Introduction to Management

Performance and effectiveness

• Organization level:
  • Profit, sales, growth, resource utilization, flexibility/adaptability
• Group level
  • innovation, efficiency, cohesion
• Individual level
  • Satisfaction, productivity, learning, quality of work life, ethical behaviour

Specific (Who? What?)

Measurable (How much/many?)

Achievable (How?)

Relevant (Why?)

Time-bound (When?)

Obstructionist approach

Defenisve approach

Accomodative approach

Proactive approach

1. Utiliarian Rule: produce the greatest good (or least harm) for the greatest number of people.
2. Moral rights rule: An ethical decision should maintain and protect the fundamental rights and privileges of people (e.g. Freedom, life, … )
3. Justice Rule: An ethical decision should distribute benefits and harm among people and groups in a fair, equitable and impartial manner (eg. similar payment for similar jobs)
4. Practical rule: Answering yes to three questions:
   1. Decision within the accepted values or standards of my business activity?
   2. Am I willing to see the decision communicated to the people / groups affected?
   3. Would the people with whom I have a significant personal relationship (family, friends) approve the decision?

Market hybrid (Customers = Beneficiaries, only business activites, eg. m-pesa)

Blending hybrid (Customers = Beneficiaries, business and social activites, eg. Grameen Bank)

Bridging hybrid (Customers ≠ Beneficiaries, only business activities, eg. AddioPizzo Travel)

Coupling hybrid (Customers ≠ Beneficiaries, business and social activities, eg. Blindekuh)

Attraction - Selection - Attrition

A theory holding that: (1) individuals are attracted to organizations whose members are similar to themselves in terms of personality, values, interests, and other attributes; (2) organizations are more likely to select those who possess knowledge, skills, and abilities similar to the ones their existing members possess; and (3) over time, those who do not fit in well are more likely to leave. Owing to these three factors, the personal characteristics of those who work for an organization are likely to become more similar over time, leading to the consolidation of organizational culture.

• inbound logistics
• operations
• outboundlogistics
• marketing and sales
• services 

• firm infrastructure
• human resource management
• technology development
• procurement 

1. Political/Legal
2. Economic
3. Socio-cultural
4. Technological
5. Demographics
6. Global

Anticipatory
Performance: high and increasing
Readiness for change: Low
Capability: High
Commitment: Low

Reactive
Performance: slightly decreasing
Readiness for change: mixed
Capability: mixed
Commitment: mixed

Crisis
Performance: decreasing, low
Readiness for change: High
Capability: Low
Commitment: High

Predictability: give people as much information as possible about what will happen and when

Understanding: explain why the changes you are implementing are necessary - again, again and again

Compassion: express empathy, put yourself in other person's place, be sorrow for painful actions

Decision making: top-down, centralized, strict goals and control

Cost Cutting / Layoffs: consciously taking longer periods for layoff, reduction in sales force only in crisis regions, only small reduction in R&D, continuation of cultural training activities (culture not only in good times)

Supporting activities: all employees at headquarter gave up 5% of salary, Hilti family doesn't take dividend despite Hilti is making profit

The creation, maintenance, and implementation of competitive advantages

Consists of a series of skillful maneuvers

Involves critical, sometimes irreversible decisions

1. Formal (organisation): explicit, codified aspects of the organisation (structure, rewards, control systems)
2. Informal (organisation): implicit, assumed aspects of the organization (culture, values, communication patterns)
3. People: characteristics of members of the organisation (demography, personality, skills, motivation)
4. Work: characteristics of jobs and how jobs are related to each other

Are we performing effectively on the following levels?

1. Organisation
2. Group
3. Individual

Strategy

The practice of planning, structuring, leading and controlling organizations.

Administration, setting the strategy, coordination, application of available resources (financial, human, naturla, technological).

• Special type of organisation
• Technicals knowledge
• Clearly defined structure (officies, which have defined competencies)
• Fixed salaries and career
• Hiring based on technical skills
• Seperation of operations and ownership

The higher the congruence among the elements, the greater the performance.

Fits and misfits can exist

• among different elements of the transformation process and strategy (“internal fit”)
• between strategy and environment (“external fit”)

1. Threat of new entrants
2. Bargaining Power of Buyers
3. Threat of substitute products or/and services
4. Bargaining Power of Suppliers
5. Rivalery among existing competitors

Basic question: should we enter, or stay in (if already entered), this ‘industry’?

• Diminishes profits as resources are devoted to price competition, advertising battles, increased customer service or warranties, etc.
• Rivalry intensifies with:
  • Number of competitors
  • Slow industry growth
  • Lack of differentiation or switching costs
  • Etc.

• Profits of established firms in the industry may be eroded by new competitors
• This threat is lower when barriers to entry are higher:
  • Economies of scale
  • Product differentiation
  • Access to distribution channels
  • Etc.

• Buyers can force down prices or bargain for higher quality or more services by playing competitors against each other
• When do buyers have this power?
  • Concentrated groups
  • Commodity products/services
  • Etc.

• Suppliers can threaten to raise prices or reduce quality of purchased goods/services
• When do suppliers have this power?
  • Concentrated groups
  • The supplier’s product is an important input to the buyer’s business
  • The supplier group’s products are differentiated or it has built up switching costs for the buyer
  • etc.

• Substitute products and services limit the potential returns of an industry by placing a ceiling on the prices that firms in that industry can profitably charge
• The lower the price and the higher the performance of substitutes, the greater this threat

• Patent analysis (good for emerging technologies)
• 3-round Delphi Survey (re-adjustment of focus of investigation on industry-wide trends)
• Follow-up interviews with Experts