The Evolution of Management

 Management as Science (1910s – 1940s)

 Org. Structures (1950s – 1960s)
 Strategic Planning (1960s)
 Competitive Advantage (1980s)
 Process Optimization (1990s)
 Big Data (2000s – 2020s)
 Artificial Intelligence (2020s - …)
Management Concepts
Classic Models:
 Scientific Approach
Analyses workflows
Aims to improve economic efficiency (i.e. productivity)
Rewarding employees rather than penalizing them
“The principal objective of management should be to secure the maximum prosperity for the
employer, coupled with the maximum prosperity for each employee” (Taylor)
Break down assignments into small tasks
Delegate responsibilities and train workers
Monitor Performance
Allocate work between managers and employees

 Administrative Approach
Rational way to design an organization as a whole
Formalized Administrative structure
Division of Labor
Delegation of Power

 Bureaucracy Approach
Hierarchical Structure (Accepted chain of command)
Formal rules
Impersonal (hiring and promoting based on merits and not favoritism)
Clear division of labor

 Behavioral Approach
Addresses the human dimension of work (motivation, conflict, group dynamics);
Workers to be seen as individuals and not just as another part of a machine
Socialization
Employee improvement
The McKinsey 7S Model is an organizational tool that assesses the wellbeing of seven
internal factors of an organization as a means of determining whether a company has
the structural support to be successful.
The Model comprises a mix of hard elements, which are clear-cut and influenced by
management, and soft elements, which are fuzzier and influenced by corporate culture.

Hard Elements: Influenced by Management

STRATEGY STRUCTURE SYSTEMS
Plan Distribution of Procedures of daily operation
responsibilities (Marketing, Finance, supply
Aims to create competitive chain, HR,)
advantage Internal Communication

Soft Elements: Company Culture

SHARED VALUES SKILLS STYLE STAFF
Philosophy of the Competence of the Managing style of Recruitment policy,
company (culture, staff (Helps create the company staff development
values, mission, added value)
ethics, etc.,)

Systems – Business Processes

Smooth and efficiently run daily operations results in:

 Higher productivity
 Increasing sales
 Satisfied staff
 Satisfied Clients
Types of Business Processes
 Core Business Processes
o Supply Management
o Production Management
o Sales Management
o Clients Servicing management, etc.
  Supporting Business Processes
o HR
o Finance / Accounting
o Marketing Management

 Operating Business Processes

o Strategic Management / Planning
o Quality Control
Process System

LEVEL 1 MEGA PROCESS

LEVEL 2 Main Process Main Process
LEVEL 3 SUB Process SUB Process
LEVEL 4 Activity
LEVEL 5 Operation

Types of Companies
 Private Sector Company (For Profit – Market Principle) Partnerships, individually
owned companies
 Public Sector Company (Redistribution Principle) Governmental services
 Third Sector Company (Reciprocity Principle) voluntary
Total Revenue – Total Costs = Profit
Total Costs = Fixed Costs + Variable Costs

Fixed Costs Variable Costs

Does not depend on the amount of goods Depends on the amount of goods produced
produced Vary between industries
Rent Economies of scale
Salaries Paid Costs of raw materials (gasoline, fertilizer)
Property Taxes Repairs / Maintenance (e.g.)
Insurances

TC-Total costs
VC-Variable costs
FC-Fixed costs
 Break-even point is the point of crossing of Total Costs and Revenue.
Average Cost Structure
Average cost is the total amount of all production costs divided by the quantity of output
produced. This number is also known as average total cost or unit cost. In simpler terms, it
measures how much a business has to spend on each unit or product of output produced
Knowing ATC is critical when making pricing decisions because any prices below ATC will
result in a financial loss. Understanding the importance of average cost will also help you
understand how it works in relation to long periods of time. For example, cost fluctuates
depending on seasonal demand and production efficiency. When you calculate average
cost, it normalizes or levels out the cost per unit of production overall.
Total Cost of Production / Quantity of Units Produced=AVERAGE TOTAL COSTS(ATC)
How to Price?
o Cost Focused Pricing (Cost + markup)
o Competitive Pricing (What does the competition charges?)
o Value-based pricing (how much does the customer thinks you are worth?)

LIMITS FOR PRICING

Ceiling (set by the government)

Demand competiton

costs

Floor
 STRATEGIES
Low entry price (Netflix) and High entry price (iPhone)

The value delivery process is divided into choosing>providing>communicating the value.

The value chain is a tool for identifying ways to create more customer value (design, produce,
market, deliver, support, product).
Core business processes

 Market-sensing process (trying to understand the movement of the market)

 New-offering realization
 Customer acquisition
 Customer relationship management (building better understanding of customers)
 Fulfillment management

Core competencies

 A source of competitive advantage and makes a significant contribution to perceived

customer benefits
 Applications in a wide variety of markets
 Difficult for competitors to imitate

Maximizing core competencies

 Redefine the business concept

 Reshaping the business core
 Repositioning the brand’s identity

Central role of strategic planning

 Managing the business as an investment portfolio

 Assessing the market’s growth rate and the company’s position in that market
 Establishing a strategy
Planning (Corporate>Division>Business>Product)>Implementing
(Organizing>Implementing)>Controlling (Measuring results>Diagnosing results>Taking
corrective action)
Corporate and division strategic planning

 Defining the corporate mission

 Establishing strategic business units
 Assigning resources to each strategic business unit
 Assessing growth opportunities

Questions to define the corporate mission

1. What is our business?
2. Who is the customer?
3. What is of value to the customer?
4. What will our business be?
5. What should our business be?

Good mission statements

 Focus on a limited number of goals

 Stress the company’s major policies and values
 Define the major competitive spheres within which the company will operate
 Take a long-term view
 Are as short, memorable, meaningful as possible

Establishing Strategic Business Units

 A single business or collection of related business

 Has its own set of competitors
 Has a leader responsible for strategic planning and profitability

Assigning Resources to each SBU

Management must decide how to allocate corporate resources to each SBU (Portfolio-planning
models>shareholder/market value analysis)
Assessing growth opportunities

 Intensive Growth (corporate management should first review opportunities for improving
existing businesses)
 Integrative Growth (a business can increase sales and profits through backward, forward,
or horizontal integration within its industry)
 Diversification Growth (The industry is highly attractive, and the company has the right
mix of business strength to succeed)
 Downsizing and Divesting Older Businesses (companies must carefully prune, harvest,
divest tired old businesses to release needed resources for other uses and reduce costs)
Organization and Organizational Culture>A company’s org consists of its structures, policies,
corporate cult, all of which can become dysfunctional in a changing business environment (the
shared experiences, stories, beliefs, norms that characterize an organization)
Creation the Value (STP segmentation targeting and positioning model)
Market segmentation

 Geographic (neighborhood, city, nation, region)

 Demographic (age, gender, education, occupation, religion)
 Psychographic (social class, lifestyle, personality)
 Behavioral (special occasion, loyalty status, benefits)

Effective segmentation

 Measurable
 Accessible
 Substantial
 Differentiable
 Actionable

Targeting

 Analyze each segment

 Which ones are the most suitable
 Who should we target

It defines a segment of customers based on their unique characteristics and focuses solely on
serving them.
Instead of trying to reach the entire market, a brand uses target marketing to put their energy
into connecting with a specific, defined group within their market.
Types of targeting

 Geographic (neighborhood, city, nation, region, area code)

 Demographic (age, gender, education, occupation, religion, marital status, race)
 Psychographic (social class, lifestyle, personality, values, beliefs, interests)
 Behavioral (special occasion, loyalty status, benefits, purchasing habits, user status)
Why is it important?

 Narrows down the market

 Reduces the fuzziness
 Ensures we have the right audience
 Ensures successful marketing mix
 Ensures a good return over investments
Create a buyer persona (age, gender, income, location, family situation, education).
Positioning

 How will u position brand in the minds of customers

  How will they distinguish your product from your competition
 How are u different
 Think about your unique selling proposition USP
Determine our positioning
Based on (product characteristics, price, quality, luxury, use or application, competition).
Management 4P’s

 Product
o Features?
o Name?
o Design?
o Aimed of satisfying the needs and desires of the target market

 Price
 Place
o Distribution channels
o Locations
o Logistics
 Promotion
o Online Advertising
o PR
o Merchandising
o Sales Force
o Influencer Marketing
Management 4C’s

 Customer
 Cost
 Convenience
 Communication
7P’s (Product, Price, Place, Promotion, People, Processes, ..)

Product Lifecycle
1)INTRODUCTION product is newly
launched, and consumers may not know
much about it
2)GROWTH the public becomes more
aware of the product

3)MATURITY sales will peak as the

product reaches market saturation, and
competition will grow increasingly fierce

4)DECLINE sales growth becomes

negative, profits decline, competition
remains high, and the product ultimately
reaches its ‘death’

The BCG matrix (analyzing our

product)
 High growth, high share (significant amount of investment should be made in “star”
product)

High growth, low share (investment should be made in “question mark” products
depending on their chances of becoming stars)

Low growth, high share (“Cash cows” should be milked so products can be reinvested in
“stars” & “question marks”)

Low growth, low share (businesses should liquidate, divest, or reposition products in the
“dogs”category)
Different places

 Retail (business to Consumer B2C)

 Direct-To-Consumer (B2B or B2C)
 Wholesales (B2B)
 Direct Selling (B2C or B2B)

Objectives

 The efficient communication of what the company does to its target market
 Aims to capture people’s attention
 It should also aim to ensure that all stakeholders are aware of the product, service’s USP,
value, features, etc.

Some companies focus on being distribution driven (being available whenever the customer
needs is the most important point), selling driven (the more we sell the merrier), promotion
driven (rely on constant discounts to attract customers), price driven (Ryanair), advertising
driven.
Problem? Low awareness=focus on advertising, low availability of product=focus on
placement/distribution, low demand=focus on pricing/discounts, low percentage of returning
customers=focus on improving the product.
Management plan/strategy

 Executive summary/Introduction
 What is your business about? Vision, values, mission, etc.
 Analysis
o Extremal Analysis (opportunities, threats)
o Internal Analysis (strengths, weaknesses)
 SWOT (strengths, weaknesses, opportunities, threats)
 Market Segmentation
 Company’s Objective
 Strategy
 o Targeting
o Positioning
o Satisfaction Strategy
o Marketing Mix
 Costing Structure
 Budget
 Implementation Guide
 Appendixes
The strategic plan for the company must meet the 4S’s

 Sufficiency (Should meet the marketing objectives)

 Selective (Specific to the marketing goals, best option)
 Synchronize (All of the marketing mix should be harmonized)
 Sustainable (although very dynamic, it should hold long term)

Business Strategies

 Are the means through which organizations will achieve their objectives?
 Involve long-term decisions that will have resource implications
 Typically, strategies relate to the longer period although they should be flexible

Ingredients (Dransfield)

 Long-term planning
 Major resource decisions
 Deciding on the scope of an organization
 Planning that needs to be overseen by senior executives in the company
 Flexible planning

Strategies should meet three criteria: they should be suitable to the environment in which a business is
operating, should be acceptable to stakeholders including shareholders, should be feasiblegiven the
resources and capability of an organization at a particular time.

Strategic analyses: SWOT/ PESTEL/ VRIO/ Porter’s 5 Forces

SWOT-how the examination of the internal environment combined with the external
environmental analyses helps to determine the suitability of a strategy
PESTEL-external environment analysis helps to determine the suitability of a strategy
5 Forces-how the understanding of the external environment at industry level helps to
determine the suitability of a strategy
Levels of Business Environment
1. Micro Enterprise Level (Organization Competencies/Capabilities/Resources)
2. Meso Industry/Transactional Level (Substitutes, Government, Media, Competitive
Rivalries, NGOs, New entrants, Suppliers, Barriers to entry, Buyers)
3. Macro National/Global Level (Ecological, Legal, Technological, Social, Economic,
Political)
At every level the are dynamic complex interactive volatile unique.
SWOT consists from external (risks/Threats (Disadvantages), Opportunities(Advantages)) &
internal(weaknesses and strengths) factors of the company strengths, weaknesses,
opportunities, threats

To analyze external factors, we use PESTEL (for risks and threats) and 5 Force Analysis (for
opportunities). PESTEL is a framework or tool used to analyses and monitor the macro-
environmental factors that may have a profound impact on an organization’s
performance. This tool is especially useful when starting a new business or entering a
foreign market.

Political Economic Social Technological Environmental Legal

How to conduct?

Global National Local Opportunity/Risk?

Political
Economic
Social
Technological
Ecological
Legal
Critiques Produces long, complex lists; In practice, PESTEL factors are often interrelated

Macro trends
Political Changes in trade blocks (BREXIT), Terrorism
Economic BRIC economies, Global growth, Stagnating
 EU
Social Inequality, Globalization & anti-globalization
Technological 3D Manufacturing, Green Tech, robotic
technology
Ecological Global warming, bio-diversity loss
Legal Tax avoidance/evasion, IP protection, World
Trade Organization rules

Meso/National Trends
Political The role of the state (an owner, customer or
supplier of businesses), political stability
Economic Changing exchange rates, economic growth
rates, labor productivity
Social Aging population, environmental awareness,
consumption trends
Technological High-speed transport, telecommunications
network, e-services
Ecological Pollution, drinking water
Legal Consumer protection laws, labor laws

Micro/local trends
Political Local government priorities, exposure to civil
society organizations (campaign groups,
social media, lobbyists)
Economic Council tax, household incomes, skills base
Social Cultural diversity, demographics, social
network with regulators, NGOs
Technological Broad-brand speed, supply of engineers,
foreign investment of R&D centers
Ecological Green belts, planning restrictions
Legal Zoning laws, planning restrictions

Porter’s 5 Forces is a model that identifies and analyses 5 competitive forces that shape every
industry and helps determine an industry’s weaknesses and strengths. Five Forces analysis is
frequently used to identify an industry’s structure to determine corporate strategy. The model
can be applied to any segment of the economy to understand the level of competition within
the industry and enhance a company’s long-term profitability.

Intensity of Bargaining power Bargaining Treat of Threat of new

competitive of suppliers power of substitutes entrants
rivalry buyers
 Number of How easily can Can customers Can other The less time
competitors suppliers drive up drive the price products replace and money it
the cost of their down? mine? cost for a
products/services? competitor to
enter a market,
the more a
company’s
position can be
Ability to The number of How many weakened
undercut a suppliers buyers a
company company has

The larger the How unique are How significant is Companies that An industry
number of their products each customer produce goods or with strong
competitions, service for which barriers to
along with the there are no close entry is ideal
number of substitutes will for existing
equivalent have more power companies
products they to increase prices within that
offer, the lesser and to negotiate industry since
the power of a better terms the company
company would be able
to charge
Conversely, when How much would How much would
competitive cost a company to it cost the
rivalry is low, a switch suppliers company to find
company has new customers
more power to
charge higher
prices and set the
terms of deals
Using the model:
Identify key aspects or elements of each competitive force that impacts on the firm,
Evaluate how strong and important each element is for the firm,
Consider the firm’s strengths and weaknesses: where does it stand vs buyers, suppliers,
entrants, rivals, substitutes?
Develop strategic actions (beat rivals, scare off new entrants, limit the threat of substitutes,
neutralize supplier power, counter buyer power).
Resources and capabilities of a company: contribute to its long-term survival and potentially to
competitive advantage, are the assets that organizations have or can call upon (including those
from partners or suppliers, that is “what we have”), capabilities (competencies) are the ways
those assets are used or developed “what we do well”.
VRIO analysis helps to evaluate it, to what extent an organization has resources and capabilities
that are:
  Valuable
 Rare
 Imitable/ inimitable
 Organization supported

The Vision statements

 Statement of an organization’s overarching aspirations of what it hopes to achieve or to

become
 Example: Disney (to make people happy)

The Mission statement

 Describes what the organization needs to do now to achieve the vision

 The vision and mission statements must support each other, but the mission statement is
more specific, it defines how the organization will be different from other organizations.

The Values Statement

 Defines what the organization believes in and how people in the organization are
expected to behave inside and outside the company
 Provides a moral direction for the organization that guides decision making and
establishes a standard for assessing actions

Business Models: B2B, B2C, B2G (business selling to the government), C2C.

The main element of an organizational activity? Person/Employee

Organization (individual workplaces/work groups/departments)

Contracts: confidential agreements (NDA)/ non-competition agreements

Business contracts’ elements: date, number, parties to the contract, object, terms, contract value,
product/service conditions, fines and interests, force majeure, stamps, signatures.

Job descriptions

 Common provisions
 Duties/rights/responsibilities

Other important documents

 Invoice bills
 Commercial offers
 Direction orders

Organizational Structures

Organizing Function

 Division of labor (saving time, easier to develop)

 Grouping jobs
  Creating reporting relationships (chain of command, span of management)
 Distributing authority (hierarchy, centralization-decentralization-formalization)
 Coordinating activities (system, structure)

2 approaches to structures (Flat type/High type)

Flat type

 OS with few or 0 mid-level management

 Characterized by a wide span of control
 Number of people directly supervised by each manager-large
 Number of people in the chain of command above one-small

Advantages

 High level of autonomy

 Well-trained workers, more involved
 More flexible
 Changeable

Disadvantages

 Small types of organization

 Easy to lost control
 Risk of prominence
 Big workload

Tall type

 Adopted by large organizations

 Many hierarchical level
 A lot middle-management
 Narrow area of control
 Managers from many ranks

Advantages

 Easy to control
 Clear management
 Sharing of responsibility
 Close supervision

Disadvantages

 Reduced communication between positions

 Too long decision making process
 Slow processes may cause ineffective progress
Conflict Management

Types of conflicts: internal (employees) & External (with clients, suppliers, partners)
Steps while conflict management:

1) Conflict Identification (object)

2) Conflict analysis (character, lack of competency,responsibility, ambitions, attitudes/goals,

communication): stage (progress of issue); potential impact (negative aspects for work quality,
relationships, loss of client, matrtial losses)

3) Conflict solution (method, rule, order, operation); (the working atmosphere became bad or smd got
fired) ; (checking does the planned result was achieved)

4) Benefit for organization (was the problem solved, improved smth, prevention of future conflicts,
rules, orders, penalties);

Ways of conflict

ISO Standards (International Standard Organization)

Independent, non-governmental organization 165 national standard bodies

For products (safety, reliability, high quality)-for Businesses (low costs, min. wasting)

Iso 9000 quality of management

Iso 14000 environmental management

Iso22000 food safety

Iso 20000 it service

Iso 27000 information security

The ISO 8601 way of dating yyyy-mm-dd