Management Practices Lecture-31 1

Today’s Lectures Revision of important concepts of 1-15 lectures 2

Achieving High Performance Organizations must provide a good or service desired by its customers. – Chen One and Addidas manages his firm to provide quality food products. – Physicians, nurses and health care administrators seek to provide healing from sickness. – McDonald’s restaurants provide burgers, fries and shakes that people want to buy. 3

Organizational Performance Measures how efficiently and effectively managers use resources to satisfy customers and achieve goals. – Efficiency: A measure of how well resources are used to achieve a goal. Usually, managers must try to minimize the input of resources to attain the same goal. – Effectiveness: A measure of the appropriateness of the goals chosen (are these the right goals?), and the degree to which they are achieved. Organizations are more effective when managers choose the correct goals and then achieve them 4

Restructuring Top Management have sought methods to restructure their organizations and save costs. Downsizing: eliminate jobs at all levels of management. – Can lead to higher efficiency. – Often results in low morale and customer complaints about service. 5

Managerial Roles Described by Mintzberg. – A role is a set of specific tasks a person performs because of the position they hold. Roles are directed inside as well as outside the organization. There are 3 broad role categories: 1. Interpersonal 2. Informational 3. Decisional 6

The 4 Principles Four Principles to increase efficiency: 1. Study the way the job is performed now & determine new ways to do it. Gather detailed, time and motion information. Try different methods to see which is best. 2. Codify the new method into rules. Teach to all workers. 3. Select workers whose skills match the rules set in Step Establish a fair level of performance and pay for higher performance. Workers should benefit from higher output. 7

Weber’s Principles of Bureaucracy 8

Contingency Theory 9

Key External Factors 10

Types of Decision Making Programmed Decisions: routine, almost automatic process. – Managers have made decision many times before. – There are rules or guidelines to follow. – Example: Deciding to reorder office supplies. Non-programmed Decisions: unusual situations that have not been often addressed. – No rules to follow since the decision is new. – These decisions are made based on information, and a manger’s intuition, and judgment. – Example: Should the firm invest in a new technology? 11

Decision Making Steps Recognize need for a decision Frame the problem Generate & assess alternatives Choose among alternatives Implement chosen alternative Learn from feedback 12

Organizational Learning & Creativity Organizational Learning: Managers seek to improve member’s ability to understand the organization and environment so as to raise effectiveness. – The learning organization: managers try to improve the people’s ability to behave creatively to maximize organizational learning. Creativity: is the ability of the decision maker to discover novel ideas leading to a feasible course of action. – A creative management staff and employees are the key to the learning organization. 13

Individual Creativity Organizations can build an environment supportive of creativity. – Many of these issues are the same as for the learning organization. – Managers must provide employees with the ability to take risks. – If people take risks, they will occasionally fail. Thus, to build creativity, periodic failures must be rewarded. – This idea is hard to accept for some managers. 14

Planning and Strategy Planning – Identifying and selecting appropriate goals and courses of action for an organization. The organizational plan that results from the planning process details the goals and specifies how managers will attain those goals. Strategy – A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals 15

Three Stages of the Planning Process Determining the Organization’s mission and goals (Define the business) Strategy formulation (Analyze current situation & develop strategies) Strategy Implementation (Allocate resources & responsibilities to achieve strategies) 16

Why Planning is Important Planning determines where the organization is now and where it will be in the future. Good planning provides: – Participation: all managers are involved in setting future goals. – Sense of direction & purpose: Planning sets goals and strategies for all managers. – Coordination: Plans provide all parts of the firm with understanding about how their systems fit with the whole. – Control: Plans specify who is in charge of accomplishing a goal. 17

Vertical Integration When the firm is doing well, managers can add more value by producing its own inputs or distributing its products. – Backward vertical integration: the firm produces its own inputs. McDonalds grows its own potatoes. Can lower the cost of supplies. – Backward vertical integration: the firm distributes its outputs or products. McDonalds owns the final restaurant. Firm can lower costs and ensure final quality. 18

Goals for successful functional strategies: 1. Attain superior efficiency: the measure of outputs for a given unit of input. 2. Attain superior quality: products that reliably do the job they were designed for. 3. Attain superior innovation: new, novel features about the product or process. 4. Attain superior responsiveness to customers: Know the customer needs and fill them. 19

PORTER’S FIVE-FORCES MODEL The intensity of competition among firms varies widely from industry to industry Porters model of competitive forces assumes that there are five competitive forces that identifies the competitive power in a business situation. These five competitive forces identified by the Michael Porter are: – Threat of substitute products – Threat of new entrants – Intense rivalry among existing players – Bargaining power of suppliers – Bargaining power of Buyers 20

Four Ways to Create a Competitive Advantage 21

Total Quality Management Total quality management (TQM) – focuses on improving the quality of an organization’s products and stresses that all of an organization’s value-chain activities should be directed toward this goal 1.Identify what customers want from the good or service that the company provides 2.Identify what the company actually provides to customers 3.Identify the gap that exists between what the customers want and what they get (quality gap) 4.Formulate a plan for closing the quality gap 22

Control Types – Feedforward: use in the input stage of the process. – Managers anticipate problems before they arise. – Managers can give rigorous specifications to suppliers to avoid quality – Concurrent: gives immediate feedback on how inputs are converted into outputs. – Allows managers to correct problems as they arise. – Managers can see that a machine is becoming out of alignment and fix it. – Feedback: provides after the fact information managers can use in the future. – Customer reaction to products are used to take corrective action in the future. 23

Creating Strong Organizational Culture Values of Founder Socialization Process Ceremonies & Rites Stories & Language Organizational Culture Organizational Culture 24

Next Lecture Revision- Lecture 16 to 30 25