Navigating into the future — corporate approach

Navigation in high seas involves a process of constant and precise determination of the position of a ship in the endless expanse of water. The objective of this exercise is firstly, to get the ship reach the final destination of the voyage and secondly, to manage the risks -  that may emerge out of the conditions surrounding the position of the vessel -  in order to ensure a safe passage to the pre-set destination. Two things appear to hold paramount importance in the voyage: (1) reaching the destination; in other words, achieving the pre-set objective, and (2) safety of man and material.

In business, corporate bodies are normally expected to operate as  "Going Concerns"  meaning the business entity will not die out in the foreseeable future and shall continue operation long enough to utilise all its assets earning profits and benefits. It is only on going concern assumption that entrepreneurs embark on certain business. Under this assumption, a business entity is viewed to hold the potential to run for a reasonable time in order for achieving the objectives on which it came into existence.

The going concern assumption warrants every corporate house to undertake plans, strategies and actions that ensure sustainability. What does sustainability mean? Establishment and operation of a business entity requires employment of factors of production: land, labour, capital and organisation - all these elements entail certain expenditures; some are fixed and some are recurrent. The "going concern" assumption requires that these expenditures be recovered with expected profits over a reasonable time period. In the event a company is successful in doing so, that becomes sustainable.

The pursuit of recovery of deployed funds together with profits calls for constant adjustments in the portfolio of activities executed. In effect, a company or a corporate body navigates into the future from the day it starts performing or sailing. In the contemporary world of highly complex, competitive and transformational trade and commerce, "Corporate Navigation" is equally volatile and delicate. As in ocean navigation, corporate navigation warrants year-to-year "Corporate Passage Planning" mapping out as to what course the "Corporate Ship" will follow and how its "Positioning" shall take place at regular intervals.

"Corporate Weather Forecasting"  is a daunting job and involves collection of all sorts of information and data - taking the entity to be a manufacturing  establishment - as follows for the forecast period : (1) demand of related products, (2) supply of the products, (3) production capacity, (4) marketing and selling capacity, (5) capacity and nature of distribution network, (6) financial capacity and availability of resources and accompanying conditions, (7) availability of raw materials and inputs, (8) availability of spare parts, (9) availability of energy and power, (10) availability of labour, (11) nature and changes in promotional exercises in the market, (12) fluctuations in costs of materials, labour, utilities, (13) fluctuations in administrative and marketing costs, (14) price variations, (15) policy shifts at national and international circles, (16) political trends, (17) changes in tariff and taxes, (18) international atmosphere concerning technological developments, strategic polarizations and threats of sanctions and wars, (19) changes in infrastructural conditions, (20) speculated changes in natural environment, where applicable etc.

Collection, scrutiny, processing, analysis of these information and then drawing inferences and conclusions viewed against corporate objectives provide the framework of corporate weather forecasting. Once the forecasting function is completed, corporate passage planning can commence.  The passage plan includes two components: (1) The Plan - laying out specific statements of activities to be undertaken during the plan period substantiated by reasons and objectives, and (2) Budget - for execution of the plan.

The passage planning method includes five components: appraisal, planning, execution, monitoring & evaluation, and adjustments. The appraisal component involves collection, processing and analysis of the above information for the purpose of ascertaining the "Corporate Position" in the internal and external environments. The planning function deals with preparation of statements mentioning sequential and parallel actions with strategies for execution which represents the "Corporate Voyage Plan." Alongside planning activities, an affordable budget is prepared for meeting the financial requirements for execution of the plan. The third part of the planning process is translating the voyage plan into actions. In the fourth stage, as the "Corporate Ship" cruises through the uncertain and tumultuous oceans of business, constant monitoring and evaluation tasks are carried out to identify and locate fault lines that pose risks of losses to "Corporate Vault" and "Corporate Goodwill." In the fifth stage, corporations take corrective steps and modify the corporate voyage plan and re-position the corporate ship for a safe and profitable voyage.   

Without a definite plan adjusted with changes in business environment posing risks and promising profits from time to time, a corporate house is prone to cruise like a rudderless ship in an ocean always fraught with uncertainties and dangers. Time-bound plans are safety valves that suggest changes in the courses of corporations and ensure benefits avoiding risks. The plans make corporate objectives visible to the corporate functionaries, make them liable for working hard to achieve set objectives and augment a participatory environment in the organisation which puts all of them on a same platform for securing a same goal.

Over the last three decades, some corporate houses have been seen to grow in Bangladesh. They owe their birth and life line to three major reasons, among others: (1) the millions of poor people, mostly lightweight women who brought about an industrial revolution in the country by offering labour, astoundingly cheaper than the world average, (2) millions of poor people, mostly heavyweight men offering hard labour overseas at cheaper costs than the world average and remitting foreign currency needed to shop for machinery and equipment which moved the industrial revolution, and (3) the easy capital gains that ensued as a result of the rise of the garment industry and the exodus in flocks of poor people to foreign countries as odd-job-performers.

These are domestic reasons that caused birth and growth of large businesses, but the external tide of supply requirements (primarily for readymade garments and other textile products) reached our shores - as was done at the very advent of the 17th century by the East India Company of England and later by other European companies - out of their own push which, in reality, lured our economically starved and commercially retarded businessmen to engage in large-scale manufacturing that rotated around producing merchandise at home and selling at international markets, entirely spoon-fed in the fields of designing, marketing, pricing, sourcing machinery, raw materials and technical support.         

These corporate groups are largely family firms managed by the founder and his kith and kin. This left little opportunity for scientific and participatory management systems as practised in western countries. The easy-go phenomenon of the export market - due mainly to the cheap-labour factor and the high-tech factor that discourage the western countries to manufacture garment and textile products - perhaps serves as an incentive for local groups to overrule the need for systematic planning and budgeting for pursuing business activities.

Excepting a very few, our corporate houses are still operated by either a single finger or in concert with the other fingers of the same hand, more in similarity with a primitive hunter who hunted himself using an arrow seeing with his own eyes with no room for other eyes. Most of the Bangladeshi corporate bodies are still observed to be performing as "Lone Corporate Hunters", NOT as participatory organisations preparing and following plans and budgets through organised collective works. But, the world scenario is transforming fast and putting intensified pressure on the local organisations to adopt modern business tools and techniques; more important than that is the replacement of the old guards by younger Bangladeshis who understand the latest "Lexicon."  

S. M. Zakaria is a former banker and corporate executive