dr. Adrianna Jaskanis [email protected] Methods to mngtm_2.pdf · • Henri Fayol –14 principles of management ... •PEST helps to understand the "big picture" forces of

© Adrianna Jaskanis Faculty of Management, University of Warsaw

Introduction to management

dr. Adrianna Jaskanis

[email protected]

Chair of Organization Theory and Methods

mailto:[email protected]


Historical roots of contemporarymanagement


Historical roots of contemporarymanagement practices

• Organized activities and management – historical examples

• Adam Smith’s division of labor increases productivity

• Industrial Revolution – the advent of machine power, mass production and efficient transportation begun in the late 18th century in GBJust in 20th Century management has undergone systematic investigation, acquired a common body of knowledge and become a formaldiscipline


Roots of modern management

• Classical approach to management – looks at the field from the perspective of how to improve the productivityof operative personnel

– Frederick Winslow Taylor and his scientific management

– Henry Ford and his work

– Henry Gantt and scheduling device – graphic bar chart

• General administrative theorists – are concerned with th eoverall organization and how to make it more effective

• Henri Fayol – 14 principles of management

• Max Weber and his bureaucracy


Scientific management

• Develop a science for each element of an individual’s work, which replaces the old rule of thumb method.

• Scientifically select and then train, teach, and develop the worker.– previously workers chose their own work and trained themselves as best they

could

• Heartily cooperate with the workers so as to ensure that all work is done in accordance with the principles of the science that has been developed.

• Divide work and responsibility almost equally between management and workers. Management takes over all work for which it is better than the workers – Previously almost all the work and the greater part of the responsibility were

thrown upon the workers


14 Principles of Management

Fayol’s Fourteen Principles of Management

1. Division of Work 8. Centralization

2. Authority 9. Scalar Chain

3. Discipline 10. Order

4. Unity of Command 11. Equity

5. Unity of Direction 12. Stability of Tenure of Personnel

6. Subordination of Individual Interest to the General Interest

13. Initiative

7. Remuneration 14. Espirit de Corps


Weber’s Ideal Bureaucracy

Weber’s Idealn Bureaucracy

1. Division of Labor Jobs are broken down into simple, routine, and well-defined tasks.

2. Authority Hierarchy Offices or positions are organized in a hierarchy, each lower one being controlled and supervised by a higher one.

3. Formal Selection All organizational members are to be selected on the basis of technical qualifications demonstrated by training, education, or formal examination.

4. Formal Rules and Regulations To ensure uniformity and to regulate the actions of employees, managers must depend heavily on formal organizational rules.

5. Impersonality Rules and controls are applied uniformly, avoiding involvement with personalities and personal preferences of employees.

6. Career Orientation Managers are professional officials rather than owners of the units they manage. They work for fixed salaries and pursue their careers within the organization.


Human Resources Approach

• Mary Parker Follet – one of the early writers to recognize that organization could be viewed from the perspective of individual and group behavior

• Elton Mayo and Hawthorne studies – begun in 1924 and were undertaken in Western Electric Company’s Hawthorne Works in Cicero, USA; Hawthorne studies were initially devised to examine the effect of different illumination levels on worker productivity


Hawthorne experiments

• A series of experiments and qualitative studies covering the design of jobs, changes in the lengths of the workday and workweek, introduction of rest periods and individual versus group wage plans

– Eg. Wage plans – the results indicated that the incentive plan had less effect on worker’s output than did group pressure and acceptance and the concomitant security

• Finally experiments and qualitative studies concluded that behavior and sentiments are closely related

• Group influences significantly impacts work productivity through social norms and standards; social norms and standards as the determinants of individual work behavior


The management environment

• The foundations of planning

• Business Environment Scanning

• Building company’s strategy


Planning

• Planning helps in:

– Defining the organization’ s objectives or goals

– Establishing an overall strategy for achieving the goals

– In developing a comprehensive hierarchy of plans to integrate and coordinate activities

• And is generally concerned with ends and with means – what is to be done and how it is to be done


Why should managersformally plan?

Set the standards to

facilitate control

Minimizewaste and

redundancy

Provide direction

Reduce impact of

change


Levels of management and goals

Strategic goals

Tactical goals

Operative goals

Top managers

Middle level managers

First-line managers


Types of plans

Breadth of use

Times frame

Specificity Frequencyof use

Strategic Long term Directional Single use

Tactical Short term Specific Standing


Business strategy

• Refers to the overall strategy of an organization that is made up of multiple business units, operating in multiple markets

• Determines how the corporation as a whole supports and enhances the value of the business units within it

• Answers the question, "How do we structure the overall business, so that all of its parts create more value together than they would individually?"


Building a strategy

• Strategic management process

Analyze the environment

Analyze the organization’s

resources

Identify the organization’s

current mission, objectives and

strategies

Reassess the organization’s mission and objectives

Formulate strategies

Evaluateresults

Implement strategies


Mission and Vision Statements

• People can be genuinely inspired if their organization has a compelling vision and a clear, worthwhile mission; and these can be powerfully expressed in well-crafted mission and vision statements

• Statements serve to explain an organization's purpose and direction


Mission statements

• Mission statements define the organization's purpose and primary objectives

– set in the present tense

– explain why you exist as a business, both to members of the organization and to people outside it

– tend to be short, clear and powerful

• Examples:

– Walgreens: "To be the most trusted, convenient multichannel provider and advisor of innovative pharmacy, health and wellness solutions, and consumer goods and services in communities across America.„

– Nike (athletics) – "To bring inspiration and innovation to every athlete in the world."


Vision Statements

• Defines organization's purpose, but focuses on its goals and aspirations

• Designed to be uplifting and inspiring, timeless - even if the organization changes its strategy, the vision will often stay the same

• Examples:– PepsiCo (retail) – "Our vision is put into action through programs and

a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company."

– Amnesty International(nonprofit) – "Our vision is of a world in which every person – regardless of race, religion, ethnicity, sexual orientation, or gender identity – enjoys all of the human rights enshrined in the Universal Declaration of Human Rights and other internationally recognized human rights standards."

– Ikea (retail) – "To create a better everyday life for the many people."


SWOT Analysis

• Is a useful technique for understanding organization’sStrengths and Weaknesses, and for identifying both the Opportunities open to the organization and the Threats itfaces

• It helps to uncover opportunities and by understanding the weaknesses of business, it is possible to manage and eliminate threats

• Necessary to craft a strategy that helps to distinguish the company from the competitors, so that the organizationcan successfully compete in the market


SWOT framework

Strengths

What advantages does your organization have?

What do you do better than anyone else?

What unique or lowest-cost resources can you draw upon that others can't?

What do people in your market see as your strengths?

Weaknesses

What could you improve?

What should you avoid?

What are people in your market likely to see as weaknesses?

What factors lose you sales?

Opportunities

What good opportunities can you spot?

What interesting trends are you aware of?

Useful opportunities can come from such things as:

Changes in technology and markets on both a broad and narrow scale.

Changes in government policy related to your field.

Changes in social patterns, population profiles, lifestylechanges, and so on.

Local events.

Threats

What obstacles do you face?

What are your competitors doing?

Are quality standards or specifications for your job, products or services changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

SWOT


General tip to SWOT Analysis

• When looking at opportunities and threats, PEST Analysis can help to ensure that you don’toverlook external factors, such as new fovernmentregulations, or technological changes in yourindustry


PEST Analysis

• Changes in business environment can create great opportunities – and cause significant threats for a company

• PEST Analysis is a simple and widely used tool that helps to analyze the Political, Economic, Socio-Cultural, and Technological changes in organization’s business environment

• PEST helps to understand the "big picture" forces of change that the company is exposed to, and, from this, take advantage of the opportunities that they present


Political Factors to Consider

• When is the country's next local, state, or national election? How could this change government or regional policy?

• Who are the most likely contenders for power? What are their views on business policy, and on other policies that affect your organization?

• Depending on the country, how well developed are property rights and the rule of law, and how widespread are corruption and organized crime? How are these situations likely to change, and how is this likely to affect you?

• Could any pending legislation or taxation changes affect your business, either positively or negatively?

• How will business regulation, along with any planned changes to it, affect your business? And is there a trend towards regulation or deregulation?

• How does government approach corporate policy, corporate social responsibility, environmental issues, and customer protection legislation? What impact does this have, and is it likely to change?

• What is the likely timescale of proposed legislative changes?• Are there any other political factors that are likely to change?


Economic Factors to Consider

• How stable is the current economy? Is it growing, stagnating, or declining?

• Are key exchange rates stable, or do they tend to vary significantly?

• Are customers' levels of disposable income rising or falling? How is this likely to change in the next few years?

• What is the unemployment rate? Will it be easy to build a skilled workforce? Or will it be expensive to hire skilled labor?

• Do consumers and businesses have easy access to credit? If not, how will this affect your organization?

• How is globalization affecting the economic environment?

• Are there any other economic factors that you should consider?


Socio-Cultural Factors to Consider

• What is the population's growth rate and age profile? How is this likely to change?

• Are generational shifts in attitude likely to affect what you're doing?

• What are your society's levels of health, education, and social mobility? How are these changing, and what impact does this have?

• What employment patterns, job market trends, and attitudes toward work can you observe? Are these different for different age groups?

• What social attitudes and social taboos could affect your business? Have there been recent socio-cultural changes that might affect this?

• How do religious beliefs and lifestyle choices affect the population?

• Are any other socio-cultural factors likely to drive change for your business?


Technological Factors to Consider

• Are there any new technologies that you could be using?

• Are there any new technologies on the horizon that could radically affect your work or your industry?

• Do any of your competitors have access to new technologies that could redefine their products?

• In which areas do governments and educational institutions focus their research? Is there anything you can do to take advantage of this?

• How have infrastructure changes affected work patterns (for example, levels of remote working)?

• Are there existing technological hubs that you could work with or learn from?

• Are there any other technological factors that you should consider?


The Porter’s Five Forces

• Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry, the firm’s position and ability to make a sustained profit in anindustry

• Porter’s Five Forces– Supplier Power: The power of suppliers to drive up the prices of your inputs.

– Buyer Power: The power of your customers to drive down your prices.

– Competitive Rivalry: The strength of competition in the industry.

– The Threat of Substitution: The extent to which different products and services can be used in place of your own.

– The Threat of New Entry: The ease with which new competitors can enter the market if they see that you are making good profits (and then drive your prices down).


The Porter's Five Forces


Strategic SMART Goals

• SMART is an acronym that guides goal setting

• Its criteria are commonly attributed to MBO

• To make sure the goals are clear and reachable, each one should be:

– Specific (simple, sensible, significant).

– Measurable (meaningful, motivating).

– Achievable (agreed, attainable).

– Relevant (reasonable, realistic and resourced, results-based).

– Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).


The Ansoff Matrix

• Also called the Product/Market Expansion Grid

• Shows four strategies that an organization can use to grow; helps to analyze the risks associated with each strategy


Porter's Generic Strategies

• They can be applied to products or services in all industries, and to organizations of all sizes

• According to Porter's Generic Strategies model, there are three basic strategic options available to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation and Focus


The Cost Leadership Strategy

• Organizations that achieve Cost Leadership can benefit either by gaining market share through lowering prices (whilst maintaining profitability) or by maintaining average prices and therefore increasing profits

• All of this is achieved by reducing costs to a level below those of the organization's competitors


The Differentiation Strategy

• Differentiation involves making products or services different from and more attractive than those of competitors

• It typically involve features, functionality, durability, support, and also brand image that your customers value

• To make a success of a Differentiation strategy, organizations need:– Good research, development and innovation.

– The ability to deliver high-quality products or services.

– Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings.

• Companies that pursue a Differentiation strategy win market share by offering unique features that are valued by their customers


The Focus Strategy

• Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low-cost or well-specified products for the market

• The companies tend to build strong brand loyalty amongst their customers which makes the segment less attractive to the competitors

• Focus strategies involve achieving Cost Leadership or Differentiation within niche markets in ways that are not available to more broadly-focused players


Blue Ocean Strategy

• Blue Ocean Strategy was developed by W. Chan Kim and Renée Mauborgne. They observed that companies tend to engage in head-to-head competition in search of sustained profitable growth. Yet in today’s overcrowded industries competing head-on results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Lasting success increasingly comes, not from battling competitors, but from creating blue oceans of untapped new market spaces ripe for growth.

• It pursues differenciation and low cost

• https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/


Green Management

• Environmental issues are a touchy subject. They continue to polarize opinion, particularly when it comes to government policy and the long-term view

• Green initiatives are fundamentally important for some consumers; the companies' environmental efforts (or lack of them) are increasingly being seen as "deal breakers" for many choice-rich, time-poor customers

• A way to differentiate the brand and to enhance the power of the brand

• Companies that have good green credentials have higher staff morale, see less staff turnover, and can attract and retain top talent more easily


Benefits for business

• Stimulation of innovation - new sources of revenue – or even entirely new products – after starting sustainability efforts

• Going green helps the companies manage risks more effectively, enter new markets, use resources more efficiently, and improve their competitive position…

• Examples:

– Global coffee chain Starbucks is on track to reduce its energy consumption by 25 percent, which will result in substantial company-wide savings.

– Office chain Staples® saved $4.2 million each year simply by changing the light bulbs in its stores and offices, and another $1.5 million by making delivery trucks more energy-efficient.


Start-up business consultancy


Shell case study - Questions

Please confront the information on Royal Dutch Shell from differentsources and answer the questions:

1. Illustrate the main internal and external stakeholders in Shell usingPEST Analysis

2. Choose two groups of stakeholders and then describe whetherthere is a way in which Shell tries to meet the needs of these twogroups.

3. Why does Shell find out about the views of interest groups and pressure groups? Is this information usefull for Shell when makingdecisions? How? In what way?

4. Evaluate if it is possible for a business to meet the needs of shareholders, customers, employees, suppliers and society at the same time. Can a balance of interests be achieved?


Homework – Shell case study

• Please answear the questions from the previousslide on A4 format paper; squeeze your answerson one page

• Pls be specific Use all the materials distrubutedto you during the lecture

• Name the file with your answers yourname.shelland save it in pdf format

• Send it to [email protected] by the 20th of October 2016, 23.59

mailto:[email protected]

Documents

dr. Adrianna Jaskanis [email protected] Methods to mngtm_2.pdf · • Henri Fayol –14 principles of management ... •PEST helps to understand the "big picture" forces of