Business Management Concepts

Created a modern study of management, summed up 5 tasks of management: set goals, organize activities, motivate, communicate, and measure performance.

Peter Ducker

Observed managers and recorded their activities and schedule, provided a better understanding of what managers do

Henry Mintzberg

“Father of Scientific Management”, improved efficiency and labor productivity through scientific methods, proposed that workers “could be retooled like machines”, management decisions would be based on precise procedures based on study

Fedrick Winslow Taylor (Scientific Management)

Scientific Management; developed the Grantt chart to measure and plan work. A bar graph that measures planned and completed work along each stage of production by time elapsed

Henry Grantt

Pioneered time and motion studies to promote efficiency. Frank B, illustrated the time-and-motion study. Lillian M, “First lady of management” interested in the human aspect of work, made a substantial contribution to human resource management

Gilbreths

Administrative Principles; a French mining engineer. Proposed 14 principles of management and 5 basic functions of management: planning, organizing, commanding, coordinating, and controlling

Henri Fayol

Bureaucratic Organization; a German theorist. Introduced the concepts of bureaucratic organizations and managing organizations on an impersonal, rational basis.

Max Weber

Administrative Principles; “Father of African American Management”, outlined 8 fundamental necessities. President of Mutual, life insurance company

Charles Clinton Spaulding

Early Advocate; “Don’t hug your blueprints”, was trained in philosophy and political science. Approached leadership that stressed the importance of people rather than engineering

Mary Parker Follett

Early Advocate; Proposed that informal relationships are powerful forces if managed correctly. Proposed informational organizations and acceptance theory of authority

Cheston Barnard

Humanistic perspective; Researchers changed things like lighting, rest breaks, work hours, and working conditions. Employees performed better when managers treated them more positively. Strongly shaped management practice and research.

Hawthorne Studies

Humanistic Perspective; the hierarchy of needs

Abraham Maslow

Humanistic Perspective; theory x and y

Douglas McGregor

Leading, planning, controlling, and organzing

4 Core Management Functions

setting goals for future performance

Core function: Planning

assigning tasks, grouping tasks into departments, and allocating resources

Core function: Organizing

Using influence to motivate employees to achieve the organizational goals

Core function: Leading

Monitoring employees’ activities, keeping the organizations on track

Core Function: Controlling

Unsettled, full of disturbances, characterized by disorder, and chaotic

“turbulent times”. “turbulent environment” definition

Technological, Natural, Sociocultural, Economic, Legal/Political, and International

Dimensions of a firm’s general environment (the elements that influence ALL organizations about equally in an indirect way)

Elements that directly influence one particular organization’s basic operations and performances

Task Environment

Customers, Competitors, Suppliers and Labor Market

Elements of Task Environment

link and coordinate the organization with the external environment

Boundary Spanning

managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes

Environmental Uncertainty

events originating in foreign countries, as well as opportunities for U.S. companies in other countries.

International dimension of the general environment

scientific and technological advances in society.

technological dimension of the general environment

includes demographic characteristics, norms, customs, and values of a population within which the organization operates.

sociocultural dimension of the general environment

the general economic health of the country or region in which the organization operates

economic dimension of the general environment

includes government regulations at local, state, and federal levels, as well as political activities designed to influence company behavior.

legal–political dimension of the general environment

all elements that occur naturally on Earth, including plants, animals, rocks, and natural resources such as air, water, and climate

natural dimension of the general environment

influence the government officials to take actions that will positively affect their business performance (Apple talking to Trump)

Political Lobbying

Symbols, Stories, Heroes, Slogans and Ceremonies

Five elements of culture (can be seen on surface level)

gathering data from social media platforms

Social media analytics

Adaptability Culture, Achievement Culture, Involvement Culture, and Consistency Culture

Four Types of Corporate Culture

characterized by values that support the company’s ability to interpret and translate signals from the environment into new behavior responses. (cosmetic/fashion)

adaptability culture

a results-oriented culture that values competitiveness, personal initiative, and achievement

achievement culture

A culture that places high value on meeting the needs of employees and values cooperation and equality; “caring, family like atmosphere”

involvement culture

values and rewards a methodical, rational, orderly way of doing things.

Consistency culture

To succeed on a global level requires managers at all levels to have a global mindset, which is the ability to appreciate and influence individuals, groups, organizations, and systems that possess different social, cultural, political, institutional, intellectual, and psychological characteristics.

Global mind set

China is strong in manufacturing; India is a rising power in software design, services, and precision engineering

Comparing and contrasting China and India

There is no “one best way”. There are logical patterns around the world, and we don’t favor any particular country, culture, or way of doing business (Stateless cooperation)

Geocentric

Every culture is unique - We must be oriented towards each individual country

Polycentric

There is one best way- the home country way

Ethnocentric

An organization that receives more than 25 percent of its total sales revenues from operations outside the parent company’s home country and has a number of distinctive managerial characteristics.

multinational corporation (MNC)

It proposes that corporations can alleviate poverty and other social ills and make significant profits by selling to the world’s poor.

bottom of the pyramid (BOP) concept

strategic alliances or programs by two or more organizations

Joint ventures

producing products in the home country for sale to foreign countries; lowest cost and lowest degree of ownership (footwear companies in Great Britain and ceramic companies in Italy)

Exporting

Also called offshoring, work activities are performed in countries with low-cost labor; it is most controversial in the current U.S. political climate; Moderate level of ownership and moderate cost. (Nike)

Outsourcing

Joint ventures; Fast, cost-effective, and a relatively low risk (Starbucks has used joint ventures to expand in China and India).

Partnerships

measure

measure power distance, uncertainty avoidance, individual ism–collectivism, and masculinity–femininity

Hofstede’s sociocultural value dimensions

degree to which people accept inequality in power among institutions, organizations, and people (Mexico)

Power distance

is characterized by people’s intolerance for uncertainty and ambiguity, and resulting support for beliefs that promise certainty and conformity. (Japan)

Uncertainty avoidance

refers to a preference for a loosely knit social framework in which individuals are expected to take care of themselves. (United States)

Individualism

refers to a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members’ interests

Collectivism

is a cultural preference for achievement, heroism, assertiveness, work centrality, and material success. (Japan)

Masculinity (Acheivement)

is a cultural preference for relationships, cooperation, group decision making, and quality of life

Femininity (Nurturing)

reflects a greater concern for the future and a high value on thrift and perseverance (Asia)

long term orientation

reflects a concern with the past and present and a high value on meeting current obligations (Russia and West Africa)

short-term orientation

the risk of lost assets, earning power, or managerial control

Political risk

includes riots, revolutions, civil disorders, and frequent changes in government

Political instability

is one in which people use communication to build personal relationships; nonverbal behavior and personal relationships are highly valued when conducting business (China)

high-context culture

people use communication primarily to exchange facts and information. (Germany)

low-context culture

knowing about the global environment and global business, mentally understanding how cultures differ, and having the ability to interpret complex global changes

The cognitive dimension of global mind-set

the emotional and affective aspect. It includes a liking for diverse ways of thinking and acting, a willingness to take risks, and the energy and self-confidence to deal with the unpredictable and uncertain

The psychological dimension of global mind-set

concerns the ability to behave in ways that build trusting relationships with people who are different from yourself.1

The social dimension of global mind set

a desire for the future state or condition

Define goal

blueprint for goal achievement

Define plan

a broadly stated definition of purpose that distinguishes the organization from others of a similar type. (IKEA, has a well-defined mission to “create a better everyday life for the many people” (in contrast to the affluent few) by “offering a wide-range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”)

Mission Statement

The planning process starts with a formal mission that defines the basic purpose of the organization for employees as well as for external audiences; the organization’s reason for existence; At the top of the goal hierarchy

Organizational mission

official goals, a broad statement describing the organization’s future; organization as a whole, senior/top management; time horizon usually planned up to 5 years (Volkswagen’s decision to focus more on designing and building electric cars)

Strategic Goals

Define the action steps the company will take to attain the strategic goals. Strategic planning tends to be long-term, with organizational action steps extending two to five years into the future. (For example, one part of Volkswagen’s strategic plan announced in 2019 is to cut 7,000 administrative jobs over a five-year period and use the cost savings to hire people specializing in new technology for electric cars).

Strategic Plans

These goals are the results that major divisions and departments within the organization intend to achieve; These goals apply to middle management and describe what major subunits must do for the organization to achieve its overall goals; the time horizon is from 1 to 2 years

Tactical goals

designed to help execute the major strategic plans and to accomplish a specific part of the company’s strategy; Such plans typically have a shorter time horizon than strategic plans—that is, they cover the next year or so. Tactical plans define what major departments and organizational subunits will do to help top managers implement the organization’s overall strategic plan.

Tactical plans

precise and measurable expectations from work groups and individuals; time horizon is less than a year

Operational goals

Mission: Contribute to community health and well-being by providing the best care to every patient.

Strategic goal: Put patients’ needs above all else.

Tactical goals: Improve quality of care; reduce costs; promote wellness.

Operational goals: Provide empathy training; invest in innovations; create care paths; implement electronic health records; cut supply costs; provide healthy lifestyle programs

Goal Levels for Health Care Organization (example for better understanding)

1. Develop a plan

2. Translate plan

3. Plan operations

4. Performance Management

5. Monitor and learn

The organizational planning process

1. Build a coalition

2. Modify goals by time or location

3. Address conflicts with debate or dialogue

4. Break down barriers

5. Manager departures

Ways to resolve managing goal conflicts

building an alliance of people who support a manager’s goals and influencing other people to accept and work toward those goals.

Coalitional management

1. specific and measurable

2. linked to rewards

3. challenging but realistic

4. cover key result areas

5. have a defined time period

characteristics of effective goals

Key performance indicators (KPIs) assess what is important to the organization and how well it is progressing toward its strategic goal; they measure how well lower-level goals are helping the organization progress toward that goal.

KPIs

Management by objectives (MBO) is a system whereby managers and employees define goals for every department, project, and person, and use them to monitor subsequent performance. (Peter Drucker developed this concept). MBO includes the steps of setting goals, developing action plans, reviewing progress, and appraising performance

MBO

Management by means is a recent approach that focuses on the methods and processes used to attain results, rather than on the results themselves; it focuses people on considering the means rather than just reaching goals

MBM

identifies key environmental factors and defines a range of alternative responses to take in the event of emergencies, setbacks, or unexpected conditions.

(British carmaker Aston Martin, executives developed contingency plans for the possibility of the United Kingdom leaving the European Union without an exit deal in place. To address the uncertainty surrounding Brexit, leaders explored options such as using ports other than Dover, bringing in parts by air freight, and stockpiling parts to prevent disruptions at the company’s only factory, which is in the United Kingdom.)

Contingency plans

Involves looking at current trends and discontinuities and visualizing future possibilities. Rather than looking only at history and thinking about what has been, managers think about what could be

(Executives at Royal Dutch Shell recently engaged in scenario building for a world of “lower forever” oil prices.)

Scenario building

big, hairy, audacious goal; big, inspiring, and outside the prevailing paradigm that it hits people in the gut and shifts their thinking

What does BHAG stand for?

“Objectives and key results.” The objectives are what the individual, team, department, or company wants to achieve, and the key results are ways to benchmark and monitor progress toward achieving the objectives.

OKR

to prepare the organization, its managers, and its employees to cope with sudden catastrophic events that could destroy the firm if a crisis-response plan were not in place

Crisis Planning

This crisis prevention stage involves activities managers undertake to prevent crises and detect warning signs. A critical part of the prevention stage is building trusting relationships with key stakeholders, including employees, customers, suppliers, governments, unions, and the community.

(At the software firm Basecamp, managers prevented a crisis by responding quickly and openly when Campfire, a real-time chat tool for small businesses, kept turning off and on unexpectedly)

Crisis planning stage 1

The crisis preparation stage involves detailed planning to handle a crisis when it occurs. Three steps in the preparation stage are (1) designating a crisis management team and spokesperson, (2) creating a detailed crisis management plan, and (3) setting up an effective communications system.

(Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, became the go-to federal government spokesperson during the COVID-19 crisis in 2020)

Crisis planning stage 2

The crisis management plan (CMP) is a detailed written plan that specifies the steps to be taken, and by whom, if a crisis occurs

CMP

is a social entity that is goal-directed and deliberately structured

Organization

The degree to which the organization achieves a stated goal or succeeds in accomplishing what it tries to do

Organizational effectiveness

refers to the amount of resources used to achieve an organizational goal. It is based on how much raw material, money, and people are necessary for producing a given volume of output

(Some managers are using mobile apps to increase efficiency; one example is Square, which is used to process credit and debit card payments with a smartphone.)

Organizational efficiency

is defined as the organization’s ability to attain its goals by using resources in an efficient and effective manner.

Performance

To achieve HIGH performance

What is a manager’s ultimate responsibility?

means taking the long-term view and seeing the big picture, including the organization and the competitive environment, and considering how they fit together.

(Managers at Hallmark Cards are struggling to adopt an effective strategy that can help the company thrive in a world where people have stopped sending greeting cards.)

Strategic thinking

refers to the set of decisions and actions used to formulate and execute strategies that provide a competitively superior fit between the organization and its environment to achieve organizational goals.

Strategic Management

The plan of action outlines resource allocation and activities to address the environment, achieve a competitive advantage, and attain the organization’s goals.

Strategy

refers to what sets the organization apart from others and gives it a distinctive edge in meeting customer or client needs in the marketplace.

Competitive advantage

target specific customers, focus on core competencies, provide synergy, and create value.

Four elements of competitive advantage