Management Theories

Management Theories







Management is the process of coordinating people and other resources to achieve the
goals of an organization. As can be understood from this definition there are different ways for this process to be carried out. Therefore over the century people with different prospectives have explained through various management theories how the goals of an organisation can be met effectively. Which as a result are explained as follows.
One of the first management theory to be brought forward was a theory of scientific management made by Frederick Taylor, this theory was also known as 'Taylorism'. As the name suggests, this theory is a very technical or scientific way of managing an organization. It stresses mainly on improving economic efficiency and labor productivity, according to Taylor both these things could only be achieved by choosing the best way and the best person to do the job. This means that the managers were to choose the best way and the best people for a specific job and hence all other workers not having control over their own jobs had to follow. As a result through this practice wastage could be minimized as all workers in the organization would be working in the most efficient way. This practice suggested by the theory is further supported by the thought made by Taylor that motivation could only be achieved through financial means. Therefore Taylor believed that the performance of the workers could be measured if they work according to his theory.
However Taylors theory had its pros and cons, his theory was and still is considered as one of the most efficient and quantifiable means to get the job done, while on the other hand this theory was and still is thought to be very demotivating for the workers. The reason to this is that with time people realized that only financial rewards were not enough for workers to be motivated, that they needed a good work place to work in and needed a friendly, safe e.t.c environment. The theory did not comprise of job enrichment, job satisfaction or any such motivational technique. Which as a result lead to the formation of other more recent and improved theories, such as Henry Foyls theory of management principles , Henry Fords theory of management or one of the most recent theory supporting this motion Elton Mayo's 'Hawthorne effect'.




                          ----------------->  




                                   TO        

TAYLORISM                                                                                        THE HAWTHORNE EFFECT         

Therefore through the centuries it could be said that peoples opinions on how to run an organization changes from Taylorism which was a very centralized and a rather strict management style towards a more i would say relaxed way of management which was the Hawthorne effect. The Howthorne effect stated that social and interactive motivation was the most effective ways of improving productivity rather then financial motivation or through improving physical conditions.The Hawthorne effect also had some drawbacks, however stated a more recent and somewhat effective way of management.
Even though Taylorism was accused with not being a sufficient or more appropriately a more demotivating theory, many leading organisations in the world today believe in Taylors theory being much effective and hence operate according to its facts. For example Googles Silicon Valley head quarters, and much of the telecommunication and cyber industry develop an approach similar to that suggested by Taylor as in such an industry perfection and precision is needed, therefore the managers select the way to perform a task and also the expert relating that task is appointed, while all other workers are to follow.
Hence through the debate above it can be seen how and why different management theories have been made through out the century.

Porters Forces

This week our main focus has been about Porter and his theory, which is the five forces analysis. Porter five forces analysis is a framework for industry analysis and business strategy development, the forces mainly consist of

1) Bargaining power of customers ( buyers ) which is the ability of customers to put the firm under pressure which also affects the customers sensitivty to price changes. This is likely to be high if he supplier purchases a large part of a suppliers output or many substitutes are available for the product.

2) Threat of substitute products or services: According to Porters model, this means finding a product that could perform a similar function to the other yet the substitute may be from another industry meaning using a plane instead of a ship.

3) Threat of new entrants: According to Porter, these are the problems faced by companies while entering industries which may include access to distribution, brand equity or capital requirements.

4) Bargaining power of suppliers: This is the power that a supplier has which could be influenced by factors such as the number of suppliers or the switching costs followed by product types.

5) Intensity of competitive rivalry: This is how competitive the firms are within the industry and is likely to be high if there are many firms within an industry, the products being similar or slow market growth taking place.

These are the five forces and I'd like to explain them with the help of the telecommunications industry. The threat of new entrants, would be high as there are high costs to buy the machinery and finance would be one of the biggest barriers. The fixed costs are likely to be high as well and a lot of cash would be required.

For the power of suppliers, telecom equipment suppliers do have bargaining power over operators. As without high tech broadband equipment and other materials the operators would not be able to transmit voice and data from place to place.

As for the power of buyers, there has been an increased choice of telecom products and the power is rising. This is because data services and telephone do not vary much.

Coming forward to the availability of substitues, there are threats of substitution as internet services can substitute for high speed business working needs. Applications such as Skype or OOVOO could be used to replace telephones.

Competitive Rivalry being the last factor, is high, There is new technology plus many entrants and as everybody pays for services, the only thing that could make a company more attractive would be lower prices which may lead to lower profits. Other than this the exit barriers are also high due to its specialized equipment

Porters Forces

This week our main focus has been about Porter and his theory, which is the five forces analysis. Porter five forces analysis is a framework for industry analysis and business strategy development, the forces mainly consist of

1) Bargaining power of customers ( buyers ) which is the ability of customers to put the firm under pressure which also affects the customers sensitivty to price changes. This is likely to be high if he supplier purchases a large part of a suppliers output or many substitutes are available for the product.

2) Threat of substitute products or services: According to Porters model, this means finding a product that could perform a similar function to the other yet the substitute may be from another industry meaning using a plane instead of a ship.

3) Threat of new entrants: According to Porter, these are the problems faced by companies while entering industries which may include access to distribution, brand equity or capital requirements.

4) Bargaining power of suppliers: This is the power that a supplier has which could be influenced by factors such as the number of suppliers or the switching costs followed by product types.

5) Intensity of competitive rivalry: This is how competitive the firms are within the industry and is likely to be high if there are many firms within an industry, the products being similar or slow market growth taking place.

These are the five forces and I'd like to explain them with the help of the telecommunications industry. The threat of new entrants, would be high as there are high costs to buy the machinery and finance would be one of the biggest barriers. The fixed costs are likely to be high as well and a lot of cash would be required.

For the power of suppliers, telecom equipment suppliers do have bargaining power over operators. As without high tech broadband equipment and other materials the operators would not be able to transmit voice and data from place to place.

As for the power of buyers, there has been an increased choice of telecom products and the power is rising. This is because data services and telephone do not vary much.

Coming forward to the availability of substitues, there are threats of substitution as internet services can substitute for high speed business working needs. Applications such as Skype or OOVOO could be used to replace telephones.

Competitive Rivalry being the last factor, is high, There is new technology plus many entrants and as everybody pays for services, the only thing that could make a company more attractive would be lower prices which may lead to lower profits. Other than this the exit barriers are also high due to its specialized equipment

Organisational structures!!

     






                        CENTRALIZED
                               &
                   DECENTRALIZED \
       ORGANISATIONAL STRUCTURES

This week we focused on the nature of different organisational structures, for instance whether they are centralized or decentralized, tall or short e.t.c. The picture above is a short but precise definition of a centralized.The arrows in the diagram represent the direction of command.For instance, the arrows pointing towards the person in the center demonstrates a centralized structure as this refers to the power of command and decision making lying solely in the hands of this one person ,who passes them on to the others who are to do as told. This in other words is a very autocratic leadership style.
A living example of a company operating with a centralized structure is APPLE. Apple's large size is one of the main reasons for it being a centralized company as with large size there usually comes an idea of the superior staff of the company to make the decisions and rely on the others to implement on those decisions.For 2012 Apple planned a capital investment of $8 billion, which is a very big investment, therefore such companies making such huge investments do not want to risk there money in the hands of the workers, as a result of which tend to be centralized.However this practice may have a few draw backs as due to centralization through out the company, problems of motivation may arise, or the company may not be able to focus on the market demand for the product in different regions as this demand would vary from place to place. All these problems can lead to inefficiency and may even lead to failure.

While on the other hand as shown in this other picture organisation A is the one with a decentralized structure. In such a structure there are more layers added to the hierarchy, therefore the decision making power is not only in the hand of one person but is spread through out.. An example of an organisation with such a structure is the famous super market TESCO. Each supermarket has a store manager who can make certain decisions concerning areas like staffing, sales promotions. The store manager is responsible to a regional or area manager. Firms following such a strategy are much closely linked to their customers, as they are able to focus on and meet the needs of the customers and give better service to their customers.Also efficiency is increased as the staff stays motivated due to the somewhat decision making authority they are given. However even organisations with such a structure have problems as at times a problem of who the actual leader is may arise , people may not know who to answer to e.t.c.
 As a result neither of the two styles of leadership are perfect on there own as both have there pros and koans. As a result most of the most successful organisations in the world use a mixture of the two and practice a style in which they can get the best out of the two and work accordingly.

        Organisational structures and how they are
                              Managed!!









Above shown is a classic example of what i learnt through out this week, as the picture showing a man pyramid not only reflects to an example of an organisational structure but also shows the importance of group work. As even if one man losses his balance the whole group will collapse. More importantly for a basic organisation to be formed, the first step is for there to be a group of people working together to achieve a goal or objective. That is exactly what we did this week.

We were given a group presentation we had to choose a firm of our choice, identify the management of the organisation is structured, figure how they add value to there products e.t.c.Me and my group chose Samsung as the organisation, we found out that Samsung being a multinational organization operates with a fairly autocratic leadership style as the main decision and orders are made by the chairman, who is the figure head of the organisation. Where as orders when passed down the hierarchical structure and given to the functional workers, are to be carried out with somewhat authority given to the workers to do their jobs. Secondly value addition being a key objective of every business, is carried out very carefully and strategically by Samsung, they do this by focusing on a very vast target market, as they aim there product in on all genders, age groups e.t.c, giving them a higher chance of adding value.Samsung also spends a lot of finances and effort on its promotional activities and advertising, for example to focus on a niche part of there target market such as the teen agers,they would market there product for instance the galaxy s4 by using a famous celebrity to use it in an appropriate movie.There fore our presentation explained all these aspects along with a few difficulties they may be facing due to such a managerial structure and a few improvements we thought they can make.

Working on this presentation as a group enabled us to cover a very wide view about what this organisation was dealing with and how it was operating. We were able to make the presentation much quicker and better, which i do not think any one of us would have been able to do by our self.

What i used to think an organisation was before working on this presentation was something like this;

Where as now i understand that it actually is something more similar to this ;

Therefore i would say that while working in this group i actually felt that i was part of a small organisation. Something i could have never experienced back at home.