Introduction To Business Management And Its Environment Week 1 PDF

INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 1: Introduction What is Management? Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Rule N° 1: There is no wrong answer!!!! Rule N° 2: Be Respectful!!!...

INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 1: Introduction What is Management? Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Rule N° 1: There is no wrong answer!!!! Rule N° 2: Be Respectful!!! Rule N° 3: Listen to each other Rule N° 4: Don’t EVER forget about the previous rules  Who are you? Full Name, DOB, E-mail Professional Experience (internships, summer job,…) Career Interest –Current academic focus –How/Where do you see yourself in 5 years, and in 10 years? –What industry/sector you would like to operate in? Auto-Portrait –Three words to describe your strengths (only 3) –What are your aspirations? Course –What do you expect from this class? –How much reading are you willing to invest in this class? (from none to 20 pages a week) –How important is this subject for your future? –What would be your functional role during this class? (e.g., Marketing-Brand Manager, Finance- CFO)  What are our objectives for this course? 1. Understand the core functions of business management. 2. Analyze internal and external environments. 3. Understand the role of strategic planning, leadership, and decision-making in management. 4. Develop critical thinking and problem-solving skills related to real-world business challenges.  Master the “Big Picture” questions! Active learning objectives Apply core business management concepts Evaluate the impact of business decisions Develop and present a strategic business plan Critically assess ethical dilemmas Collaborate with peers  Go out there and make a positive impact! Course content Session Topic Case studies 1 Introductions - What is Management? 2 Understanding the Business Environment 3 Management Functions - Planning and Strategy 4 Organizational Structures and Cultures 5 Leadership and Decision-Making in Management 6 Human Resource Management Various case studies (national Marketing and the Role of Customers in the and international) 7 Business Environment 8 Financial Management in Business The Impact of Globalization and Technology on 9 Business Ethics, Corporate Social Responsibility (CSR), and 10 Sustainability in Business  Course process The course is based on case studies and interactive learning Two group Collective In-outs Q&A Wrap-up presentations Diagnosis 25 min+25 min 30 min 60 min 30 min Starting 50 minutes: case presentations by 2 groups Following 30 minutes: Q&A Following 60 minutes: collective case diagnosis Final 30 minutes: perspective, takeaways, feedback and wrap-up of the case. Course metrics You all have an How do you keep it? A+  Assiduity and class participation - 15%  Case reports - 15%  Group case presentation - 30%  Final exam - 40% Planning of groups’ presentations Session Groups 3 Group 1 & 8 4 Group 2 & 7 5 Group 3 & 6 6 Group 4 & 5 7 Group 1 & 8 8 Group 2 & 7 9 Group 3 & 6 10 Group 4 & 5 The million dollar question… What is Management ?  Management: Definitions “Management is the art of knowing what you want to do and then seeing that you do it in the best and the cheapest way.” Frederick Winslow Taylor “Management is to forecast, to plan, to organize, to command, to co-ordinate and control activities of others.” Henri Fayol “Management is doing things right; leadership is doing the right things” Peter Drucker Functions of Management: P-O-L-C framework Functions of Management: P-O-L-C framework 1. Planning: This is the first step in management. It involves setting objectives and determining the best course of action to achieve them. 2. Organizing: Once plans are set, organizing involves arranging resources and tasks to execute the plans. It’s about structuring the company so that people and resources are in the right place to perform efficiently. 3. Leading: This function relates to motivating and managing people. A good manager leads by example, inspires their team, and ensures that everyone is working towards the same goal. 4. Controlling: The final function involves monitoring performance and ensuring that everything aligns with the plan. If there’s a deviation, corrective actions are taken. Levels of Management 1. Top-level managers: These include CEOs, presidents, and other senior executives who are responsible for setting strategic goals. For example, Tim Cook at Apple or Elon Musk at Tesla make decisions that affect the entire organization, from product direction to long-term strategy. 2. Middle managers: These managers, such as department heads or regional managers, bridge the gap between top-level executives and operational managers. They ensure that the strategies set by top-level managers are implemented effectively. Middle managers play a key role in translating high-level strategy into actionable plans. 3. First-line or operational managers: These managers supervise daily operations. For instance, a floor manager in a manufacturing plant or a retail store supervisor ensures that the day-to-day tasks are performed efficiently and according to plan. They directly manage the employees who produce the goods or services. Levels of Management and Types of Managers (1/2) Levels of Management and Types of Managers (2/2) Skills for Effective Management 1. Technical skills: This refers to the ability to understand and apply specialized knowledge. For instance, in a software company, an operational manager might need strong technical skills to understand the product development process. 2. Human skills: These are the interpersonal skills that help managers lead and work with others. A good manager listens, communicates, and motivates their team. 3. Conceptual skills: These are the abilities to see the organization as a whole and understand how various functions interact. For example, a middle manager might need to understand how changes in marketing strategy could affect production or finance. WHY STUDY BUSINESS MANAGEMENT?  Business management (1/2) Business management is the discipline of overseeing and supervising business operations, processes, and resources to achieve organizational goals and objectives. It involves planning, organizing, leading, and controlling resources, including people, finances, materials, and technology, to efficiently and effectively achieve the desired outcomes.  Business management (2/2) The role of a business manager usually includes making strategic decisions, allocating resources, and creating policies that guide the company’s daily operations. Managing a business encompasses various aspects of business administration, including finance, accounting, human resources, marketing, operations, and logistics. Food for thought…  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 2: Understanding the Business Environment: Internal vs. External Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Robbin Hood case study: Robin Hood faces growing challenges as his band of Merry Men expands. What began as a small, united group has become harder to manage, leading to issues like declining discipline, resource shortages, and strained loyalty. Managing the larger, more diverse group while keeping everyone aligned to the mission has become increasingly difficult. Resource management is a major concern, with food, shelter, and the ability to hide in the forest stretched thin. Robin must maintain morale and ensure the group stays organized despite the pressures of rapid growth. These internal challenges are compounded by the external threat of the Sheriff of Nottingham, whose resources and influence are growing. As the Sheriff tightens control over regional assets, Robin operates at a strategic disadvantage, relying heavily on the forest for sustenance and safety. Additionally, the political instability caused by King Richard’s imprisonment presents both risks and opportunities. While some may sympathize with Robin’s cause, forming alliances could provoke even harsher retaliation from Prince John and the Sheriff. Robin must carefully balance these external threats with the survival and cohesion of his group. Robbin Hood case: Internal and External environment Internal Environment Elements External Environment Elements  Rapid Growth:  Declining Discipline:  Threat from the Sheriff of Nottingham:  Resource Shortages: Strain of  Sheriff's Well-Resourced Diversity: Administration:  Challenges in Maintaining Loyalty and  Sheriff’s Influence: Unity/Risk of Betrayal:  Dependence on the Forest:  Morale and Organization Issues:  Political Instability:  Logistical Difficulties:  Potential Alliances and Retaliation:.  Balancing Internal Cohesion with  External Political Landscape: External Pressures: Organizational Environment  EXTERNAL ENVIRONMENT PESTEL Analysis The external environment refers to factors outside the organization that can impact its operation, often beyond the company’s direct control.  PESTEL Analysis Political These include government policies, regulations, and political stability. These relate to the overall economy, such as inflation, exchange rates, unemployment, and Economic economic growth as these elements play a critical role in business decision-making. Changes in societal attitudes, demographics, lifestyle changes, and consumer behavior and Social preferences— can create both challenges and opportunities. Technological advancements can disrupt industries, developing new business models, and Technological creating both opportunities and challenges. Environmental Companies are under increasing pressure to adopt sustainable practices. These could include labor laws, consumer protection regulations, and environmental Legal standards.  PESTEL Analysis – Robbin Hood Political Factors Economic Factors Social Factors Technological Environmental Legal Factors Factors Factors Political Sheriff’s Public Dependence The Sheriff’s instability. Control Over Sympathy and on Sherwood Enforcement Potential Resources. Support. Forest of Law. Alliances and Resource Risk of Public Retaliation. Scarcity in the Discontent. Forest PESTEL Analysis – Coca-Cola Organizational Environment Porter’s Five Forces How easy is it for How much power new competitors do suppliers have to enter the over the industry business? Threat of Bargaining New Power of Rivalry Among Entrants Suppliers Existing Competitors Bargaining The level of competition within Threat of an industry can determine Power of Substitutes profitability. Buyers How likely is it How likely is it that customers that customers will switch to a will switch to a different product different product or service? or service? Porter’s Five Forces Porter’s Five Forces Analysis – Samsung Rivalry Among Existing Competitors High Threat of New Entrants Medium Bargaining Power of Buyers High Bargaining Power of Suppliers Low Threat of Substitutes Low  INTERNAL ENVIRONMENT Internal Environment Definition: factors that exist within the organization. Company culture Internal Organizatio resources nal structure Internal Environm ent Management Employees style Internal Environment Company The set of shared values, beliefs, and behaviors that define how culture things are done in an organization. Management The way in which managers lead the organization significantly style affects the overall performance. Human resources are arguably the most important internal Employees factor. An organization’s workforce drives its success or failure. Internal These include the company’s financial, physical, and resources technological resources. Organizational The way a company is structured can influence how efficiently structure it operates.  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 3: Management Functions – Planning and Strategy Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Core Management Functions: P-O-L-C framework Management is often described as the process of coordinating people and resources to achieve organizational goals. To achieve these goals, managers perform four essential functions: Core Management Functions: P-O-L-C framework Management is often described as the process of coordinating people and resources to achieve organizational goals. To achieve these goals, managers perform four essential functions: Core Management Functions: P-O-L-C framework Planning & Strategy: This is the first step in management. It involves setting objectives and determining the best course of action to achieve them. Planning is the cornerstone of effective management because it lays the foundation for everything else that follows. Without a clear plan, organizations would drift without purpose, wasting resources and missing opportunities. P-O-L-C framework: Planning and Strategy 1. Provides Direction: Planning sets a clear direction for the organization by defining goals and outlining how to achieve them. It aligns the efforts of all employees and departments toward a common purpose. 2. Reduces Uncertainty: Business environments are constantly changing, and planning helps managers anticipate potential challenges and opportunities. By creating contingency plans, managers can respond more effectively to unexpected events. 3. Improves Efficiency: A well-thought-out plan ensures that resources are used efficiently. It identifies what needs to be done, who will do it, and what resources are required. This minimizes waste and maximizes productivity. 4. Facilitates Decision-Making: Planning helps managers make informed decisions. When managers know the goals and strategies, they can evaluate options and choose the best course of action. 5. Enables Control: Planning and controlling are closely linked. Without a plan, there’s no benchmark against which to measure progress. A good plan includes performance standards and timelines, which managers can use to track progress and make necessary adjustments. P-O-L-C framework: Planning and Strategy Strategy Analysis Strategic management involves formulating, implementing, and evaluating cross-functional decisions that Strategic enable an organization to achieve its Choice long-term objectives. It’s all about thinking ahead and positioning the organization for success in a competitive Strategy environment. Implementatio n Strategic Management components SWOT Analysis SWOT analysis is a simple yet powerful tool for evaluating an organization’s internal and external environment. It stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is typically used during the strategic planning process to help organizations assess their current position and develop strategies for the future. SWOT Analysis: Strengths Strengths: These are the internal factors that give the organization an advantage over competitors. Strengths could include strong brand recognition, a skilled workforce, superior technology, or efficient processes. o Example: Apple’s brand loyalty and innovative product design are major strengths that have helped the company dominate the smartphone market. SWOT Analysis: Weaknesses Weaknesses: These are internal factors that may hinder an organization’s performance or prevent it from achieving its objectives. Weaknesses might include outdated technology, poor customer service, or lack of capital. o Example: A small startup may struggle with limited financial resources, which can slow down product development or expansion efforts. SWOT Analysis: Opportunities Opportunities: These are external factors that an organization can capitalize on to grow or improve its performance. Opportunities could include emerging markets, technological advancements, or shifts in consumer preferences. o Example: The growing demand for sustainable products presents opportunities for companies to develop eco-friendly alternatives, such as electric vehicles or reusable packaging. SWOT Analysis: Threats Threats: These are external factors that could harm the organization. Threats might include new competitors, economic downturns, changing regulations, or technological disruptions. o Example: The rise of streaming services like Netflix posed a significant threat to traditional cable companies, forcing them to rethink their business models. SWOT Analysis: NETFLIX SWOT Analysis: SAMSUNG  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 4: Organizational Structures and Culture Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Core Management Functions: P-O-L-C framework Management is often described as the process of coordinating people and resources to achieve organizational goals. To achieve these goals, managers perform four essential functions: Core Management Functions: P-O-L-C framework Organizing defines how activities such as task allocation, coordination, and supervision are directed toward achieving organizational goals. Essentially, it’s how a company is set up to ensure that work gets done efficiently and effectively. ORGANIZATIONAL STRUCTURE Organizational structure Organizational structure specifies the firm’s formal reporting relationships, procedures, controls, authority and decision-making processes. A firm’s structure determines and specifies the decisions that are to be made and the work that is to be completed by everyone within an organization as a result of those decisions. Organizational structure: Simple Structure A simple structure generally is used by small firms with low organizational complexity. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations. Organizational structure: Functional Structure Functional structure groups employees into distinct functional areas based on domain expertise. These functional areas often correspond to distinct stages in the company value chain such as R&D, engineering and manufacturing, and marketing and sales, as well as supporting areas such as human resources, finance, and accounting. A functional structure allows for a higher degree of specialization and deeper domain expertise than a simple structure. Organizational structure: Matrix Structure In this structure, the firm is organized according to SBUs (along a horizontal axis, like in the M-form), but also has a second dimension of organizational structure (along a vertical axis). In this case, the second dimension consists of different geographic areas, each of which generally would house a full set of functional activities. (SOURCE: Rothaermel, Frank T.. Strategic management. 2nd ed. New York: McGraw-Hill Education, 2015.) Organizational structure: Matrix Structure Organizational structure: Matrix Structure Organizational structure: Multidivisional Structure The multidivisional structure (or M- form) consists of several distinct strategic business units (SBUs), each with its own P&L responsibility. Each SBU is operated more or less independently from one another, and each is led by a CEO (or equivalent general manager) who is responsible for the unit’s business strategy and its day-to-day operations. The CEOs of each division in turn report to the corporate office, which is led by the company’s highest ranking executive (titles vary and include president or CEO (SOURCE: Rothaermel, Frank T.. Strategic management. 2nd ed. New York: McGraw-Hill Education, 2015.) for the entire corporation). Organizational structure: Simple Structure vs. Functional Structure vs. Multidivisional Structure (SOURCE: Rothaermel, Frank T.. Strategic management. 2nd ed. New York: McGraw- Hill Education, 2015.) Organizational Structure : Why Organizational Structure Matters The structure of an organization affects everything from how decisions are made to how efficiently resources are used. It can enable smooth operations, clear communication, and better employee satisfaction. However, a poorly designed structure can cause confusion, reduce productivity, and make the company less agile in responding to changes in the business environment. ORGANIZATIONAL CULTURE Organizational Culture: Organizational culture describes the collectively shared values and norms of an organization’s members. Norms define appropriate employee attitudes and behaviors. “How things get done around here” Organizational Culture: Employees learn about an organization’s culture through socialization, a process whereby employees internalize an organization’s values and norms through immersion in its day to- day operations. Successful socialization, in turn, allows employees to function productively and to take on specific roles within the organization.  Strong cultures emerge when the company’s core values are widely shared among the firm’s employees and when the norms have been internalized. Organizational Culture: Corporate culture finds its expression in artifacts. Artifacts include elements such as the design and layout of physical space; symbols; vocabulary; what stories are told; what events are celebrated and highlighted; and how they are celebrated. Organizational Culture: Values, Norms, and Artifacts The most important yet least visible element—values—is in the center. As we move outward in the figure, from values to norms to artifacts, culture becomes more observable. Understanding what organizational culture is, and how it is created, maintained, and changed, can help you be a more effective manager. Where Does Organizational Culture Come From? Founder imprinting Company founders define and shape an organization’s culture, which can persist for many decades after their departure. This phenomenon is called founder imprinting. Firm founders set the initial strategy, structure, and culture of an organization by transforming their vision into reality.  Groupthink: a situation in which opinions coalesce around a leader without individuals critically evaluating and challenging that leader’s opinions and assumptions. Organizational Culture: How Culture Drives Success Organizational culture has a profound impact on performance. A strong, positive culture can:  Increase Employee Engagement: Employees who feel aligned with their company’s values are more likely to be motivated and committed to their work.  Improve Customer Satisfaction: Companies with strong cultures of service and care often provide better customer experiences.  Drive Innovation: Cultures that encourage risk-taking and experimentation foster creativity, leading to new products and services.  Enhance Organizational Agility: Companies with adaptive cultures are better able to respond to changes in the market or external environment. The Relationship Between Structure, Culture, and Strategy: How Structure and Culture Align with Strategy An organization’s structure and culture must align with its strategy to be effective. Let’s break this down: 1. Structure Supports Strategy: The structure of an organization should be designed to support its strategic objectives. For example, a company pursuing rapid growth might need a flexible structure, such as a matrix or divisional structure, to quickly adapt to new opportunities. 2. Culture Drives Strategy Execution: Culture is the engine that drives strategy execution. A company might have a brilliant strategy, but if the culture doesn’t support it, the strategy will fail. For example, a company that wants to innovate but has a culture that discourages risk-taking will struggle to execute its innovation strategy. 3. Strategy Shapes Culture and Structure: At the same time, an organization’s strategy can shape its culture and structure. For instance, if a company adopts a multidomestic expansion strategy, it may need to shift to a more divisional structure to manage different regions. It may also need to foster a culture of diversity and inclusion to succeed in different markets.  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 5: Leadership and Decision- Making in Management Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Core Management Functions: P-O-L-C framework Management is often described as the process of coordinating people and resources to achieve organizational goals. To achieve these goals, managers perform four essential functions. Core Management Functions: Leading Leading is the ability to influence, guide, and inspire others toward achieving a common goal. In a business context, leadership is not just about giving orders or being at the top of the hierarchy; it’s about motivating and enabling people to work toward the vision of the company. Effective leaders are those who can foster trust, build a collaborative environment, and drive results through their influence. Why Is Leadership Important? Leadership is essential for several reasons: 1. Setting Direction: Leaders set the strategic direction of an organization. They help teams understand the bigger picture and how their efforts contribute to the organization’s goals. 2. Inspiring and Motivating Teams: A good leader can inspire others to give their best efforts, even in challenging times. Motivated employees are more productive, engaged, and committed to their work. 3. Building and Managing Relationships: Leadership is not just about managing tasks; it’s also about managing relationships. Effective leaders know how to build strong relationships with employees, stakeholders, and customers, which contributes to long-term success. 4. Driving Change: In today’s fast-paced business world, leaders are also change agents. They help organizations navigate through changes—whether technological, structural, or market- driven—by leading the way with vision and strategy. Leadership Styles Leadership Styles: Commanding/Autocratic Autocratic leader: This is a "do as I say" approach. Leaders who use this style demand immediate compliance and often use tight control. It can be effective in crisis situations or when turnaround is required, but overuse can harm morale and innovation. Example: A CEO takes charge during a company crisis, making quick decisions and requiring immediate compliance from employees to implement an emergency restructuring plan. Impact: While this style can ensure fast decision-making, it can also lead to disengagement and resentment among employees if used excessively. Leadership Styles: Visionary Leadership Visionary Style: Leaders using this style mobilize people toward a vision, inspiring and guiding the team toward a common goal. It’s especially effective when the organization or team needs a new direction. This style fosters a positive work environment and high motivation, as people understand the big picture. Example: A new leader at a tech startup communicates a clear vision of becoming the most innovative provider in the industry, explaining how each department’s work contributes to this goal and inspiring employees to strive for it. Impact: This style fosters enthusiasm, motivation, and alignment toward a common goal. It helps teams understand the bigger picture and feel purpose-driven. However, it can be ineffective if the leader lacks credibility or if employees need more hands-on guidance. Leadership Styles: Affiliative Leadership Affiliative Style: With an emphasis on emotional bonds and harmony, the affiliative leader aims to build strong relationships within the team. This approach boosts morale and is beneficial for repairing broken trust or improving communication, although it may lack focus on results if overemphasized. Example: After a difficult project that caused team tension, a manager uses team-building activities, one-on- one check-ins, and positive reinforcement to rebuild trust and support among team members. Impact: This style enhances team morale and builds strong bonds between team members, creating a supportive and collaborative environment. However, if overused, it can lead to underperformance, as the focus on harmony may overshadow necessary feedback or accountability. Leadership Styles: Democratic Leadership Democratic style: This leader seeks to build consensus and includes team members in decision-making processes. It works well when collaboration is needed and can boost morale by ensuring everyone feels heard. However, it can be time-consuming and less effective in urgent situations. Example: A department head invites team members to contribute ideas and vote on the best approach for an upcoming project, ensuring everyone’s input is considered. Impact: This style can lead to higher employee satisfaction and creativity but may slow down the decision-making process in situations where speed is crucial. Leadership Styles: Pacesetting Leadership Pacesetting Style: Pacesetters lead by example, setting high standards for performance and expecting the same from others. This style can be highly motivating for self-driven employees and produces rapid results. However, it can create stress or burnout if expectations are unrealistic or if support is insufficient. Example: A sales manager sets a high bar by consistently exceeding their sales targets and expects the team to do the same, offering minimal guidance but expecting high performance. Impact: This style drives quick results and can inspire high-achievers, fostering a fast-paced, results-oriented culture. However, it can lead to burnout, stress, and high turnover if employees feel the pace is unsustainable or if they aren’t given the support they need to meet expectations. Leadership Styles: Coaching Leadership Coaching Style: Focused on long-term professional development, coaching leaders help team members identify strengths, weaknesses, and development goals. This style is ideal for developing people and strengthening the team over time but is less effective when employees are resistant to change or lack the motivation to grow Example: A manager works with an employee on developing a career plan, helping them identify strengths and areas for improvement, and providing opportunities for skill-building and growth over time. Impact: This style helps develop talent, boosts employee confidence, and builds a learning culture. It can lead to strong team loyalty and long-term success, but it may be ineffective with employees who lack motivation or in time-sensitive situations where immediate results are required. Leadership Styles The Rational Decision-Making Process 1. Identify the Problem: The first step is to clearly define the problem or decision that needs to be made. Without a clear understanding of the issue, it’s impossible to find the right solution. 2. Gather Information: Once the problem is identified, the next step is to gather relevant data and information to fully understand the situation. 3. Generate Alternatives: After understanding the problem, the next step is to brainstorm possible solutions or courses of action. This step encourages creativity and out-of-the-box thinking. 4. Evaluate Alternatives: In this step, you evaluate each of the alternatives by considering the pros and cons, risks, and potential outcomes. 5. Make a Decision: After evaluating the alternatives, the decision-maker selects the best course of action. This involves choosing the solution that aligns most with the organization’s goals and values. 6. Implement the Decision: Once a decision is made, it’s time to put it into action. Implementation is critical because even the best decisions can fail if not executed properly. 7. Monitor and Evaluate the Results: After implementing the decision, the final step is to monitor its outcomes and evaluate whether the problem has been resolved. If not, adjustments may be needed.  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 6: Human Resource Management Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Core Management Functions: P-O-L-C framework Management is often described as the process of coordinating people and resources to achieve organizational goals. To achieve these goals, managers perform four essential functions. Core Management Functions: Leading Leading is the ability to influence, guide, and inspire others toward achieving a common goal. In a business context, leadership is not just about giving orders or being at the top of the hierarchy; it’s about motivating and enabling people to work toward the vision of the company. Effective leaders are those who can foster trust, build a collaborative environment, and drive results through their influence. The Role of HR in Business Management Human Resource Management is a strategic function that goes beyond administrative tasks like hiring and payroll. HRM is responsible for aligning the workforce with the organization’s goals, ensuring that the company can achieve its objectives through its people. What Does HR Do?  Talent Acquisition: HR is responsible for attracting and hiring the right talent. This involves everything from writing job descriptions and conducting interviews to onboarding new employees.  Employee Development: HR ensures employees have the skills and knowledge they need to succeed. This could be through training programs, workshops, or career development initiatives  Performance Management: HR plays a key role in setting performance standards and evaluating employee performance. They help ensure employees meet expectations and contribute to the organization’s success.  Employee Relations: HR is the bridge between management and employees, handling conflicts, ensuring job satisfaction, and maintaining a positive work environment.  Compliance and Legal Issues: HR ensures the company complies with labor laws, health and safety regulations, and other legal requirements. Why Is HR Critical to Business Success? HR is essential because it ensures the organization has the right people in place, performing at their best. Without effective HRM, businesses would struggle to recruit talented employees, retain high performers, and create a productive work environment. Moreover, HR’s role in maintaining legal compliance is crucial in preventing costly lawsuits and maintaining the company’s reputation. Functions of HRM: Recruitment Recruitment is the process of identifying and attracting qualified candidates to fill job vacancies. Recruitment strategies can vary depending on the nature of the job and the company’s needs, but the main goal is always the same: to attract the best possible talent.  Internal vs. External Recruitment: Recruitment can be internal (promoting or transferring existing employees) or external (bringing in candidates from outside the organization).  Methods of Recruitment: Companies use various methods to attract candidates, such as online job boards, social media, recruitment agencies, and campus recruiting events. Functions of HRM: Selection Selection is the process of evaluating candidates and choosing the best person for the job. This involves multiple steps, such as screening resumes, conducting interviews, and administering tests or assessments. The goal of selection is not just to find someone who meets the technical requirements but also someone who fits the company’s culture.  Types of Selection Tools: Interviews (behavioral and situational), personality tests, and skill assessments are common tools used in the selection process. o Example: Many companies use behavioral interviews to assess how candidates have handled past work situations, as this can be a good predictor of future performance. Functions of HRM: Employee Development Employee development refers to ongoing efforts to enhance employees’ skills, knowledge, and experience, helping them grow within the organization.  Training Programs: These can be job-specific, such as technical training, or soft skills training, such as leadership and communication. o Example: Companies like IBM offer extensive leadership development programs for their high-potential employees to prepare them for managerial roles.  Career Development: HR departments often provide career planning resources, mentorship programs, and opportunities for employees to advance in their careers. o Example: Deloitte provides a robust mentoring system and continuous learning opportunities to help employees advance their careers within the organization. Performance Management and Employee Motivation 1. Performance Management Performance management is the process of setting goals, monitoring progress, and providing feedback to employees. The goal is to ensure that employees’ work aligns with the company’s objectives and that they are performing at their best.  Setting Clear Expectations: Employees need to know what is expected of them. Clear, measurable goals help provide direction.  Regular Feedback and Evaluations: Performance appraisals, conducted annually or semi- annually, are common tools used to evaluate employee performance. However, regular feedback throughout the year is equally important for keeping employees on track. Performance Management and Employee Motivation 2. Employee Motivation Motivating employees is a critical challenge for managers. Without motivation, even the most skilled employees can become disengaged, leading to lower productivity and higher turnover rates.  Intrinsic vs. Extrinsic Motivation: Intrinsic motivation comes from within the employee—such as personal growth, a sense of accomplishment, or passion for the work. Extrinsic motivation involves external rewards like salary, bonuses, and promotions. o Example: Companies like Google and Salesforce foster intrinsic motivation by creating a purpose- driven, collaborative environment that allows employees to work on meaningful projects.  Motivational Theories: o Maslow’s Hierarchy of Needs: This theory suggests that employees have different levels of needs, from basic physiological needs (e.g., salary) to higher-level needs like self-actualization (e.g., personal growth). o Herzberg’s Two-Factor Theory: This theory divides workplace factors into hygiene factors (which can prevent dissatisfaction, like job security and salary) and motivators (which lead to satisfaction, like recognition and achievement). Maslow’s Hierarchy of Needs Herzberg’s Two-Factor Theory  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 7: Marketing and the Role of Customers in the Business Environment Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Marketing: Definition Marketing is the process by which businesses identify customer needs, create products and services to meet those needs, and communicate the value of these products to customers. The ultimate goal of marketing is to drive customer engagement, foster loyalty, and support an organization’s growth by aligning its offerings with market demands. The Marketing Mix The Marketing Mix: is a framework that helps businesses strategize how to bring their products or services to market. It's often represented by the 4 Ps: Product, Price, Place, Promotion. Together, these four elements help companies design effective strategies to attract and retain customers, balancing product value, pricing, availability, and communication to meet market demands. The Marketing Mix: Product The product refers to what the business offers to meet the needs or wants of customers. It can be a physical good, service, or idea. The success of a product depends on understanding the target market and creating something that fulfills their needs.  Key Considerations: What are the features and benefits of the product? What makes it stand out from competitors? Does it solve a problem for the customer? The Marketing Mix: Price Price is what customers pay to obtain the product. Pricing strategies must strike a balance between profitability and customer demand. The price also signals value to customers, so setting the right price is critical.  Key Considerations: Is the product priced for luxury, affordability, or somewhere in between? How does the price compare to competitors? The Marketing Mix: Place Place refers to how and where the product is made available to customers. This could be through physical locations like stores or online platforms, such as e- commerce websites.  Key Considerations: Where do customers expect to find your product? Should you sell directly to consumers or through intermediaries? The Marketing Mix: Promotion Promotion is how the company communicates with its target market about the product. This can include advertising, public relations, sales promotions, and digital marketing.  Key Considerations: What’s the best way to reach your audience? Which channels—such as TV, social media, or search engines—are most effective? Market Research Market research involves gathering, analyzing, and interpreting information about a market, including the needs and preferences of customers. It provides insights into what customers want, how much they’re willing to pay, and how they perceive competing products. Market Research: Types  Types of Market Research: o Primary Research: This is data collected directly from customers, such as through surveys, interviews, or focus groups. o Secondary Research: This involves analyzing data that’s already been collected, such as reports from industry analysts or government statistics.  Example: Starbucks regularly conducts primary research by gathering feedback from its customers on their preferences for new products or store experiences. This feedback helps the company tailor its offerings and marketing campaigns to suit customer preferences. Consumer behavior Understanding consumer behavior is crucial for marketers because it explains the reasons behind customers’ buying decisions. Why do people choose one product over another? What influences their purchasing decisions?  Factors Influencing Consumer Behavior: o Psychological Factors: Motivation, perception, beliefs, and attitudes. o Social Factors: Family, friends, and cultural background. o Personal Factors: Age, occupation, lifestyle, and personality.  Example: When marketing luxury goods like Rolex watches, companies consider the psychological motivations of consumers, such as status and prestige, to create an image that resonates with their target audience. The Role of Branding Branding is more than just a logo or a tagline. It’s the image and identity that a company creates in the minds of consumers. A strong brand can foster customer loyalty, differentiate a product from its competitors, and create an emotional connection with the audience.  Importance of Branding: A well-defined brand helps a company stand out in a crowded market and gives customers a reason to choose it over others.  Brand Loyalty: Customers who are loyal to a brand are more likely to make repeat purchases and recommend the product to others. This is why companies invest heavily in building strong, recognizable brands. Extra 1: The Role of Digital Marketing in Today’s Business Landscape With the rise of the internet and mobile technology, digital marketing has become a dominant force in the business world. Digital marketing encompasses all marketing efforts that use the internet or electronic devices to reach consumers.  Key Components of Digital Marketing: o Search Engine Optimization (SEO): Optimizing content to rank higher in search engine results, increasing visibility. o Social Media Marketing: Engaging with customers on platforms like Instagram, Facebook, Twitter, and LinkedIn. o Email Marketing: Sending targeted messages directly to customers’ inboxes to promote products or services. o Content Marketing: Creating valuable, relevant content to attract and engage a target audience. o Paid Advertising: Using paid search ads, display ads, or social media ads to reach a specific audience. Extra 2: The Shift to E-Commerce The COVID-19 pandemic accelerated the shift to e- commerce, with many businesses moving their operations online. E-commerce allows customers to shop from anywhere at any time, providing convenience and broadening a company’s reach. In the digital age, businesses that fail to embrace digital marketing risk falling behind their competitors. The power of digital tools allows companies to reach global audiences, engage with customers in real-time, and measure the success of their marketing campaigns with greater accuracy.  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 8: Introduction to Financial Management Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Overview of Financial Management in Business Financial management involves planning, organizing, leading, and controlling financial activities. It includes managing the firm’s finances, analyzing its financial performance, and making decisions that influence its financial health. Effective financial management aligns a company’s financial strategy with its broader goals, whether it’s expanding operations, launching new products, or sustaining competitive advantage. Importance of Financial Management 1. Resource Allocation: Effective financial management ensures that resources are allocated efficiently to maximize returns. 2. Risk Management: It helps in identifying, analyzing, and mitigating financial risks associated with business operations. 3. Financial Planning: Financial management allows businesses to set short-term and long-term financial goals and develop strategies to achieve them. 4. Performance Evaluation: It provides tools and metrics for evaluating business performance and making informed decisions. Resource/Capital allocation Resource or capital allocation is a fundamental aspect of financial management that involves the strategic distribution of a company’s limited financial resources to various areas of the business to achieve organizational goals. Effective capital allocation ensures that resources are directed toward projects and initiatives that maximize returns, align with the company's strategic vision, and sustain long-term growth. Key Aspects of Resource/Capital Allocation 1. Strategic Investment Decisions: This includes funding for product development, technological advancements, or market expansion. 2. Balancing Short-term and Long-term Goals: balances short-term operational needs with long-term strategic investments. 3. Prioritizing Projects and Initiatives: Projects that offer high returns with manageable risks are prioritized. 4. Considering Stakeholder Interests: Shareholders seek returns through dividends, employees desire job security and career growth, and customers expect investments in quality and innovation. 5. Optimizing Resource Utilization: Businesses track and monitor the performance of investments to ensure resources are being utilized effectively. 6. Adapting to Market Conditions: External factors, technological advancements, or competitive pressures often influence resource allocation. Risk Management in Finance Risk management in finance is the process of identifying, analyzing, and addressing potential risks that could negatively affect an organization’s financial health and operational stability. It involves proactive measures to minimize the likelihood of adverse events or their impact, ensuring the company’s long-term sustainability and success. Importance of Risk Management in Finance  Preservation of Financial Stability  Enhanced Decision-Making  Regulatory Compliance  Improved Resilience Funding and Financing Options Funding and financing options refer to the various mechanisms available for organizations to raise capital to support their operations, growth, and strategic objectives. Choosing the right option is essential for achieving financial stability, minimizing risks, and aligning with long-term goals.  Internal Financing Options: Retained Earnings, Asset Liquidation, Operational Cash Flow.  External Financing Options 1. Debt Financing (Bank Loans, Corporate Bonds); 2. Equity Financing: (Venture Capital, Public Equity (IPO)); 3. Hybrid Financing: (Convertible Bonds: Mezzanine Financing); 4. Government Grants and Subsidies; 5. Crowdfunding.  Internal Financing Options External Financing Options Retained Earnings: Profits Debt Financing reinvested into the business rather Bank Loans: Borrowing from financial institutions at agreed than distributed to shareholders. interest rates. Corporate Bonds: Issuing bonds to investors with a promise Asset Liquidation: Selling non- of periodic interest payments. core or underutilized assets to Equity Financing generate funds. Venture Capital: Raising funds from investors in exchange for equity stakes, often used by startups. Operational Cash Flow: Using Public Equity (IPO): Issuing shares to the public through surplus cash from day-to-day stock markets. operations to fund activities. Hybrid Financing Convertible Bonds: Debt that can be converted into equity. Mezzanine Financing: Combines debt and equity features, offering flexibility in repayment terms. Government Grants and Subsidies:Financial support from government programs to encourage specific business activities. Crowdfunding: Raising small amounts of capital from a large number of people, typically through online platforms. Cost Control and Profitability Cost control and profitability are fundamental aspects of financial management that ensure the long-term success and sustainability of an organization. Cost control involves actively managing and reducing business expenses without compromising quality or operational efficiency. Profitability focuses on maximizing the difference between revenues and costs. Balancing Cost Control and Profitability requires: 1. Revenue Growth with Controlled Spending o Identifying profitable market segments to focus efforts on high-margin products or services. 2. Investment in Innovation o Ensuring that innovation efforts align with profitability objectives. 3. Customer Value Optimization o Implementing value-based pricing strategies that reflect the quality and benefits offered. Basics of Budgeting Budgeting is a fundamental aspect of financial management, enabling organizations to plan their finances and allocate resources effectively. Importance of Budgeting 1. Resource Allocation: Budgets help businesses allocate resources to various departments and projects based on priority and expected returns. 2. Performance Monitoring: They serve as benchmarks for measuring actual performance against planned performance. 3. Decision-Making: Budgets provide a framework for financial decision-making, helping managers evaluate the feasibility of projects and initiatives. Steps in the Budgeting Process 1. Setting Objectives: Define the financial goals and objectives for the budget period. 2. Gathering Data: Collect historical data and trends to form the budgeting process. 3. Developing the Budget: Create a detailed budget that outlines expected revenues and expenses. 4. Monitoring and Adjusting: Regularly review actual performance against the budget and make adjustments as necessary. Business Performance Indicators Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively a company is achieving its business objectives. Examples include:  Return on Investment (ROI): Measures the gain or loss generated relative to the investment cost.  Customer Acquisition Cost (CAC): Evaluates the cost associated with acquiring a new customer.  Employee Turnover Rate: Indicates employee satisfaction and retention.  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 9: The Impact of Globalization and Technology on Business Samah MOURTAKA, PhD Sep 2024 – Jan 2025 The Impact of Globalization Globalization refers to the increasing interconnectedness and interdependence of economies, societies, and cultures across the globe. It has reshaped the business landscape in several significant ways. Interconnectedness: the state of having different parts or things connected or related to each other. How Globalization Affects Businesses and Management Practices 1/4 1. Market Expansion Businesses now have the opportunity to reach customers beyond their domestic borders. This allows companies to:  Tap into New Customer Bases: For instance, companies like Coca-Cola and McDonald's operate in hundreds of countries, catering to diverse tastes and preferences.  Increase Revenue: By entering emerging markets, businesses can boost their revenues and profits. How Globalization Affects Businesses and Management Practices 2/4 2. Increased Competition While globalization opens new markets, it also brings increased competition. Local businesses now face competition from international firms. This compels companies to:  Enhance Quality and Efficiency: To remain competitive, businesses must improve their products and services, often leading to innovations and advancements.  Adopt Competitive Pricing Strategies: Companies may need to reconsider their pricing strategies to attract customers in diverse markets. How Globalization Affects Businesses and Management Practices 3/4 3. Cultural Awareness Globalization necessitates cultural sensitivity and awareness. Understanding cultural differences is vital for effective management. Companies must:  Adapt Marketing Strategies: Businesses often tailor their marketing campaigns to align with local customs, values, and preferences.  Embrace Diversity in the Workplace: A diverse workforce can enhance creativity and innovation while fostering a more inclusive environment. How Globalization Affects Businesses and Management Practices 4/4 4. Changing Management Practices Globalization influences management practices in several ways:  Collaborative Approaches: Managers often engage in collaborative practices, working with diverse teams across different time zones and cultures.  Global Leadership Skills: Effective global leaders must possess skills such as adaptability, communication, and cultural intelligence to navigate complex international environments. Global Business Strategies: Definition Global business strategies involve approaches that companies adopt to operate successfully in international markets. Key strategies include multinational corporations, outsourcing, and global supply chains. Global Business Strategies (1/3) 1. Multinational Corporations (MNCs) MNCs are companies that operate in multiple countries while maintaining a centralized management system. They often:  Leverage Global Resources: MNCs can access diverse resources, including raw materials and skilled labor, at competitive costs.  Adapt Products to Local Markets: For example, Unilever tailors its product offerings to meet local preferences, such as producing region- specific flavors of ice cream. Global Business Strategies (2/3) 2. Outsourcing Outsourcing involves delegating certain business functions or processes to external suppliers, often in different countries. This strategy allows businesses to:  Reduce Costs: Companies can save on labor and operational expenses by outsourcing to countries with lower wage rates, such as customer service functions to India or manufacturing to China.  Focus on Core Competencies: By outsourcing non-core activities, businesses can concentrate on their primary areas of expertise. Global Business Strategies (3/3) 3. Global Supply Chains Global supply chains involve sourcing materials, manufacturing, and distributing products across international borders. Effective management of global supply chains enables companies to:  Enhance Efficiency: Businesses can optimize production processes by sourcing materials from different regions, reducing costs, and improving delivery times.  Mitigate Risks: Diversifying suppliers and production locations can help mitigate risks associated with geopolitical tensions, natural disasters, or supply disruptions. The Role of Technology in Modern Business Technology plays a pivotal role in transforming how businesses operate and engage with customers. It enables innovation, improves efficiency, and facilitates decision-making. The Role of Technology in Modern Business (1/3) 1. Digital Transformation Digital transformation involves integrating digital technology into all areas of business, fundamentally changing how organizations operate and deliver value. Key aspects include:  Improved Customer Experiences: Companies use technology to enhance customer interactions, providing personalized experiences through data analysis and customer insights.  Automation of Processes: Automation reduces manual work and enhances efficiency. Businesses adopt technologies like robotic process automation (RPA) to streamline repetitive tasks, allowing employees to focus on more strategic activities. The Role of Technology in Modern Business (2/3) 2. Artificial Intelligence (AI) AI is revolutionizing business practices by enabling machines to perform tasks that typically require human intelligence. Its applications include:  Data Analysis and Insights: AI algorithms can analyze vast amounts of data to identify trends and patterns, supporting data-driven decision-making. For instance, Netflix uses AI to recommend content based on user preferences.  Chatbots and Customer Support: Businesses are increasingly deploying AI-powered chatbots to handle customer inquiries, providing instant responses and improving service efficiency. The Role of Technology in Modern Business (3/3) 3. Big Data Big data refers to the vast volumes of structured and unstructured data generated every second. Leveraging big data allows businesses to:  Gain Insights: Companies can analyze customer behavior, market trends, and operational performance to make informed decisions.  Predictive Analytics: Organizations can use predictive analytics to forecast future trends, enabling proactive decision-making. For instance, retailers analyze purchasing patterns to optimize inventory levels.  INTRODUCTION TO BUSINESS MANAGEMENT AND ITS ENVIRONMENT Week 10: Ethics, Corporate Social Responsibility (CSR), and Sustainability in Business Samah MOURTAKA, PhD Sep 2024 – Jan 2025 Ethics in Business Ethics refers to the moral principles that govern a person's or group’s behavior. In business, ethical behavior fosters trust, promotes a positive reputation, and encourages a culture of integrity. The Importance of Ethics in Business (1/4) 1. Building Trust and Reputation A company that prioritizes ethical behavior builds trust with its stakeholders, including customers, employees, and investors. Trust is essential for long- term success. The Importance of Ethics in Business (2/4) 2. Legal Compliance and Risk Management Ethical practices help organizations comply with laws and regulations, reducing the risk of legal issues and penalties. For example:  Financial Regulations: Companies must adhere to financial regulations to avoid scandals like the Enron scandal, where unethical practices led to significant financial losses and the company’s eventual collapse. The Importance of Ethics in Business (3/4) 3. Employee Engagement and Retention A strong ethical culture contributes to employee satisfaction and retention. Employees are more likely to remain with a company that aligns with their values. For example:  Company Culture: Businesses that prioritize ethics tend to foster a positive work environment, encouraging employees to take pride in their work and remain loyal to the organization. The Importance of Ethics in Business (4/4) 4. Competitive Advantage Organizations that actively engage in ethics and CSR can differentiate themselves from competitors. Customers increasingly prefer to support businesses that demonstrate ethics and social responsibility. Sustainable Business Practices Sustainability in business refers to practices that meet the needs of the present without compromising the ability of future generations to meet their own needs. The concept of the triple bottom line encapsulates the three pillars of sustainability: people, planet, and profit. Sustainable Business Practices and the Triple Bottom Line (1/3) People (Social Responsibility) The social aspect of sustainability emphasizes the importance of treating employees, customers, and communities fairly and with respect. This includes:  Fair Labor Practices: Companies should ensure fair wages, safe working conditions, and respect for human rights.  Community Engagement: Businesses can positively impact communities through charitable initiatives, volunteer programs, and partnerships. Sustainable Business Practices and the Triple Bottom Line (2/3) Planet (Environmental Responsibility) Environmental sustainability focuses on minimizing the negative impact of business operations on the planet. Sustainable practices include:  Resource Conservation: Companies can implement energy-efficient practices, reduce waste, and use renewable resources.  Green Supply Chains: Businesses can prioritize environmentally friendly practices throughout their supply chains, such as reducing carbon footprints and using eco-friendly materials. Sustainable Business Practices and the Triple Bottom Line (3/3) Profit (Economic Responsibility) The profit aspect emphasizes that businesses can be profitable while also being socially and environmentally responsible. Companies that embrace sustainable practices can:  Enhance Brand Value: A commitment to sustainability can enhance brand value and attract a growing segment of eco- conscious consumers.  Long-term Financial Performance: Research indicates that companies with sustainable practices often experience better long-term financial performance, reducing risks and creating opportunities for innovation. The Role of Businesses in Addressing Global Challenges (1/3) 1. Climate Change Businesses contribute to climate change through greenhouse gas emissions and resource consumption. However, they also have the power to drive positive change:  Innovative Solutions: Companies can develop sustainable technologies and practices to reduce emissions. For example, Tesla is revolutionizing the automotive industry by promoting electric vehicles, helping to decrease reliance on fossil fuels.  Corporate Initiatives: Many organizations are committing to net-zero emissions goals and sustainability initiatives, demonstrating their responsibility to combat climate change. The Role of Businesses in Addressing Global Challenges (2/3) 2. Inequality Inequality remains a pressing global issue. Businesses can address this challenge by:  Diverse Hiring Practices: Organizations can promote diversity and inclusion in the workplace, ensuring equal opportunities for all individuals, regardless of background. Companies like Microsoft have implemented diversity initiatives to foster a more inclusive workforce.  Supporting Local Communities: Businesses can invest in community development and education programs, helping to uplift marginalized groups. For example, Unilever’s Sustainable Living Plan focuses on empowering women and improving livelihoods in developing communities. The Role of Businesses in Addressing Global Challenges (3/3) 3. Social Justice Businesses can advocate for social justice by:  Responsible Marketing Practices: Companies must ensure their marketing strategies do not perpetuate stereotypes or discrimination.  Philanthropy and Activism: Organizations can engage in philanthropic efforts and social activism, supporting causes that align with their values and mission.