Chap 2+3+4 PDF Management Theories

lOMoARcPSD|40186229 CH2: Looking backward, thinking forward -Why Study Dead Scholars?  Progressive Insight: Scientic knowledge builds upon past discoveries ("Standing on the shoulders of giants").  Relevance of the Past: Historical works, like Machiavelli's "Il Principe,"...

lOMoARcPSD|40186229 CH2: Looking backward, thinking forward -Why Study Dead Scholars?  Progressive Insight: Scientic knowledge builds upon past discoveries ("Standing on the shoulders of giants").  Relevance of the Past: Historical works, like Machiavelli's "Il Principe," remain relevant and applicable today.  Repetition of Ideas: Events and ideas from history often recur, albeit with variations, highlighting enduring themes in human experience. A Historical Perspective on Management Theories -Purpose of Theories: o Theories in management provide practical frameworks for understanding and solving organizational challenges. o “Nothing as practical as a good theory” Kurt Lewin -Contextual Development: o Management theories are shaped by the era in which they develop. o They address specic contextual problems and draw on existing knowledge and skills. -Evolution and Inuence: o Historical management theories often build upon or challenge earlier ideas. o For example, Henri Fayol rened Adam Smith's division of labor concept. o The behavioral approach emerged as a counter to scientic management, reecting ongoing theoretical evolution and debate in management studies. Schools of thought: 1) Classical Ideas: Adam Smith: Enhancing productivity through specialisation Advocated division of labor during the industrial revolution to enhance productivity through specialization. (Assembly workers, cashiers) Frederick Taylor: Optimising worker productivity through process standardisation 5 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Introduced scientic management to optimize worker productivity through process standardization. (oce workers, warehouse workers) Henri Fayol: Eectuating managerial functions Emphasized good management practices and organizational functions for ecient industrial production. Max Weber: Optimising the ‘human machine’ Developed bureaucracy theory focusing on rules, hierarchies, and eciency in organizational structures. (Schools) -Assessment of Classical Ideas: Pros: Eective in structuring complex organizations. Cons: Often viewed workers as mindless and neglected human factors. 2) Behavioural Approaches: Mary Parker Follett: Foregrounding humans Advocated for human-centric management, emphasizing informal processes and conict resolution. (protests, unions) Elton Mayo: Nurturing social relations Highlighted human attention and interactions to nurture social relations in workplaces. Chester Barnard: Mobilising power and morality for cooperation Emphasized cooperation and the moral aspects of organizational behavior. -Assessment of Behavioural Approaches: Pros: Focus on personal willpower and social interactions. Cons: May overlook rational structures and processes in favor of human factors. 3) Contemporary Approaches: Edwards Deming: Eectuating circles of performance improvement 6 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Pioneered quality management focusing on continuous improvement and performance circles. Open Systems Perspective: Overseeing global implications of local actions Focuses on interactions within and outside organizations in unpredictable, complex business environments. Contingency Theory: Attuning actions to contingencies Adjusts actions based on factors like technology, size, and environmental complexity. Resource Dependence Theory (Pfeer and Salancik): Eectuating governance to control resources Emphasizes managing external resource dependencies. Institutional Theory: Building and adhering to institutions Studies how formal and informal institutions shape organizational behavior. Organizational Learning: Learning how to perform better Focuses on adapting and improving through experience and observation. -More salient approaches:  Herbert Simon’s boundedly rational decision-making  Ronald Coase’s transaction cost economics  Georg Simmel’s social network analysis  Edward Freeman’s stakeholder perspective -Assessment of Contemporary Approaches: Pros: Adaptability to changing environments and holistic perspectives. Cons: Complexity and potential oversights in specic organizational contexts. Some take-aways -Historical insights are surprisingly topical -Older and more recent management theories oer cumulative, complementary insights into contemporary management practices -Extant management theories are probably helpful in explaining future practices 7 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 CH3: Mapping external inuences Types of external inuences 1) General Environment: PESTEL Framework -The political environment Politics: collective decision-making on societally relevant practices Government: developing and implementing policies Nongovernmental groups: advocating and acting upon moral issues -The economic environment Economics: production, distribution, and consumption of products and services Markets: clearing of supply and demand Market structure: Monopoly, Oligopoly, Monopolistic competition, Perfect competition Market evolution: Business cycles (short, medium, long run), Industry evolution (introduction, growth, maturity, decline) Geographic dierences: International specialisation (factor market dierences), International and intranational wealth accumulation and deprivation -The social environment Sociology: social structure and interaction patterns Social structure: Demography, Social classes, Migration, Educational level and orientation Social interactions: Degree of harmony, Degree of egalitarianism, Degree of formalism -The technological environment Technology: applying knowledge for practical purposes in a reproducible way 8 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Technology waves: long-term, clustered innovations  First wave (1770s-1830s): early mechanisation  Second wave (1830s-1880s): steam power and railways  Third wave (1880s-1930s): electrical and heavy engineering  Fourth wave (1930s-1970s): industrial mass production  Fifth wave (1970s-present): information and communication Innovation types: Product innovation, Process innovation Innovation degrees: Radical innovation, Incremental innovation -The ecological environment Ecology: natural ecosystems Business enabler: Natural resources as inputs, Natural biosystems as outputs Enabling ecosystems in action Business constraint: Neutralising negative eects on natural ecosystem (externalities), Ecological limits and whims hampering business -The legal environment Law: enforceable government regulations Types of law: Common law: case-based, Civil law: codied Levels of legislation:  Supranational legislation: across nation states  National legislation: in nation state only  Local legislation: in municipality/province/region… Regulatory stringency: Level of ambition and sanctions, Enforcement 2) The task environment -The market environment Market environment: competitive context of an organisation Porter’s 5 forces:  Bargaining power of Suppliers  Bargaining power of Buyers  Competition of Incumbent rivals  Threat of New entrants  Threat of Substitutes and complementors -The nonmarket environment 9 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Nonmarket environment: direct interactions with noneconomic actors  Governments  Nongovernmental organisations  Neighbours  … Environmental uncertainty Environmental uncertainty: extent to which an organisation’s context is hard to understand and predict -Environmental complexity Environmental complexity: number of components and interrelations constituting an organisational context Many components: dicult to chart and oversee all factors Many interrelations: dicult to chart and manage, especially indirect and delayed interrelations -Environmental dynamics Environmental dynamics: degree of unpredictable change in an organisation’s context Degree of change: rate of uctuation Unpredictability: unknown direction and rate of uctuation -Environmental uncertainty in action: Some take-aways  External environments are multifaceted  Dierent types of inuences concur and interact  Organisations act upon task environments but also need to duly consider general environments CH4: Eectuating strategies The essence of strategy -The origin of strategy: Strategos = the general’s art 10 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Nonmarket environment: direct interactions with noneconomic actors  Governments  Nongovernmental organisations  Neighbours  … Environmental uncertainty Environmental uncertainty: extent to which an organisation’s context is hard to understand and predict -Environmental complexity Environmental complexity: number of components and interrelations constituting an organisational context Many components: dicult to chart and oversee all factors Many interrelations: dicult to chart and manage, especially indirect and delayed interrelations -Environmental dynamics Environmental dynamics: degree of unpredictable change in an organisation’s context Degree of change: rate of uctuation Unpredictability: unknown direction and rate of uctuation -Environmental uncertainty in action: Some take-aways  External environments are multifaceted  Dierent types of inuences concur and interact  Organisations act upon task environments but also need to duly consider general environments CH4: Eectuating strategies The essence of strategy -The origin of strategy: Strategos = the general’s art 10 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 -Strategy dened: “An integrated way of accomplishing one’s long-term goal” -Strategic goal: (Golden circle what, how, why)  Importance of getting acceptance for a shared goal  Framing to create common ground on the why is critical -Strategy Diamond: Framework encompassing: Economic logic: underlying reasoning of how to accomplish the established goal Arenas: target markets of activity  Functional arena: (sub)sector of business  Geographic arena: location of business activities  Customer arena: targeted market segment Vehicles: internal and external resources to operate in arenas  Internal capabilities: distinctive own resources, Barney’s VRIN framework Valuable Rare Inimitable Non-substitutable  External capabilities: accessing resources controlled by others (cf. resource dependence theory): Strategic alliance, Licensing/franchising, Joint venture, Merger, Acquisition Dierentiators: sources of distinctive competitive advantage  Porter: cost leadership, dierentiation, focus  Treacy & Wiersema: operational excellence, customer intimacy, product leadership Staging: evolution of strategic moves: Sequence of actions, Speed of actions Strategy at dierent levels -Corporate strategy: Corporate strategy: way in which a (large) rm develops a portfolio of activities to accomplish its goals  Scope and depth of business-unit activities  Added value of parent Anso’s corporate strategy directions Boston Consulting Group (BCG) matrix 11 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Existing New Products Products Existing Market New market penetratio products s n New Market Conglomera Market developme te s nt diversicati on Business unit strategy: way in which an entity in rm with a distinct domain of activities seeks to accomplish its goals  Capability development  Competitive positioning  Competitive strategies Competitive positioning: SWOT analysis -Ecosystem strategy: Ecosystem strategy: way in which a rm governs its relations with external actors to accomplish its goals  Forms of external governance  Ability and willingness to control external actors Ability to control: Market or nonmarket actor (ability to transact), Relative dependence and power Willingness to control: Risk attitude, Desire to grow organically (slow) or externally (fast) 12 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Strategy process Strategy process: sequence and pacing of actions to accomplish an organisation’s goals  Strategic planning  Strategic incrementalism  Strategic eectuation -Strategic planning: Strategic planning: systematic formulation and implementation of long-term actions  Goal establishment  SWOT analysis  (Longer-term) action formulation  (Longer-term) action implementation  Outcome evaluation -Strategic incrementalism: Strategic incrementalism: shaping courses of action, adjusted to unfolding events  Initiate (longer-term) actions  Observe (unpredicted) events  Experiment with adjusted actions  Learn from past  Remain exible -Strategic eectuation: Strategic eectuation: establishing the most eective way to achieve an organisation’s goals for a given set of resources  Chart available resources  Determine acceptable risk and aordable loss  Eectuate best possible actions given constraints  Prioritize external collaboration over competition  Adjust actions when new contingencies emerge Wrap-up -Eective strategies encompass and align all ve components -Strategies are everywhere, strategize at the right level 13 Downloaded by Hong Van Do 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