Introduction to Business Organizations and Strategy - Lecture Nine Notes

Introduction to Business Organizations and Strategy - Lecture Nine

  • Instructor: Fabrice Leggett
  • Previous Discussions:
    • Definition of a business
    • Business models and foundation of economic systems
    • Focus on entrepreneurs and entrepreneurs' mindset
    • External and internal drivers impacting businesses
    • Tools for analysis: PESTEL and Porter's five forces
    • Resource-based view of organizations for sustainable competitive advantage
    • Definition of strategy and generic strategies at business unit level
    • Role of operations in competitive advantage and performance
    • Strategy at corporate level and tools for corporate portfolio balance
    • Key concepts in marketing to understand customers and find product-market fit
    • Innovation: types and approaches
  • Today’s Focus: Organization of firms

Section One: Management Explained

  • Definition of Management:
    • Management is a set of interrelated tasks: planning, organizing, leading, and controlling to achieve organizational goals.
    • Importance of management: can make or break a company by inspiring and enabling employees versus destroying morale.
    • Managers do not perform hands-on work, but create the environment and provide resources for employees to excel.

Managerial Roles

  • Categories of Managerial Roles:

    • Interpersonal Roles: Leading employees, building relationships, acting as liaison (inside and outside the company).

    • Interaction with suppliers, government, consumers, unions, and community leaders.

    • Skills needed: Networking and information gathering from various sources.

    • Informational Roles: Managers gather and communicate information.

    • Types of information: technical, administrative, and motivational.

    • Communication methods range from private conversations to video conferences.

    • Increasing role of social media as a conversational model for communication.

    • Decisional Roles: Managers face an endless stream of decisions.

    • Routine decisions: hiring, pricing new products.

    • Non-routine decisions: crises like product tampering or hostile takeovers.

    • Decisions can be made with varying levels of information and experience.

    • Emphasis on empowering lower-level employees to make decisions to improve workflow and customer service.

Technological Influence

  • Companies are exploring AI to augment managers' decision-making skills.

Section Two: Functions of Management

  • Planning:
    • Development of strategies, establishment of goals and objectives, and translation into action plans.
    • Strategic planning derives from corporate strategy and outlines organizational goals and courses of action.
    • Connection between strategic planning, tactical plans, and operational levels was established in previous lectures.

Strategic Planning Process

  • Six-Step General Model:

    1. Identify organizational goals.
    2. Environmental assessment.
    3. Strategy development.
    4. Implementation of plan.
    5. Monitoring outcomes.
    6. Revising as necessary (circular model).

  • Understanding Benchmarks:

    • Supporting strategic position analysis through benchmarking includes:
    • Industry benchmarking: Comparing own industry standards.
    • Best-in-class capabilities: Comparing to firms in and outside one's industry.

Forecasting in Planning

  • Challenges of Forecasting:
    • Forecasting is difficult, involving predictions about the future and its impact on business.
    • Importance of accurately predicting when events will affect the organization.
    • Example: Pandemic impact on forecasts.

Approaches to Forecasting

  • Categories of Data for Forecasting:
    1. Primary Data: Collected firsthand via surveys, observations, and specific research.
    2. Secondary Data: Collected and compiled by others; includes government reports and official statistics.
    3. Historical Data: Company-specific past sales data to forecast future performance.

Marketing Forecasting Example

  • Measuring forecast efficiency by comparing real sales numbers against forecasted data to assess marketing campaigns.

Competitive Positioning

  • SWOT Analysis:
    • Helps in comparing competitors on various criteria like price and quality.
    • Example: Apple uses ease of use as a criterion for competitive analysis.

Goal Setting in Management

  • Goals vs Objectives:
    • Long-range goals vs. short-range objectives.
  • SMART Goals:
    • Specific, Measurable, Attainable, Relevant, Time-bound.
    • Example: "Substantially increase our sales" lacks clarity on what “substantially” means and lacks a timeframe for measurement.

Tactical and Operational Planning

  • Hierarchy of Plans:
    • Overall strategic plans supported by R&D, manufacturing, and marketing plans.
    • The nature and contents of these plans vary widely across industries and companies.

Conclusion

  • This lecture elaborates on the core aspects of management, laying a framework for how firms are organized and manage change effectively. It connects previously discussed concepts to present a holistic view of business strategy and organization management.