Portfolio management is the organization of an organization’s programs and projects to fit particular goals and objectives. There are two classifications of portfolio management, namely, active and passive (Turner, 2016). Active portfolio management is a strategy used by portfolio managers to implement specific investments. In the quest to use active portfolio management, portfolio managers buy and sell stocks to the market in a bid to meet a specific index. This is often done in response to changing marketing conditions. Passive portfolio management aims at generating a profitability that is concurrent to a specific index. Unlike an active portfolio where the management of programs and projects is left to a particular management team, passive portfolio management does not involve the management making market decisions. In passive portfolio management, decisions are made by investors. It is a management strategy that involves tracking the market index. In this case, the funds involved in the portfolio reflect the market index.
One of the greatest issues in portfolio management is management efficiency. Most portfolio managers struggle to meet market efficiency protocols. An efficient market is where the existing market price favors good returns on investment (Ginger Levin & John Wyzalek, 2014). Unfortunately, most organizations either do not make enough returns on investment or are making losses. Marketing efficiency is based on three basic assumptions. First, investors should take their decisions based on data available in the market. Secondly, that there is a sufficient number of investors in the market. Lastly, that no investor has a direct influence on the market price, if all these standards can be met, market efficiency can be achieved. However, in a typical market, only one or two of these assumptions can be met unless the portfolio manager has effective portfolio management skills that can aid in market efficiency.
Portfolio Management Tools
Portfolio managers would act as the overall financial manager to supervise how the funds will be utilized. They would also be in charge of appointing supervisors at the three levels of the project. At the three levels, supervisors will be assigned to each level to monitor the utilization of the funds. The supervisors at the three levels would be liable to report to the director of the program. Supervisors at these levels would be responsible for keeping accounts of how funding is allocated. On the other hand, the director of the program would be in charge of either approving or disapproving funding for programs at the three levels of the project.
A marketing plan is basically a comprehensive business document outlining an organization’s market strategy. It is a document describing the business activities and how these activities are geared towards attaining the set marketing goals and objectives within a specific set time frame. Market planning is essential to any organization in the following ways: First, it provides focus as well as direction to the organization. With several marketing strategies that are out there, a market plan is necessary. There are several options that an organization may opt to use in its marketing, which may include the use of social media, email, advertising, publicity, and so on. A market plan also helps, and the organization clarifies the specific target market of the organization. Secondly, it makes it easy for organizations to locate their clients since they know who their clients are through market planning. Lastly, it aids in an organization developing products and services that suit the customer needs. A good market plan should be able to identify the customers’ tastes and preferences of products and services.
The effectiveness and the significance of the market planning through strategies such as advertising and the use of social media is undoubtedly visible in the tremendous progress that the organization has been able to make over the past few years. Through the two strategies of market planning, advertising, and the use of social media, the organization has been able to meet the customer tastes and preferences, which has seen the organization expand its scope of service provision and ensure the quality of its services.
One of the tools that portfolio managers can use to create market efficiency is marketing and sales messages. There are two fundamental steps in creating marketing and sales messages, especially when using mobile technologies. Like all mobile messages, marketing or sales messages need to be kept short, simple, and precise. Additionally, marketing or sales messages not only have to be precise and straightforward but also factual and achievable so as to avoid situations where a business promises what it cannot deliver. Just like how the way mobile users are discouraged by websites that don’t load quickly, they often dislike businesses that make promises they cannot or don’t intend to keep. To avoid this, there is a need for businesses to demonstrate honest concern for its customers’ needs rather than focusing much on making profits. The FTC has the mandate to penalize advertisers who engage in deceptive advertising on products and services.
On the other hand, balance-of-payments (BOP) is an approach that involves the analysis of economic transactions between a state and other countries across the world. An economist would define (BOP) as a record of all economic transactions made between economic entities in a state and other states across the world over a given period of time. Using the BOP approach, the country’s net income can be analyzed through the evaluation of the country’s imports, dividends, interest, and export balance (Prasad, 2018). Furthermore, factors affecting demand and supply curve for both imports and exports in and out of the country are analyzed, and an economic correlation is established to assess the country’s economic situation.
There are several factors that determine the decrease or increase in the demand for any products and services. Some of the notable factors that can cause a shift in demand include socioeconomic status, purchasing power, expectations, tastes, and preferences. All these factors can be used to improve the performance of a business. Take, for example, the income of the buyers; if a business is dealing with a population of low-income earners, it is only reasonable that the business has to consider lowering the prices of its products or services to suit the consumer’s income (Carroll, 2013). On the other hand, the nature and size of the population also matter when it comes to both the law of demand, supply, and elasticity of demand. Therefore, Portfolio managers need to balance the demand and supply of goods and services for a business to thrive. To achieve this, a business has to ensure the elasticity of the prices of its goods and services, then consider the elasticity of the demand for its products when supplying the products.
Customers deserve to know when they are being marketed to and who is behind the marketing and sales messages they read and year. They also deserve to be provided with the actual and factual information about the products and services they are purchasing. When a business is making marketing and sales messages, it is important for them to make promises that they are sure they can deliver. Otherwise, they risk losing the trust of their customers. The Federal Trade Commission (FTC) argues that stealth marketing deceives the consumers into buying a product whose quality has not been affirmed; hence such a decision is unethical and can have negative consequences on a business (Guffey & Loewy, 2012). When a customer finds out that the marketing and sales messages are deceptive and are meant to lure them into buying from the business and not concerned with their needs and welfare, there is the risk of losing such clients. It is important for a business not to make promises they do not intend or cannot fulfill so as to maintain good communication etiquette. Doing so will also go a long way in the business demonstrating sensitivity to user needs and gives the buyers more control of the messages they receive
Portfolio managers can also utilize forecasting as a tool for predicting market preferences. Forecasting involves an economic analysis meant to predict the future of the economic prospects of a country. There are two fundamental types of forecasts, namely; short-term forecasts and long-term forecasts (Turner, 2016). A short-term forecast is an economic analysis undertaken within a short period of time, mostly on an annual or quarterly basis. On the other hand, a long-term forecast is an economic analysis undertaken over a long time, usually over 5 to 10 years. Forecasting involves the correlation of exchange rate changes so as to compute the economic situation of a country. Technical Analysis and Balance of Payments (BOP) approach to forecasting are the two most common forecasting approaches. Technical models are used to correlate exchange rate changes with other variables. Unlike other approaches, “technical analysis comprises the evaluation of exchange rate changes without considering whether there is reciprocity for the correlation” (Lien, 2015). Forecasting using technical analysis also utilizes the use exchange rates recorded in the past to forecast future exchange rates. During a technical analysis, past exchange rates that are expected to reoccur in the future are analyzed, and their economic correlation differentiated.
Recommendations
Planning for the implementation of project management is an important part of project management. Planning involves the target setting, setting milestones, and master schedule (Kerzner, 2017). Target setting involves identifying the target for the project, including the target population and the target market. To achieve this, project implementers have to consider the tastes and preferences of the target population. On the other hand, setting the milestones that the project is expected is also important. In addition, a schedule of implementing the project should be formulated for the effective execution of the project. When a plan has been developed, the next step is to test the plan. Some of the productivity measurements include; cumulative employee labor productivity, sales productivity, returns, and individual employee labor productivity (Stewart, Piros & Heisler, 2019). Some of the strategies that portfolio managers can employ to increase their productivity include; employee downsizing (Turner, 2016). This will enable then to maximize their input for maximum output and also resonate with their organization’s goals and objectives.
Part of the testing process involves the use of pilot tests where programs and projects are tested on a simulated path to ascertain the effectiveness and quality of the project. After the testing process, the project’s effectiveness should be evaluated; if there are any errors identified from the evaluation, necessary steps would be put in place to correct these errors. This is where the market’s performance is checked; if there were milestones that were not met, the project has to be developed further (Stewart, Piros, & Heisler, 2019). However, if the project meets all the milestones set, then the project proceeds to the execution stage. Here, all the resources required for the implementation of the project are assembled.
Some of the strategies portfolio managers may employ in order for it to achieve its optimum level of production and profits include; creation of a culture that promotes hard work and commitment. Portfolio managers need to encourage their employees to do their best to meet the company’s targets so that long-term and short-term company objectives are met. Secondly, portfolio managers need to adopt a customer focus strategy. Portfolio managers need to realize that their consumers are their greatest asset; thus, they should strive to keep up with their constantly changing needs and wants. As the common phrase stipulates, the customer is always right. Other strategies that portfolio managers may adopt include; provision of top-notch customer service and product differentiation.