Management Basics /

Introduction to Business
Exhibit Organization as an Open System
Exhibit : Levels of Organizational
Strategy
 Exhibit: Managerial Levels

Exhibit Skills Needed at Different Management Levels

1–4
Exhibit Skills Needed at Different Management Levels

1–5
Exhibit The External Environment
Business Life Cycle
 RESOURCES,
CAPABILITIES,
CORE COMPETENCIES,
AND ACTIVITY ANALYSIS

The fundamental building blocks for

building winning strategies
 Resources, Capabilities, and
Competitive Advantage
INDUSTRY
KEY
COMPETITIVE SUCCESS
STRATEGY FACTORS
ADVANTAGE

ORGANIZATIONAL
CAPABILITIES

RESOURCES

Tangible Intangible
 Organizational Capabilities

Organizational Capabilities = firm’s capacity/ability to

manage resources (i.e., driver for meaningful business
results e.g., Human/Intellectual Capital, Lean operations,
World-class production system like Toyota’ TPS, project, or talent
management), effectively to gain an advantage over
competitors.
The capabilities must focus on the
business's ability to meet customer demand
 Organizational Capabilities
Distinctive Competence = things that an organization
does particularly well relative to competitors.
Core Competence = capabilities that are fundamental to a
Quality,
firm’s strategy and performance e.g.,
Innovation, Customer Service, Flexibility,
reliability and performance
This include combination of knowledge and technical capacities that
allow a business to be competitive in the marketplace
Top Challenges
 Resource-based Approach
to Strategy

• When the external environment is subject to

rapid/ turbulent change, internal resources and
capabilities offer a more secure basis for strategy
than market focus

• Resources and capabilities are the primary

source of profitability. Firm-specific strategic
differences account for 50-70% of observed differences
in firms’ profits
Why companies focus on building
capabilities
 Categories of Firm Resources
• Financial $ ¥ £
• Physical

• Human

• Technological

• Reputational
Valuable Resources and Competencies:
The key to Competitive Advantages

Resources can be:

 Physical ie the wiring into your home (ramp for the info highway)

 Human ie. skilled and creative employees (WalMarts’ dedicated

employees)

 Intangible i.e. brand names and technological know-how (Coca-

Cola, Disney, Microsoft, Sharp LCDs)

 Organizational Capabilities embedded in the business’ routines, processes,

culture (Japanese auto makers)
 What Makes a Resource
Valuable?

Appropriatability
Scarcity

Demand

Value creation zone

The dynamic interplay of three fundamental

market forces determines the value of a
resource.
Source: Collis and Montgomery, Corporate Strategy (1996)
 Key Elements of Business Strategies:
Understanding Resources, Capabilities,
and Competencies is the key!

• Selecting a business strategy that exploits valuable resources

and distinctive competencies (i.e. competitive advantages)

• Ensuring that all resources and capabilities are fully employed

and exploited

• Building and re-generating valuable resources and

distinctive competencies -- competitive advantages
Managerial Challenges and Opportunities
• Respond to Economic Pressures
• Respond to Globalization
• Increased Foreign Assignments
• Overseeing Movement of Jobs to Countries with Low-Cost Labor
• Working with People from Different Cultures
• Managing Diversity
• Create a Positive Work Environment
• Create a Positive Work Environment
• Improve Ethical Behavior
• Improve People Skills
• Work in Networked Organizations
• Stimulate Innovation and Change
• Improve Customer Service
• Help Employees Balance ‘Work–Life Conflicts’
Michael
Porter 5
Force Model
How Managers Achieve Effectiveness
Management Functions: What do Managers
perform
Organizing(2)

Analysis (SWOT) Allocating resources

Goals Who will do what
Strategy Planning(1) Directing
Investments
Leading (3) Team &
Outcomes motivation
Timeline Review and monitoring
evaluating progress

Controlling(4)

Managers coordinate and oversee the work of other people so

that organizational goals can be accomplished. 23
 Managers: Achieving Effectiveness
• Planning Effective Performance
• The planning function includes defining the ends to be achieved and
determining appropriate means to achieve defined ends. This function
follows from the nature of organizations as purposive (end-seeking) entities.

• Organizing Effective Performance

• The organizing function includes all managerial activities that translate
required planned activities into a structure of tasks and authority.
• involves (1) designing the responsibility and authority of each individual job and
(2) determining which of these jobs will be grouped in specific departments.

• Many different individuals and groups and activities -> Senior Management’s
responsibility is to devise integrating methods and processes
 Managers: Achieving Effectiveness
• Planning and Organizing provide guidelines and
directives in the form of:
• Strategic, Annual & Operational Plans, Strategies, Actions
• Job Descriptions
• Organization charts
• Policies, guidelines and procedures

• People have unique needs, ambitions, personalities, and

attitudes.
 Managers: Achieving Effectiveness
• Leading Effective Performance
• Leading involves day-to-day interactions between
managers and their subordinates. Leading is the most
human oriented. Thus, it requires Strong Interpersonal
and Effective Emotional Intelligence skills

• Effective leaders use words and symbols to express the

organization’s abstract ideals and what it stands for.
- Effective Interpersonal & Emotional Intelligence Skills
 Managers: Achieving Effectiveness
• Controlling Effective Performance
• Managers undertake control to determine whether intended
results are achieved and if they aren’t, why not.
 Controlling function involves explicit consideration of effectiveness at all
three levels: Individual, Group, and Organizational.

• Activities that managers undertake to ensure that ‘actual outcomes’ are

consistent with ‘planned outcomes’. include employee selection and
placement, materials inspection, performance evaluation, financial
statement analysis, and other well-recognized managerial techniques.
 Why managers are important to
organizations
Three reasons:
• Organizations need their managerial skills and abilities in uncertain,
complex, and chaotic times.
• Managers are critical to getting things done in organizations.
• Finally, managers contribute to employee productivity and loyalty; the
way employees are managed can affect the organization’s financial performance; and
managerial ability is said to be important in creating organizational value.
 Functions, Roles, and Skills of
Managers
• Mintzberg’s managerial roles include
• Interpersonal, which involve people and other ceremonial/symbolic duties
(figurehead, leader, and liaison);
• Informational, which involve collecting, receiving, and disseminating
information (monitor, disseminator, and spokesperson); and
• Decisional, which involve making choices (entrepreneur, disturbance
handler, resource allocator, and negotiator).

• Managing is about influencing action, which managers do in three ways: by

managing (i) actions directly (ii) people who take action, and (iii) information that
stimulate/force people to take action.
 Katz’s Managerial skills
• Technical (job-specific knowledge and techniques),
• Human (ability to work well with people), and
• Conceptual (ability to think and express ideas).
• Technical skills are most important for lower-level managers while conceptual skills
are most important for top managers. Human skills are equally important for all
managers.

• Some other managerial skills also identified include managing human capital (Refers
to: Knowledge (know what), Advanced skills (know how), System understanding and
creativity (know why), Motivation to deliver high-quality products and services (care
why)), inspiring commitment, managing change, using purposeful networking, and
so forth.
Benchmarking
Exhibit 18–7 Managerial Decisions in the Control Process

18–33
Exhibit Steps in Benchmarking

Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking for Superior Performance,”
Long Range Planning. February 1993, p. 42.
 Interaction of
Individual, Teams, Organizational Effectiveness

At every level, Managers have the primary responsibility for

attaining effective performance
 Three(3) Levels of Performance Outcomes
• Outcomes are the key variables that you want to explain
or predict, and that are affected by some other variables.

1.Individual-level Outcomes like attitudes and satisfaction, task

performance (i.e., core duties and responsibilities), citizenship behavior
(Performance beyond Expectations), and withdrawal behavior

2.Group-level Outcomes like cohesion and functioning

3.Organizational-level Outcomes like overall profitability and survival.

 Define Leadership and contrast
Leadership and Management

• Leadership is the ability to influence a team/group toward the

achievement of a vision or set of goals.
Strong Leadership and Strong Management are needed for
‘Optimal Effectiveness’

• Leaders are needed today to challenge the status quo, create visions of the
future, and inspire organizational members to want to achieve the visions.

• Managers formulate detailed plans, create efficient organizational

structures, and oversee day-to-day operations. 12-38
• Studying Leadership
Leadership Framework

• Various traits, behavioral

styles, and situational
variables found in the
leadership literature.
1-39