Deal With Credit Issues

One of the most important aspects of creating successful partnerships is to know yourself first. It’s essential to understand your own weaknesses, biases, and prejudices. Knowing these things does not make you weaker. In fact, it makes you much stronger. Knowing where you are vulnerable enables you to seek out those people who can reinforce and strengthen those areas. Keeping your weaknesses hidden from yourself does not ensure that others won’t spot them immediately and exploit them readily.

Knowing yourself also relates to business. An organization must have a realistic assessment of its own culture, its way of viewing the world. Understanding the organization’s strengths and weaknesses is as critical to a business partnership as understanding your personal pluses and minuses is to a personal partnership.

Customer perceptions and behaviour – what the customer wants and expects – are among the biggest influences on pricing. Successful pricing is based on a clear understanding of the needs and nature of the target market. The culture of the market affects pricing decisions. If there is an acceptance of a particular type of pricing structure or approach, strategies will often follow this. The maturity of the market is also important. If the market is mature with few new customers, pricing decisions should focus on taking customers from competitors as well as retaining market share. But if the market is new and growing, the aim is to build and gain market share as rapidly as possible.

These two approaches may or may not lead to the same result. Lastly, if the market is in decline, prices may need to be cut simply to compete for a dwindling number of customers.

To manage the risk inherent in commercial decisions requires an awareness of what the risks are and the danger signals that risk is becoming reality. This is the starting point: in making any major strategic choice you must be confident that you can detect and absorb any potentially dislocating events.

Providing sufficient resources to avoid, mitigate or control risks is important, as is clear organisational communication. Focusing on the quality of what people do is crucial too. Designing and maintaining management information systems to produce the right information in the right form at the right time to the right people should make it easier to control risks, particularly at times of change. Following a process for managing risk involves assessing potential catalysts, avoiding or dulling them and taking action.

But decisions should positively embrace risk. Just as the previous chapter highlighted the nature of organisational learning and how action is central to reflection, development and learning, so audacity is also necessary if progress is to be achieved.