Exam 1: Intro to Management

Purpose of Management

To achieve the "Right Work, Done Well."

Right Work

Refers to the essential tasks that managers need to accomplish, including creating vision, mission, goals, strategies, and plans.

Core Values

Ethical and legal practices that guide managers in serving the diverse needs of stakeholders.

5 categories of management theory

• Specialization of labor 

• Systematic Management 

• Scientific Management 

• Administrative Management 

• Human Relations Management

Specialization of Labor

Individual workers “specialize” in performing the sub-tasks that improves production quality and overall efficiency

Systematic Management

In the early industrialization stage, engineers and economists performed the major higher-level managerial tasks in factories.

Scientific Management

Focuses on productivity with many leaders developing and enhancing the foundation for later modern day advanced methods, such as lean manufacturing, which focus on removing “waste” from production.

Administrative Management

Theories on how to manage organizations more effectively that include concepts such as: line of authority (hierarchical organization charts), equitable treatment of employees, formal selection processes for hiring, and impersonal application of rules in the workplace.

Human Relations Management

Increasing power of “Unions”. Advent of “Employee Welfare”
departments that evolved into “Personnel” departments

Scientific Management Leaders

• Frederick Taylor

• Frank & Lillian Gilbreth

• W. Edwards Deming

• Henry Gantt

• Joseph Juran

Human Relations Management Leaders

• Mary Parker Follet

• Elton Mayo

• Abraham Maslow

• Herbert Simon

Elements of “Right Work”

1. Vision

2. Mission

3. Goals

4. Strategy

5. Plans

Vision

Aspirations and Purpose of the organization

Mission

Provides clarity of what the organization does, who it is for, and how it will fulfill that

Goals

Specifies success and creates measurable

Strategy

Describes how the goals will be achieved

Plans

Specific steps and requirements for executing strategies

Different Strategy Options

• Differentiation Strategy

• Low-cost strategy

• combination strategy

• focus strategy

Differentiation Strategy

Provide Product/Service features/benefits that are superior and more attractive to customers than competitive offerings

Low-Cost Strategy

Have the lowest total cost methods for producing products/services vs. competitors.

Combination Strategy

Provides some of the “differentiation” features valued by customers at an overall lower price point than competitors’ fully differentiated product/service offerings

Focus Strategy

Serve the needs of a market segment better than competitors’ offerings for the total market

Steps of Strategy Development Process

1. Develop/Review/Update vision, mission, and goals

2. Conduct and external analysis of the business

3. Conduct an internal analysis of products/services/capabilities against competitors

4. Select best strategy

5. Implement Strategy

External Analysis Tools

• Porter’s Five Forces

• Industry Life Cycle Analysis

• Macroenvironmental Analysis

Porter’s Five Forces

1. Intensity of rivalry

2. Bargaining power of buyers

3. Bargaining power of suppliers

4. Threats to new entrants

5. Threat of substitute products/services

Industry Life Cycle Analysis

1. Embryonic: when a distinct product/service beings the formation of a new industry

2. Growth: becomes broadly accepted by customers

3. Shakeout: when industry growth starts to flatten/decline and participants exit/merge/are acquired. 

4. Mature: growth begins to slow and new entrants decline

5. Decline: when growth is negative and very few participants remain

Macroenvironmental Analysis

1. Macroeconomic factors

2. Global trends

3. Technology

4. Demographics

5. Social values

6. political//legal factors

Elements to Effective Strategy Implementation

1. Organization structure: Designing meaningful jobs and creating an optimal organizational model. 

2. Monitoring and control: Creation of a system that will periodically review and oversee the progress of the strategy, goals achieved/not achieved, and providing feedback and guidance. 

3. Culture: The set of values, norms, beliefs, and attitudes shared by the organization

Elements for Doing What’s “Right“

1. Business Law

2. Ethical Decision Making

3. Core Values

4. Corporate Social Responsibility

Business Law

• Labor Laws

• Uniform Commercial Code

• Environmental Protection

• Industry Specific Regulations

Ethical Decision Making

What does happen(Internal and External Factors) and what should happen

What should happen

• Moral Awareness

• Moral Judgment

• Moral Intention

• Action/Implementation

Ethical Standards

• Utilitarian Approach: Choose the option that benefits the greatest number of people.

• Individualism Approach: Select the option that serves the individual's long-term interests.

• Moral Rights Approach: Ensure that fundamental rights (e.g., privacy, freedom of speech) are not violated.

• Justice Approach

• Moral Intention: Prioritize moral values over personal values and commit to doing what is right.

• Impartial Opinion: Seek an unbiased perspective from a knowledgeable third party.

• Full Disclosure: Consider how the public would view the decision if it were fully disclosed.

Core Values

• Underlying norms of behavior
  and actions expected of al
  employees

• Must go beyond articulation
  • Reinforced by example
  • Reinforced by action

Corporate Social Responsibility

The actions of an organization to recognize and proactively respond
to the needs and expectations of all of its stakeholders

Key Actions for Effective CSR

1. Role Modeling: Leaders should act as role models in their daily decisions to set an example for the organization.

2. Cognitive Empathy: This involves consciously understanding others' emotional states to find common ground and mutually beneficial solutions.

3. Broad Vision: Organizations should have a higher purpose beyond just meeting customer and shareholder demands.

Drivers of Economic Value of a Business

Profitability and Growth

Profitability

Ability to generate long-term positive cash flow necessary to provide an appropriate, risk-adjusted, rate of return on capital employed

Growth

Rate of increase in net cash flows year over year

Options for Creating Growth

1. Existing products/services to
   current customers

2. Gaining new customers while
   retaining current customers

3. New products/services to current
   and new customers

4. Selling existing products/services
   into new markets

5. Entering completely new markets
   with new products/services

Innovation

Executing an idea which addresses a specific challenge and creates value for both the developer and the user

Mechanisms for Successful Innovation

1. Use of Artificial Intelligence

2. Use of Technology Platforms

3. Use of Collaborative Ecosystems
   

Entrepreneurship

Bringing forth novel ideas and concepts that create value.

Implementing Intrapreneurship in large companies

1. Leadership commitment to support and fund more innovation, with high failure rates.

2. To focus on a few targeted areas that align with core business skills.

3. Compliance with internal constraints such as risk aversion, short-term budgets and consent restrictions.

4. Creating business development units for external opportunities through seed funding, minority investments, or acquisitions of start-ups.

5. Implementing technological infrastructure and collaborative ecosystems to share costs and risks.

6. Learning from past successes/failures to improve future results.

7. Courageous abandonment of failed projects to avoid wasting resources on useless opportunities

Factors Driving Globalization

1. Declining Trade Barriers

   1. Tariffs are being reduced or eliminated

   2. There are overall advantages to a free trade market 

2. Technology Enablement

   1. Air travel, communications, internet make it easier and cheaper to manage

3. Rise of Multinational Enterprises

   1. Increases of successful global businesses has increased knowledge of how to run one

4. Formation of Global Institutions 

   1. World Trade Organization(WTO) and the World Bank govern global markets and provide support and protections to encourage global trade.

Key Elements of Political Economy

1. Evaluation of the Political Climate

   1. Does the government favor free trade?

   2. Are there high tariffs on imported goods and services?

   3. Is there a lot of civil unrest and revolutions

   4. How are corruption and fraud? 

2. Evaluation of Economic Conditions

   1. Sound and stable economy?

   2. Inflation rate?

   3. Exchange rate?

3. Evaluation of the Legal System

   1. Do laws and business norms ensure your company’s contracts and needs?

• Loom at culture as well

  • Countries can have multiple cultures 

  • Be aware of languages

Core Strategies for Conducting International
Business

1. Global Standard

   1. All products are essentially unchanged in all markets

   2. Why?: To optimize costs

2. Local customization

   1. Modified to meet local differences

   2. Why?: To compete against others who have met the needs of the local population 

3. Combination strategy

   1. Customized for some countries but not others

   2. Why?: Some markets are not large enough while some are.

Strategies for Entering a Foreign Market

1. Export

   1. Ship from other countries to sell through retail/directly to customers

2. License

   1. Sell rights to third party

3. Franchise

   1. Let business partner use trademarks/patents/brands

4. Joint venture

   1. Formal arrangement with each member having ownership 

5. Strategic alliance

   1. Less formal arrangement.

6. Do it yourself