat them and survive in the environment using a few techniques. Some of the best ways to survive a bad manager include ignoring them if they say anything bad, acting like you do not understand what they mean, mentioning their mistakes to them, and improving your skills. Improving your skills will allow you to look for better jobs and get rid of this toxic atmosphere.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Management

Advantages of Affiliate Leadership Style

Last Updated on February 2, 2023 By Methew Harbor Leave a Comment

The most suitable word to describe an affiliate leadership style is “harmonious.” Unlike autocratic leadership, affiliate leadership does not focus on a rigid working style. Affiliate leaders work to keep their team gelled. They have excellent communication skills that enable them to resolve conflicts within the company. Affiliate leaders carry optimistic weather within them and give positive energy to the people around them. Let’s tell you further about this style and the advantages of affiliate leadership.

What is Affiliate Leadership

The Merriam-Webster Dictionary defines affiliative as “Relating to the formation of social and emotional bonds with others or the desire to create such bonds.”

Affiliate leadership is one of the six leadership styles by Goleman. It is a less stern type of leadership where the focus lies on the people and their relationships within the workplace. The leaders ensure harmony and positive relations to improve job satisfaction among employees. Following this type of leadership model allows the managers to understand the concerns of the employees about each other and the organizational structure. The leaders resolve conflicts between the employees where needed. They prove to be immensely useful during a crisis when the employees look for a confidant.

Advantages of Affiliate Leadership Style

Creates Harmony

The main advantage of the affiliate leadership style is that it creates harmony among employees of one or different departments. It enables them to communicate easily and understand underlying issues. Effective communication and a sense of inclusiveness help build close-knit teams. It helps improve job satisfaction and reduces the employee turnover rate.

Improved Morale and Trust

Affiliate leaders motivate employees and build trust in them. They enable the workers to use their abilities to their best by allowing innovation and creativity. Transparency among the employees contributes significantly to morale building. Lack of innovation and decision-making in different organizational systems may cause disappointment.

Reduces Workplace Stress

An affiliate leadership structure does not push the employees to follow a specific set of rules. When the employees are under no stress working per strict instructions, they perform better. They intake the positivity around them and resonate with the same energy. The exchange of positive energy in a workplace just makes everything better instantly.

Employees Feel Valued

Employees in an affiliate leadership system feel valued because of the appreciation from their employers. The managers trust their workers and give them due appreciation for their performance. The trust and encouragement from the leader boost their confidence. They strive to work better to make their leader happy as it makes them satisfied too.

Better Emotional Recovery

Sometimes businesses face crises, and that affects everyone. However, when your employees play an active role in sharing ideas and making decisions, they feel responsible for it. The knitting and gelling between the teammates come into play in these situations. They realize the problems the company is facing and own them. An affiliate leader informs them that the team can get over it together. They do not blame individuals. Instead, they support their team and push them to move forward.

Characteristics of Affiliate Leadership

Affiliate leaders also have specific characteristics that distinguish them from other leadership styles. While laissez-faire also offers a rather informal leadership system, they do not primarily focus on harmony and conflict resolution. Affiliate leadership focuses on better communication and relations in the company. Other characteristics of affiliate leadership include

Focuses on People

Affiliate leaders make their employees a priority in the system. They understand and value the emotions and feelings of individuals and teams. Focusing more on the people tells them that they are important to the company and work more efficiently. As an affiliate leader, you may also remember the birthdays of your workers and ask about their families in case of crisis. Many leaders prefer team dinners and lunches to celebrate milestones with their employees. Focusing on people is the fundamental characteristic of the affiliate leadership style.

Flexibility

Many employees do not like coercive or authoritative leadership styles because they do not offer flexibility. Alternatively, the affiliate leadership style focuses on flexibility to ensure harmony in the company. This kind of leadership has a high level of trust, resulting in better flexibility within the organization. Affiliate leaders do not hesitate to change or bend the rules a little for the employees. Their goal is not to bind the employees to particular guidelines but to allow freedom and innovation.

Communication

No affiliate leader can be successful without effective communication skills. When you are responsible for resolving content and promoting harmony, you must try to communicate with both parties. Any miscommunication can wipe away all your efforts and give rise to further issues. Building bonds also improve communication within the department and with others.

business meeting

Strong Moral Values

Strong moral values are an essential trait of a good human, but they are also critical for affiliate leaders. An affiliate leader must have strong moral values to differentiate the good from the bad conduct in the company. They have to make sure that unethical behavior is discouraged in the beginning to avoid complications. The affiliate leadership style focuses highly on empathy and understanding. As a leader, you must be able to open up to your employees in a friendly manner, so they confide in you for their problems.

Continuous Feedback

If you wonder what makes an affiliate leader successful, providing feedback to your employees matters significantly. This exhibits your knowledge and interest in the employee’s behavior and progress. Offering positive criticism and appreciation to the employees also promotes cooperative behavior.

The Bottom Line

Affiliate leaders are among the most liked managers in an organization. They work to knit the team together by resolving conflicts and improving communication. One of the most fundamental advantages of the affiliate leadership style is a morale and confidence boost in the employees. Affiliated leadership managers possess strong moral values to sort the issues adequately. This leadership style focuses on people and makes them feel valued. Appreciated employees give their best and understand the position of their managers as well.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Management

Advantages of Nonbranded Products

Last Updated on January 30, 2023 By Methew Harbor Leave a Comment

With changing economic dynamics, the purchasing power of people is also changing. Some people can afford better products, while others have been hit badly by inflation. The difference between the purchasing power of different socioeconomic classes also depicts the kinds of products they purchase. Mostly, the rich opt for branded products. On the other hand, those struggling with their finances prefer non-branded products.

Yet, nonbranded products have multiple benefits. Let’s tell you everything about nonbranded products, including their advantages.

What are Nonbranded Products?

Nonbranded products are those which do not have a particular brand name. They are typically sold without a brand name and logo. The products might have a generic or store name or sell by the item’s name. For example, if you buy frozen vegetables from a store’s freezer with the store’s name or a local vendor, they are nonbranded. On the other hand, if you buy Birds Eye frozen vegetables, they are branded. Nonbranded products are more economical compared to branded ones. It is so because they are usually locally produced and the transport and material costs are reduced.

People with higher affordability prefer buying branded products. It is a common belief that branded products give better quality leading to a high price. However, it may not be entirely true. Branded products may not be high-quality all the time. Sometimes the price is attributed to the brand’s popularity, not quality. You may find good-quality products locally (nonbranded) at a low price.

Advantages of Nonbranded Products

Though many people think that nonbranded products are low in quality, they are not always. For example, a local seller making and selling chips on the roadside will have a lesser price compared to branded chips. If you wonder why? Because the transport, electricity, and labor charges are not added. Nonbranded products have several other advantages as well. Some of them are:

Low Price

What’s better than getting Good-Quality Products at a Low Price?

Generic or nonbranded products usually have a low cost due to the above-mentioned reasons. The nonbranded products are produced by the cottage and small-scale industries. They do not require a lot of energy to power a huge manufacturing plant or hundreds of workers to operate them. Most of these products are also sold locally, reducing the cost of transport. Eventually, you receive nonbranded products at a low price.

Local Produce

The locals produce these items on a small scale. They are usually produced and sold in the same or neighboring region. Buying nonbranded products supports the locals and helps improves the economy. It utilizes local resources and employs local people. It also contributes to a better environment by reducing fuel burned to transport them.

Uplifting Small Businesses

Small-scale and cottage industries provide you with products at a low cost. This is made possible by reducing their profit margin. They earn more by selling as much as possible. Nonbranded products help uplift small businesses and leave a major impact collectively. In India, around 40% of the total economic value comes from the cottage and small-scale industries.

Similar Quality

Unbranded bottle

You Purchase a Paracetamol and a Tylenol; Would they give the Same Effect? Yes

Mostly the quality of nonbranded products is not compromised. They are as good as any branded product. But they cannot afford the same packaging or branding as big brands.

Easy Availability

One of the most significant advantages of nonbranded products is that they are easily available. Sometimes you might not be able to find a particular branded product in your region due to a shortage of political issues. Yet, you can always find local products.

Branded vs Nonbranded Products

Branded products are visually more appealing and often thought to be superior quality. Premium products might have an extraordinary quality compared to nonbranded products. But, other products of daily use do not have a significant difference. If you are looking for affordable products, nonbranded is better than branded. But, if you are willing to pay more for the slightest quality difference, branded products are a suitable choice. It all depends on your socioeconomic situation and choice.

The Bottom Line

Nonbranded products do not have the best reputation, yet they are widely used. They are more popular in communities with low incomes. Alternatively, families with high incomes prefer branded products. Non-branded products are less costly, support local businesses, are easily available, and offer good quality. You can choose between branded and nonbranded per your choice and affordability.

FAQs

Does non-branded mean Fake?

Not at all. Nonbranded products typically do not have a label which makes their quality doubtful. You might come across fake products in some cases, mostly counterfeit products. Nonbranded items are not sold by another brand’s name.

What is the difference between Brand and Product?

A brand refers to the name, symbol, or logo used by a company for all its products or specific products. On the other hand, the product is the item or service offered by that company.

What are Nonbranded Products examples?

Nonbranded products come without a label, and you can find many of them in your local market. For example, oils that come without a label are sold as “olive oil,” “castor oil,” or “almond oil.”

What is the difference between Branded vs. Unbranded Food?

Branded foods and unbranded foods may sometimes have a quality difference, but they are mostly the same. You might be surprised that the same industry often manufactures unbranded and branded food items.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Marketing & Advertising

Advantages and Disadvantages of Strengths-Based Management

Last Updated on February 4, 2023 By Methew Harbor Leave a Comment

As they say, “do what you love and love what you do.”

However, not everyone gets the opportunity to do what they love. The managers often do not let the employees love what they do because of their behavior.

According to a survey by Gallup, managers do not appreciate their employees’ strengths and try to fix their mistakes instead. The reports show that only one out of three employees say that they have the freedom to perform what they excel at.

Another study shows that strength-based management improves the organization’s engagement and productivity.

Let’s tell you about the advantages and disadvantages of strength-based management in detail.

What is a Strength-Based Management Approach?

A strengths-based management approach considers the employee’s strengths over the weaknesses. This management system does not ignore shortcomings but assigns tasks based on the worker’s strengths. When the managers focus on the employee’s strengths, the team works on their weaknesses to turn them into strengths.

Core Principles of Strength-Based Approach

The definition of a strength-based approach gives nine guiding principles that act as the backbone and guiding practice.

Everyone has Potential

One of the main characteristics of the strength-based approach is that limitations do not define a person. Each team member has strengths and capabilities that differentiate them from others.

We Become what we Believe in

Strength-based management encourages seeing challenges as opportunities. Such leaders, like coaching leaders, push their teams to take on challenges and believe in their potential.

Your words Determine your Reality

One of the most common issues with traditional coercive leaders is their choice of work. They do not care about using bad language with their employees to get the job done. Modern leaders opt for a friendlier approach and use thought-out words to motivate their teams.

Change is Necessary

Changes are critical in any transformational leadership to change the way people think and behave. It allows them to improve and do better in their jobs.

Better Relationships Lead to Positive Changes

When people trust in their management, they change per needs. They are ready to accept challenges and do their best to succeed. On the contrary, unsupportive management cannot bring the best out of its people.

Every Individual is the Author of their Story

One of the nine guiding principles contributing to the advantages and disadvantages of strength-based management is understanding by the management. You must understand that each person creates their own story. You may guide them but do not shape them.

Begin with Acknowledgment

Begin the change and strength-based approach by acknowledging what the person already knows. They may be more willing to take on challenges relating to what they are familiar with.

Change has no Shortcut

It suggests that there is no single method for change. It is a journey and process with several steps. It requires patience and flexibility.

Change is Inclusive

When you are working to bring changes in an organization through a transformational or strength-based approach, it must be inclusive. The leaders should inform the team of the expected changes and discuss how to cope with them.

Advantages of Strength-Based Management

Improved Skills

Improvement in skills and job roles of the employees is among the most prominent advantages of strength-based management. It gives them the confidence to explore different domains and expand their skill set. Highlighting your employees’ natural abilities pushes them to give their best and take on new job roles faster. This approach gives rise to better leaders for the future with better hard and soft skills.

Increased Productivity

A positive environment in the organization always allows the employees to be more productive. Another survey by Gallup also suggests that employees working on areas of their strength are 7.8% more productive. When the teammates learn new skills and take up challenges, they perform better and give improved results.

Less Time Consumption

Many managers often focus more on fixing the weaknesses of the employees than strengthening their skills. However, enhancing and utilizing existing skills takes less time than fixing imperfections. Often employees do not cooperate with the management, resulting in time wastage. Thus, it is better to focus on the skills and abilities of your team and work to improve them.

Builds Self-Esteem and Confidence

Strength-based management helps build self-esteem in the company. It also improves emotional intelligence and teamwork in the organization. The workers believe in their skills and abilities, which gives them the confidence to believe in themselves.

Higher Engagement

Every department in a functional organization performs a specific function. The tasks are divided among different team members. The division of tasks among the team members according to their expertise and area of interest brings them together to accomplish goals. It keeps everyone in the team engaged and offers better solutions utilizing their strengths. Reports show that the strength-based approach engages double the employees as the average engagement of 30% in the US.

Better Mental Health

Mental Health

The strength-based approach focuses on the team members’ strengths but does not drain them. Employees feel less stressed, upset, and tired when the right strategies for strength-based management are used. One method is not to keep them working for hours continuously if you want to adopt a strength-based approach in your organization, ensure not to burn out your employees.

Less Turnover Rate

Helping employees improve the skills they feel confident about instills trust in them. It enables the team members to contribute to organizational success in the best possible way. Happy employees do not leave your company to move to another.

Disadvantages of Strength-Based Management

No Scientific Evidence

There is no scientific evidence regarding employees in a strength-based management company. While different studies suggest that people in a company work better when their managers focus on their strengths, no studies show exact results. The absence of scientific backup does not mean this approach is ineffective.

Increase in Competition

This management approach allows employees to identify their strengths and improve them further. It drives a sense of competition among peers as well as the higher personnel. However, it may become a disadvantage of strength-based management when the executives see the juniors as a threat. They might think the juniors will become experts and take over their position.

Over Confidence

Overused strengths have the tendency to become toxic in the long run. Team members who work hard on their skills believe that the company cannot survive without them. This overconfidence can lead to unreasonable demands and issues within the organization. The managers might not realize when some of their teammates become toxic because of their overconfidence.

Ignores Weaknesses

The suitable strength-based management approaches make sure that you do not ignore the weaknesses of your employees. Sometimes the leaders entirely focus on their strengths without understanding how their shortcomings can hinder their progress. Successful strength-based management highlights and improves the string points without neglecting the weaknesses.

The Bottom Line

The advantages and disadvantages of strength-based management depend on how you implement the system. It can help boost productivity, increase engagement, improve skills in less time, and reduce turnover. Alternatively, you may neglect the weaknesses of your team workers leading to overconfidence and a sense of competition. Thus, it is essential to apply strength-based management considering the guidelines to get the best out of it.

Tom Ruth mentions, “If you focus on people’s weaknesses, they lose confidence.” So, focus on their strengths and see how it facilitates organizational growth.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Management

Disadvantages of Affiliative Leadership Style

Last Updated on January 27, 2023 By Methew Harbor Leave a Comment

Affiliative leadership is considered one of the best leadership styles. Apart from people who have been working in an autocratic leadership environment, almost all employees prefer affiliative leadership. Affiliative leaders do not consider themselves the only authority and allow the team to participate in conversation and brainstorming sessions. It creates a sense of responsibility and increases the team’s morale. However, this leadership style also comes with a few cons and challenges. The leader and the team may face problems sometimes, like all other leadership styles. Sometimes, these leaders may be more lenient than needed or avoid confrontation to keep the atmosphere friendly. This can lead to problems in the long run.

Keep reading to understand all the disadvantages of the affiliative leadership style. But first, let’s tell you briefly about this leadership style.

What is the Affiliative Leadership Style?

Affiliative leaders focus on the employees within the team and maintaining healthy relationships within the department or organization. Thus, the main interest of affiliative leadership is to create a friendly atmosphere instead of being overly strict. It enables the team members to give their suggestions and improve functioning through feedback.

Affiliative leadership can be defined as a people-first approach to creating and sustaining a harmonious environment. These leaders make sure to get tasks done through teamwork and build emotional connections and bonds within the team. It helps the leaders avoid conflict among employees and solve problems within the team easily. The leader also connects to every employee personally to develop meaningful relationships that do not seem fake.

These leaders become friends with their subordinates or team to prevent communication barriers. Yet, these characteristics of affiliative leaders can sometimes be more harmful than good for the organization and the team. The team members might not realize that they still have to consider the orders of their leader. Eventually, these leaders may also overlook underperforming employees to avoid confrontation. It can lead to significant problems for the company in the long term.

Let’s tell you about all the disadvantages of the affiliative leadership style in detail.

Disadvantages of Affiliative Leadership Style

Overlooking Underperformance

Overlooking underperformance is a major problem in affiliative leadership that exhibits their conflict-avoiding attitude. It can sometimes be difficult to manage underperforming employees as leaders. Most underperforming team members come up with excuses that the managers and leaders might not be able to question further. Affiliative leaders avoid such situations by avoiding confrontation with low-productive employees.

Reduced Productivity

Most teams run under affiliative leadership have one or two underperforming employees. But, the leaders avoid confrontation and let them be as they are. The other team members observe this and wonder why they are putting in the extra effort. There is a high chance that other team members will also become unproductive when the low-performing employees go unnoticed. Thus, affiliative leaders need to be more attentive and straightforward without being rude to their team.

Lack of Leadership

Talking about a leadership style, it does not really make clear sense how there could be no leadership. Right? But it is so in the case of leadership styles that are not centralized. Sometimes, the team members take up leadership and make decisions without consulting the leaders. This leads to issues within the team when one or some of the team members start dictating orders to others. The affiliative leadership style does not work well for employees who need constant constructive feedback to perform well.

Avoiding Conflict

As mentioned above, affiliative leaders focus on creating relationships and bonds between team members to avoid conflict. The primary reason is to prevent conflict in the team or department because they are not the best at handling conflict. Affiliative leaders avoid dealing with conflict and prefer if the team members sort out the issues on their own. Confrontation is one of the aspects of leadership these leaders dread. Eventually, they may also ignore underperforming employees as mentioned earlier.

Complacent Team Attitude

Almost all leadership workshops tell you to provide positive feedback to the team members and tell them how they are an important part of the team. But, like everything else, excess praise can also be detrimental to work. When the leaders keep telling their team how they are amazing at what they do, the team does not find gaps in their skills. Another approach is the complacent attitude leading to halted growth. The team members stop learning to improve themselves and may be left behind. When the employees think they have reached their high of working in an organization, they may also move to another company.

Deviation from Company Mission

Sometimes affiliative leaders are so concerned about the welfare of their team that they forget the mission and vision they are working towards. Their team becomes their main focus, and the leadership puts efforts into their team instead of company welfare. While they might not see or understand it initially, it begins to show eventually. Their team also ignores the big picture and only focuses on solving problems that arise within the group. It restricts their ability to see how their performance is impacting company operations.

Avoiding Uncomfortable Situations

Similar to their efforts to provide negative or constructive feedback, these leaders also avoid other situations that make them uncomfortable. Besides focusing on the relationship and emotions in the team, affiliative leaders also care for their feelings. When they provide an easygoing atmosphere to the team, they also want to feel happy at the end of the day. So, they tend to avoid situations that would cause discomfort to them. It may build irritation in the team when the leaders avoid the problems that have been pointed out by the team.

Difficulty in Managing Complex Problems

Affiliative leaders are not adept at solving complex problems as they require the accountability of the team members. Usually, these leaders offer positive feedback to keep the morale high in their teams. Yet, besides offering positive feedback, they eliminate constructive feedback. When the problems are not fixed in the initial stages through constructive feedback, they keep growing. The leader’s inability to deal with complex issues can cause serious problems for the team as well as the company.

Emotional Dependence on Leader

As the leader acts as a bonding gum between the team members to keep them gelled, the team might start depending on the leader for emotional support. They might be unable to give their best in situations where the leader is unavailable to support the team. Conflicts may arise, and things may fall because of the unrealistic emotional dependency on the leader.

6 Benefits Of Hotel Consulting Services

Bad Choice for Transformational Changes

Some companies undergo revolutionary changes when they merge with another company or are acquired by different management. It is challenging for everyone to adjust to a new environment immediately. But, the dependency of employees on affiliative leaders adds to the trouble. Their team members do not welcome the change and try to run away from it. They are more resistant to changes and do not want to work under another leader.

Now that you know all the disadvantages of affiliative leadership, it is time to learn how to avoid these problems and be an effective affiliative leader.

How to be an Effective Affiliative Leader?

Be a Life-Long Learner

The first step to being an effective leader is becoming a life-long learner. When people get leadership roles, they believe they know everything they should know. With changing times, leaders also need to improve their working methods and efficiency to avoid problems within the team and organization. However, a lack of learning attitude may prevent them from being effective leaders. Thus, you must be open to learning new techniques and strategies to lead your team better.

Offer Constructive Criticism

Affiliative leaders are more focused on giving positive feedback to keep the team motivated all the time. Yet, sometimes, it leads to uncommunicated issues in processes that should have been addressed in time. Affiliative leaders should focus on providing constructive feedback so the employees can fill in gaps that can cause trouble later.

Do not Avoid Conflict

Typically, it is better to avoid conflict within the team by creating a harmonious and positive environment. But, it is also important to face conflict when it arises within the team. Be confident in your abilities and confront the team members when needed without thinking twice. These conflicts may keep growing and impact the relationship between the employees.

Track Employee Performance

One of the reasons why employees like working under affiliative leadership is that these leaders typically tend to overlook underperforming employees. To be an effective leader, make sure to track the progress of all employees and discuss it with them. When you ignore underperforming employees, other team members get the message that it is okay not to give the required input. Monitoring employee performance will let them know that you will not put up with consistently low-performing employees.

Share Goals Clearly

Affiliative leaders must communicate clearly and share the goals with their team. When you share the mutual goals the team needs to work towards, they trust you and are motivated to work to achieve the goal efficiently. Make sure to communicate the aim of the team as well as the mission and vision of the organization.

Watch their Body Language

Your team members might come up with excuses for confrontation about their idle behavior. You can judge their honesty and integrity by analyzing their body language to see if they are telling the truth. Their body language when working in the team also shows how seriously they take their work.

The Bottom Line

Affiliative leadership is one of the most powerful leadership models that has its strength in feedback from the team. It offers creativity and leadership-within-leadership while creating friendly relationships between employees. However, there are also a few disadvantages of affiliative leadership. These leaders tend to overlook underperforming employees, leading to reduced productivity.

Furthermore, they may promote complacency, avoid conflict, prevent transformational changes, and increase emotional dependence on the leader. However, you can avoid these situations by learning strategies to help you to be an effective affiliative leader. Affiliative leaders share the goals with the team and deal with conflict where needed. Ask for suggestions and provide constructive feedback when needed.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Management

Advantages of Matrix Organizational Structure

Last Updated on January 27, 2023 By Methew Harbor Leave a Comment

Companies usually follow a centralized or decentralized organizational structure. Yet, sometimes organizations also adopt the matrix system. The matrix system pushes the team to work towards their goals more efficiently as they report to more people. It allows the managers to keep in touch with the teams and their members.

The matrix structure has disadvantages but still, it is more suitable for interconnecting different departments and having them on board about company activities. Let’s tell you all the advantages of matrix organizational structure to know why big names like Starbucks use the matrix system.

What is Matrix Organizational Structure?

The matrix organization is a fusion of functional and project management systems. It consists of an organizational structure where the employees report to multiple people simultaneously. It comprises a functional and a project manager. The project and functional managers supervise members of the same team. It enables the functional manager to have details of each project at the root level. Having a matrix organizational structure also gives insight into each employee’s performance.

Components of a Matrix Organizational Structure

The two fundamental components of a matrix structure are a functional manager and a project manager.

  • The functional manager oversees the horizontal structure according to the department. They represent the traditional organizational structure.
  • The project manager manages a cross-functional team. It is usually a different team for each project with representatives from each department.

In a matrix organizational system, these hierarchy systems work side by side. It gives equal, more or less opportunity to both according to the type of matrix structure.

Advantages of Matrix Organizational Structure

Inter-Departmental Harmony

A matrix system brings different skilled and experienced workers together for a particular project. It improves communication between different departments and allows them to communicate openly. As more companies move towards specialized job roles, employees from different departments form a team. Employees from varying departments trust each other’s abilities under the functional and project managers.

Flexibility

Besides specialized jobs, the matrix system allows workers to perform different tasks in a project. While the right people perform the right task, they also get an opportunity to understand the working of other departments. This encourages the employees to give their input on the project based on previous experiences. You may also utilize a specialized person for another task per need as they understand the working through matrix system.

Steady Flow of Information

The flow of information is more efficient and quick when it goes both horizontally and vertically. It also prevents miscommunication as the employees report to two managers at once. All the team members are in the loop about the process and status of tasks.

Less Time Consumption

One of the most significant advantages of matrix organizational structure is how it speeds up the process. Communication between departments and the higher hierarchy makes the process quicker. Every person within a team performs the assigned task and reports to the managers. They command the next step to avoid hindrance in the process.

Efficient Use of Human Resources

When the employees are flexible and understand the process of different departments, they can be used more efficiently. The employees can be used in another domain if required. This saves you from hiring a new workforce for a short period.

Adaptation Per Need

The matrix system is of three types; weak matrix, strong matrix, and balanced matrix system. Each of them gives different authority to the functional and project managers. Organizations may choose from one of these according to their need for every project.

Consistent Functional Roles

This system combines functional and project roles. While the project roles may end with the project, the functional roles stay consistent. The team may participate in other projects. Thus, it provides better job security to the employees.

Employee Growth

Working in a diversified environment in various projects enables the employees to learn more skills. They can utilize these skills in their job role or participate in other projects. It provides growth opportunities to the employees while excelling in their respective fields meanwhile.

The Bottom Line

The matrix system is a combination of functional and project management. In such a system, the members of each project team report to the functional and project managers. The advantages of a matrix organizational structure include less time consumption, open communication, flexibility, and choosing the right structure. It also empowers the employees by securing their jobs in functional roles and enabling them to acquire new skills.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Management

Types of Retailing Businesses

Last Updated on January 25, 2023 By Methew Harbor Leave a Comment

With the evolution of businesses over the decades, more categories have emerged. Previously, business was widely categorized as wholesale and retail. However, now business expansion has specified further sub-divisions. Retailing business is a more convenient choice for many people as it does not require a high capital compared to wholesale. There are various types of retailing businesses you can choose from according to your expertise and demand.

Let’s tell you about the five types of retailing with their subtypes.

Store Retailing

Store retailing refers to setting up stores to facilitate customers. Store retailers get their products from wholesalers at a lesser cost and sell to consumers with added profit. Store retailing businesses include convenience stores, specialty stores, supermarkets, departmental stores, and discount stores. Drug stores, extreme value stores, and catalog showrooms are also retail stores.

Convenience Stores

Convenience stores are retailing businesses with daily-use items like grocery and regular-use FMCG products. They are typically present around residential areas for easy access to the customers. It is smaller than a supermarket and departmental store. The common items in a convenience store include groceries, snacks, magazines, confectionery, soft drinks, medicines, etc. Convenient stores offer limited choices. Yet, they are open for extended hours.

Departmental Stores

Departmental stores are huge stores with departments within them for each goods category. They have a wide range of products from food to skincare and clothes. As departmental stores are massive, you can find a wide variety in every category. They are pretty convenient and the first choice of shopping for many people. You can buy everything under one roof but make sure to stay on budget while shopping grocery or other stuff for home. Each department in a departmental store is treated as an individual business unit. Departmental stores are working to provide better service to compete with other retail stores. Some try telephone selling and partnering with other stores to offer combined discounts. 

Super Market

Supermarkets are even bigger than departmental stores. They offer everything from clothing to electronics to food products. In short, they have everything you need!

Super Market

Supermarkets made their way into the retailing business in the 1920s, with Piggly Wiggly being one of the earliest supermarkets. Over 37,000 supermarkets run in the United States. They offer various items that you may not find in a convenience or a basic departmental store. Some supermarkets also have self-customer checkout counters. The prices at supermarkets are also mostly quite affordable for everyone.

Specialty Stores

As the name indicates, specialty stores specialize in one kind of item only. They have their own pros and cons. Specialty stores usually have a small variety of products focusing on one category. While they do not have an assortment of products, the products in specialty stores are believed to be high-quality. Examples of common specialty stores include apparel stores that only sell clothes, perfume stores, candle stores, etc.

Discount Stores

While almost all stores offer discounts during a season or festival, discount stores offer low prices throughout the year. They keep lower margins to make more sales. Discount stores are facing competition as other retail stores are also offering discounts frequently to do more business. The early discount stores did not look appealing and only focused on providing low costs. Yet, now they are revamping the stores and advertising heavily to stay in business.

Catalog Showrooms

Catalog showrooms provide brand-name products at discounted prices to cut costs and attract more sales. They usually have luggage, appliances, power tool, jewelry, etc. Unlike today, catalog showrooms have been quite popular back in the day. They are working towards improving their service every day not to get overshadowed by departmental stores and supermarkets.

Corporate Retailing

Corporate retailing refers to a single business entity or partnered business operating multiple stores in different locations. Each store is authorized individually yet owned by the same business. Franchises, chain stores, and merchandizing conglomerates are corporate retailing businesses.

Chain Stores

Chain stores are two or more stores of the same business at different locations. They typically operate with the same name at all locations. Chain stores could be nationwide or international. All the chains have a mutual voice, promotional objectives, plans, and selling design. Chain stores evolved in the early 20s and expanded widely. They gained popularity because of their discounts and availability in different areas. The best thing about chain stores is that people trust the quality of all stores of the same identity.

Franchises

A franchise refers to branches of a store sold to individual business owners. Franchises carry the name of a chain store, yet independent business people operate them. Franchising is common in fast-food chains and filling stations where they sell stores at different locations to different people. The franchiser typically receives a royalty on sales, an initial fee, and a share of the profits.

Merchandising Conglomerate

Merchandising Conglomerates comprise various retailing forms having one ownership. Each of the merchandising conglomerates shares management and distribution functions.

Non-Store Retailing 

Non-store retailing is one of the types of retailing businesses where you do not perform in-store transactions. Non-store retail businesses are of two types; direct selling and automated vending. Direct selling refers to going to people to sell your product instead of the customer coming for the purchase. Point-of-sale kiosks are also a form of direct retailing. Direct selling is becoming an outdated method considering that the world is moving towards automation. Automated vending refers to installing vending machines that do not require a human being for transactions.

Service Retailing

Some retail businesses do not sell tangible goods. Instead, they offer services to their customers. Such a retailing business is known as service retailing. These businesses are dependent on expertise, skill, and time. Service retailing includes banks, airlines, hospitals, theatres, restaurants, hair salons, etc. 

Online Retailing

Online retailing refers to selling products and services through the internet. It could be B2B (business to business) or B2C (business to consumer). Online retails offer better prices and more variety to the customers. Nowadays, many online retailers are offering special discounts to promote online shopping. Often online retailers do not have a physical store and operate solely online. Online retailing offers numerous benefits to businesses and consumers. This type of retailing business saves space, workforce, and power consumption costs. However, one bad customer experience can ruin the company’s reputation.

Other Retailing Businesses

Shopping Malls

Shopping malls are popular retail businesses that provide multiple options to consumers. Most of the businesses under one roof are independent retailers. They are located in areas with a large population to cater to the needs of the people in one place. They have various shops, including clothing shops for men, women, and children. Shopping malls also usually have a departmental store and food court.

Warehouse Retailers

Warehouse

Warehouse retailers provide products at a low cost compared to departmental stores. They work by offering a cost-plus pricing structure to the customers to lessen the prices. Costco and Sam’s Club are the largest warehouse retail chains in the U.S. Costco has seen an incredible hike in sales from 110.2 billion U.S. dollars in 2014 to 192 billion U.S. dollars in 2021.

Factory Outlets

Factory outlets are one of the top choices in the neighborhood. Factory outlets have the same products as some large brands. However, the prices are low as the manufacturer owns the store. It eliminates a third party (the brand retail store) and offers a better price to customers.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Business

Disadvantages of the Payback Period

Last Updated on January 7, 2023 By Methew Harbor Leave a Comment

The payback period refers to the time when an investor earns back their initial investment. It’s the point at which an asset begins to generate a profit. A capital investment’s payback period is the amount of time it takes for the project’s cash inflows to equal the cash outflows.

For example, the payback period for a two-year investment would be two years if the initial investment of $2,000 yielded $1,000 at the end of the first and second years each. Payback or recoupment times are typically given in years.

Ideally, payback periods should be brief. Recouping the initial cost of a project or investment must be fast. However, not all projects and investments have the same time horizon, so the shortest payback period must fall within that range. The payback period on a home repair project may be decades, but a construction project may be five years or less.

Why Take Payback Time into Account?

As mentioned earlier, the payback period is the amount of time in years needed to retrieve one’s initial monetary investment.

Due to its easy application to almost any situation and understood by people of varying education and experience, the payback period is frequently used as an analytical tool in the financial sector. It’s an excellent tool for comparing investments of a similar type.

A payback period is a comparative tool between investment and doing nothing. Still, it does not provide any other criteria for making a choice (except, perhaps, that the payback period should be less than infinity).

If anyone wants to evaluate risks quickly but in years rather than dollars, try using the payback period instead of a break-even analysis. Payback periods indicate how long it will take for an investor to recoup their initial investment.

Companies use the payback period to determine the rate of return on any investment, whether it be a new piece of equipment or an upgrade to an existing piece of software, just as the financial sector does.

Influential Factors on the Payback Time

The payback period will change depending on how much money someone has put into the project. The longer it takes for a project to earn back its initial investment, the higher the investment cost.

  • To calculate the payback period, one has to consider the timing and size of the cash inflows and outflows related to the project. When cash flow increases, payback time decreases, and vice versa.
  • The interest rate on the initial investment influences the payback period. Higher interest rates result in a shorter time needed to repay the loan.
  • Tax rates determine how quickly a project retrieves the investment costs if it produces taxable income. The time it takes to recoup initial investment increases as the tax rate does.
Tax documents on the table
  • Due to the discounting of cash flows, inflation affects the payback period. The payoff period will be longer if inflation is high.

Payback Period Calculation

To know the time it will take for a project to pay for itself, you must divide its initial cash outlay by its annual net cash inflow. You can assume that the annual net cash inflow is constant for the payback period formula.

Years or fractions of years are used for the final figure. Anyone can calculate the payback period using the formula:

Payback Period = Initial Investment (I) / Annual Return

If a company spends $100,000 on new manufacturing equipment and sees a $20,000 annual return on its investment, it would have a positive cash flow.

Time to Break Even = $100,000 / $20,000

If we divide $1,000,000 by $20,000, we get a payback time of 5 years.

Disadvantages of the Payback Period

Since the payback period only considers cash inflows and outflows until the initial investment has been recovered, it is often criticized for being insufficient. It ignores the cash flows forecast horizon. One must know some disadvantages of the payback period before considering it.

The usefulness of a resource or its lifespan: When an asset pays back its initial investment, it can no longer generate cash flows. The payback approach makes no assumptions about the useful life of assets.

Time Value of Money: Today’s money is worth more than tomorrow’s because of interest, a factor that people often do not consider.

Averaging Error: The calculation’s denominator relies on the project’s average cash flows over several years. Still, if most of the expected cash flows are in the part of the forecast that is farthest away, the calculation will give a payback period too short.

Profitability: It does not consider profitability. If you only look at the payback time, you might miss investments with a higher return.

The Infusion of New Funds: The idea disregards the possibility of future cash flows from an investment that may occur in periods beyond the point of total payback.

Not Suitable for Long Projects: The payback period is more appropriate for smaller projects because it can take a long time for larger projects to recoup their initial investment. The payback period calculation may be off for these projects.

Asset-focused: Many fixed asset purchases aim to improve the efficiency of a single operation, which is useless if a bottleneck downstream limits the business’s output. The payback period formula only considers a specific system operation. It’s more tactical than strategic.

The Bottom Line

The payback method alone is insufficient justification for an item of capital expenditure. Consider throughput analysis and other ways that consider the time value of money and more complex cash flows to determine whether or not the investment will increase the company’s worth. There are additional factors to think about when deciding on capital investment.

They include analyzing whether or not buying multiples of the same model of an asset would reduce maintenance costs. Or if purchasing multiple cheaper and smaller capacity units would make more sense than buying one enormous, expensive monumental support. Purchasing an investment is a significant financial commitment, and you must discuss the payback period before making a final decision.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Investment & Money

Types of Buying Methods

Last Updated on December 27, 2022 By Methew Harbor Leave a Comment

Buying is an essential part of every organization. Some companies make bulk purchases for production, while others buy everyday items for office use only. Whether your company specializes in goods or services, buying is essential. There are four types of buying methods usually implemented in different companies. They are categorized based on the quality and quantity of the goods. Let’s tell you about the buying methods used commonly.

Methods of Buying Based on the Number of Goods

The methods of buying are divided into four types depending on the quantity you need to purchase. The four types are contract buying, conservative buying, speculative buying, and tender buying.

Contract Buying

Contract buying is one of the common methods of buying in industries. Buyers and suppliers sign a contract with specific terms and conditions per their needs and convenience. The contracts usually last for months or years. Thus, the companies do not have to look for a reliable source every few months. It saves time and ensures the vendor sticks to the contract.

Conservative Buying

As the name suggests, conservative buying is buying in a small amount for daily or weekly needs. This is typically done for goods that do not have a long shelf life or materials with unsure needs. Conservative buying is followed to decrease the inventory management load. It is also used in situations when the company suspects a fall in the prices of the goods in the next few days. Other names for conservative buying are small-order buying, hand-to-mouth buying, and economical buying.

Speculative Buying

Speculative buying is the complete opposite of conservative buying. Companies that follow speculative buying purchase goods in a larger amount than needed. This method is usually adopted when the company plans on selling the goods at a higher price to others. Typically wholesalers use this method to make better profits. This type of buying method is also named forward buying.

Tender Buying

Tender buying or buying by tender is a common business practice. Many companies call tenders for the supply of goods and raw materials. Different suppliers fill the tenders, and usually, the lowest quote with the best quality is approved. It is a common practice in government offices. It allows them to be tension-free till the tender completes its period.

Why you Should Consider to Live in Victory at Verrado Adult Community

Methods of Buying Based on the Quality of Goods

Another widely implied method for buying in companies is by the quality of goods. Both purchase methods may go hand in hand when finding the right vendor. Here are the three methods of buying according to the quality of goods.

Buying by Description

Buying by description refers to purchasing goods from a seller based on their description only. Sampling or inspection may or may not be involved. The company gives a purchase order per the description given by the seller. The descriptions are typically present in business publications, hoardings, or leaflets.

Buying by Inspection

Buying by inspection includes analysis of the products or raw material by the buyer before purchasing. The buyer may visit the store or exhibitions to check the quality of the material. This method ensures that the substances seem of good quality. The buyer also ensures that the vendor can manage the required quantity. The company places an order if the product is of satisfactory quality and deliver on time.

Buying by Sample

In case the buyer cannot visit to inspect the material, they may ask for samples. When purchasing raw materials for food or pharmaceutical industries, sampling is a common practice. It helps ensure that the offered supplies are free from adulteration and unwanted chemicals. The company places an order if sampling shows satisfactory results.

The Bottom Line

Different organizations use different methods of buying to get good quality raw materials and goods. They either buy based on quality, quantity, or suppliers. It could be buying on description, sample, inspection, speculative, conservative, contract, or buying per the tender. Some companies also use concentrated buying, reciprocal buying, or diversified buying methods.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Management

Different Methods of Purchasing

Last Updated on December 27, 2022 By Methew Harbor Leave a Comment

Production is an essential element of any business. You cannot achieve smooth production until you have the required equipment and raw material. Purchasing the material and equipment is quite simple; order, receive, and pay.

But, you can make it easier.

Organizations follow various purchasing methods to cut costs, ensure the availability of raw materials and make better relationships with other businesses. Understanding the different methods of purchasing allows you to devise a suitable procurement plan for your company. Here’s everything you need to know about purchasing methods.

Bulk Purchasing

Bulk purchasing is the most common method of purchasing goods in large production units. Bulk purchasing refers to buying a huge quantity of material at once to use over a period. It is the most economical method of purchasing. You can get the required material and objects at a lesser price when you buy large quantities. However, it needs more investment, occupies space for a long time, and you may face loss if the material is not used timely.

Purchase Per Need

The next common method of purchasing goods is purchase per need. It is also known as hand-to-mouth or zero stock purchasing. It refers to buying an item only when the need arises without keeping much extra stock at hand. Zero stocking is used mostly for emergency needs or materials of office use that you cannot quantify beforehand. It offers numerous benefits like having more money at disposal and avoiding the waste of materials. Yet, it also comes with a few risks and disadvantages. One of the most critical drawbacks of this method is the unavailability of the material in the market when needed. Thus, many companies prefer stock buying to avoid issues in production due to zero stocking problems.

Purchasing

Blanket Purchasing

Blanket purchasing means buying something from a supplier for a long period. The vendor usually knows about the demand for the material beforehand and continues to supply per need. Usually, blanket purchasing orders account for items of a particular category. They help improve the procurement process by somehow automating the process.

Specific-Period Purchasing

Purchasing for a specific period is not required in all industries. Yet, it is important for some materials like chemicals that you cannot store for a long time. Companies prefer purchasing for a specific period when the overall cost of bulk and a small amount of the material is almost the same. It allows you to save costs by preventing the loss of the object. The quantity is calculated according to previous needs to buy the material good for a short period. It is one of the most appropriate inventory management methods for avoiding bulk purchasing short-life materials.

Scheduled Purchasing

As the name suggests, scheduled purchasing involves informing your vendor about the upcoming demand for material and pre-book it. Scheduling a purchase enables the vendors to arrange the supplies within the hour of need. It is an excellent measure of avoiding delayed production because of a supply shortage. Scheduled purchasing also saves you from the burden of managing purchase inventories of material for months. It may also sometimes give you a better cost compared to urgent buying. Other benefits of scheduled purchasing include an on-time supply of required materials and high-quality goods.

Market Purchasing

Market purchasing is a common practice, not only in industries but also in our daily life. Market purchasing means buying products when they hit a low price. The company might not require the material immediately, yet it can be used in the future. Market purchasing is favorable for items that can stay on the shelf for a long time without the fear of wastage. However, this method of purchasing requires a proper calculation to buy the right amount of material. Over-purchasing may lead to a loss. While it can sometimes help you save a considerable amount of money, you may also lose some in case of miscalculation of quantity.

Speculative Purchasing

Speculative purchasing is similar to market purchasing but from a different perspective. Speculative purchasing refers to taking advantage of low prices of a material in the market to sell it at a high price later. It comprises making bulk purchases and storing them to make a considerable profit from them. Speculative purchasing is different from market purchasing as it involves selling goods. On the other hand, market purchasing is done for the company’s own cost reduction. Besides the advantages of speculative purchasing, it may sometimes result in a long period of keeping inventory till the prices rise.

Group Purchasing

Group purchasing comprises buying multiple small items of different categories together to reduce cost. Often the quantity of these goods is even less than the cost of order placement. The vendor and the organization agree on a mutual price considering the supplier’s profit. It reduces the stress of visiting multiple places to buy products and lessens the workload. Instead, the supplier purchases and supplies the materials altogether.

Cooperative Purchasing

Cooperative purchasing is another group purchasing approach. However, it involves more than one company buying together. Companies looking for similar goods place bulk orders with the vendor instead of buying small quantities at a higher price. It also helps reduce transportation costs. It is common among companies producing the same kind of products.

Reciprocate Purchasing

You may understand reciprocate purchasing as barter. Reciprocate purchasing refers to an understanding between two or more companies to buy each other’s products and services. It is feasible to offer such services when both companies can benefit from each other and reduce overall costing. Reciprocate purchasing is not the most common practice, yet many businesses opt for it.

The Bottom Line

Procurement in an industry requires proper planning to purchase high-quality goods at the best prices. Some companies prefer bulk buying while others believe in zero stocking. You may also make blanket purchase orders or opt for market purchasing for efficient procurement. There is no particular right method of purchasing for all. It depends on your company’s needs and production approaches. Choose the one that best fits your organization to save costs without disturbing operations.

matt harbour
Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

Filed Under: Accounting & Taxation, Industries

  • « Go to Previous Page
  • Go to page 1
  • Go to page 2
  • Go to page 3
  • Go to page 4
  • Interim pages omitted …
  • Go to page 15
  • Go to Next Page »

Primary Sidebar

person using calculator and papers on table
a person scanning his credit card
Insurance Trucking Company
car accident
man use Shot Peening Machine
Hiring lawyer
property-insurance
Contingent Beneficiary
money in the envelope
woman holding a tote bag
Crypto hopper
image on the clothes and shoes
books
trading graph and hand
Rental Property Value Calculator: How to Tell if a Property Is a Good Investment
business-with-files
Business-Management
Girl-hold-his-CV
IPO
A-person-pick-Brand-wood-stick
Visionary Leadership
woman hand touch the white board and people look this whiten board
woman analyzing business budget
person hand holding smartphone
man using laptop

Footer

  • About US
  • Contact Us
  • Blog
  • Comment Policy
  • Terms & Conditions
  • Privacy Rights
  • Privacy Policy
  • Follow Us On
  • – Google News
  • – Facebook
  • Entrepreneur Skills
  • Business Cycle
  • Business Ideas
  • Speculator
  • Be Wealthy
  • Psychology in HRM
  • HRM in Business
  • Businessman Qualities
  • Salespeople Types
  • Health & Business
  • Business Success Rules
  • Stress At Work
Copyright © 2018-2022 BFA