Principles of Management PDF Semester 1

Semester 1 Principles of Management Principles of Management Summary Principles of Management Summary....................................................................................... 1 01 – Introduction to...

Semester 1 Principles of Management Principles of Management Summary Principles of Management Summary....................................................................................... 1 01 – Introduction to Management........................................................................................ 2 02 – Management Theory.................................................................................................... 4 03 – Environment & Stakeholders........................................................................................ 6 04 - Global Management..................................................................................................... 7 05 – Managerial Decision Making......................................................................................... 8 06 – Leadership and Management..................................................................................... 11 07 – Managing Individual Di erences & Behaviours............................................................ 12 08 – Strategic Management............................................................................................... 14 09 - Organizational Structure and Culture.......................................................................... 17 10 – Controlling................................................................................................................ 19 11 – Organizational Change............................................................................................... 21 Sabrina Flück 1 Semester 1 Principles of Management 01 – Introduction to Management Role of a Manager Operate with organizations: Non-Profit Organizations like -> Hospital, school, business association, governmental institute For-Profit Organizations like -> Single business, Multi business The Art of getting things done through people Four Principal Functions of a Manager  Planning -> you set goals and decide how to achieve them  Organizing -> you arrange tasks, people and other resources  Leading -> you motivate, direct, and otherwise influence people to work hard to achieve the organization's goals  Controlling -> you monitor performance, compare it with goals, and take corrective action as needed How can you measure it?  E iciency: a measure of productivity -> output (revenue, units of products) / input (resources: labor/time, raw materials)  E ectiveness: a measure of achievement -> achieves outcome (products sold) / desired outcome (products produced) Managerial Skills L03  Conceptual skills (organizing, planning)  Human skills (Empathy, Communication)  Technical skills (understand the business) Managerial Roles L04  Interpersonal Roles o Figurehead: Symbolic representative. o Leader: Provides direction and guidance. o Liaison: Connects with internal and external stakeholders.  Informational Roles o Monitor: Seeks and analyzes information. o Disseminator: Shares useful information within the organization. o Spokesperson: Communicates goals to external parties.  Decisional Roles o Entrepreneur: Initiates and encourages innovation. o Disturbance Handler: Resolves conflicts and unexpected issues. o Resource Allocator: Manages resources e ectively. o Negotiator: Directs important negotiations. Sabrina Flück 2 Semester 1 Principles of Management Levels and Areas of Management L05 It’s structured like this because its e ective and e icient. Functional Managers: Manage specific departments. General Managers: Oversee multiple departments or entire organizations. Challenges of a Manager L06  Building competitive advantage -> racing ahead of your competitors with high quality, innovation, responsiveness to customers, e iciency  Making use of cutting edge technology -> for example AI  Managing a diverse workforce -> di erent races, genders, ages  Managing for globalization -> Navigating a global business environment.  Maintaining ethical standards & sustainability -> making decisions that are aligned with ethical and socially responsible standards  Managing for Happiness and Meaningfulness -> Promoting meaningful and fulfilling work. Sabrina Flück 3 Semester 1 Principles of Management 02 – Management Theory Purpose: Act as a “map” for managers helping to: provide guidelines, simplify complexity, establish common language Scientific Management Theory Frederick W. Taylors Core Concept/Principles for Managers :  Improve Task performance  Standardize procedures  Train workers for tasks  Use pay as an incentive Time and Motion Study: By eliminating unnecessary motions of the workers time could be saved Administrative Management Theory Max Webers Principles of Bureaucrazy Managers need to design an organizational structure and control system that leads to organizations productivity and e iciency by:  Defining hierarchy of authority  Detailing a clear division of labor  Documenting formal rules and procedures Behavioural Management Theory Managers need to understand how people behave and find ways to motivate employees, so that the organizational goals are achieved. Mary Parker Follets Ideas: “self-managed teams”, “employee empowerment”, “interdepartmental teams”  Managers and employees should work together in harmony  Workers have the knowledge to control the work process and managers should act as facilitators  Conflicts should be resolved with satisfactory from both parties Human Relations Movement: Elton Mayos Ideas:  Managers should be aware that employees feelings , thoughts and behaviours can impact their jobs  Managers can increase productivity by keeping good relationships with their employees  These ideas form the foundation for the study of Organizational Behaviour Motivation Theory: Theories from Abraham Maslow (Hierarchy of Needs) and Douglas McGregor (Theory X and Theory Y). Sabrina Flück 4 Semester 1 Principles of Management Quantitative Viewpoints Involves the use of mathematical models, statistical analysis and computational techniques to make management decisions and solve problems.  Operations Management (OP): Is concerned with improving the production and delivery processes of goods and services  Evidence Based Management (EBM): Emphasizes the use of data and empirical studies for decision-making Systems Viewpoint Sees an organization as a collection of connected parts that work together. These parts, or subsystems can include people and technology Closed System: self-contained and does not interact with the environment Open System: Interacts with its environment, creating synergy beyond individua e orts Contingency Theory Managers approach should vary according to individual and the environmental situation  There is no one best way to organize or lead an organization  It emphasizes flexibility and adaptability of managers leading and decision making Contemporary Approaches A learning organization facilitates the learning of its members  Encourages and supports employee training, experimentation, and open sharing of knowledge and experiences  Transform itself to better adapt and respond to changes in the environment Peter Senge – Five Key Characteristics of a Learning Organization  Systems Thinking: Viewing the organization as interconnected parts.  Personal Mastery: Encouraging personal growth.  Mental Models: Fostering open communication.  Shared Vision: Aligning individual and organizational goals.  Team Learning: Promoting collaborative problem-solving. Je rey Pfe er – High performance work practices (HPWP’s) Key Elements in Human Resource Management:  Selective Hiring  Comprehensive Training  Performance-Based Compensation  Employee Involvement  Job Security  Empowerment and Autonomy  Team-Based Work Structures  Open Communication Sabrina Flück 5 Semester 1 Principles of Management Shared Values and Sustainable Development  Shared Values: Aligning company profit goals with social improvement.  Sustainable Development: Focuses on minimizing environmental and social impacts of business operations. 03 – Environment & Stakeholders Tripple Bottom Line (3P’s) People: Social responsibility towards employees and communities Planet: Environmental sustainability in business practice Profit: Financial returns to sustain the organization Goals of Business:  Shareholder value perspective: to maximize value for shareholders (people who own a part of the company by holding shares  Stakeholder value perspective: they work for the benefits of their stakeholders and the society Stakeholder Management A person, group or organization with a vested interest, or stake, in the decision making and activities of a business -> the process of maintaining good relationships with the people who have most impact on your work  Internal Stakeholders: Employees, owners, Board of Directors  External Stakeholders: Task Environment and the General Environment o Task Environment: Customers, Competitors, Suppliers, Distributors, Strategic Allies, Unions, Media, Local Communities, Government Regulators o General Environment: Economic Forces, Technological forces, Socio-cultural Forces, Demographic Forces, Political and Legal Forces, International Forces -> use of the PESTLE Analysis PESTLE Model  Political: Laws and regulations.  Economic: Market trends, inflation.  Social: Cultural and demographic shifts.  Technological: Advances impacting business.  Legal: Compliance with laws.  Environmental: Ecological impacts. Sabrina Flück 6 Semester 1 Principles of Management 04 - Global Management Why Companies Expand Internationally  Availability of supplies  Lower labour costs  New markets  Access to finance capital  Avoidance of tari s and import quotas How Companies Expand Internationally  Global Outsourcing: Using foreign suppliers  Importing/Exporting: Buying and selling goods across borders  Countertrading: Exchange of goods (without money)  Licensing: Allowing foreign companies to produce/distribute products  Franchising: Allowing foreign companies to use brand/business model  Joint Ventures: strategic Partnership for shared goals  Wholly Owned Subsidiaries: A foreign subsidiary fully owned/controlled by parent organization  Greenfield Ventures: A foreign subsidiary that the owning organization built from scratch Globalization Interconnected economies and cultures. Rise of the “Global Village” trough e-commerce and multinational corporations, the e ects are positive and negative Free Trade: Unrestricted movement of goods across borders, promoted by organizations like the World Trade Organization (WTO), World Bank, International Monetary Fund (IMF) Trading blocs: a group of nations that agreed to remove trade barriers with one another like the European Union (EU), Nort America Free Trade Agreement (NAFTA), Us-Mexico-Canada Agreement (USMCA), Brazil, Russia, India, China, Sout A rica (BRICS) Trade Barriers:  Tari : a custom duty or tax mainly on imports  Import Quota: a limit on the quantity of the import  Sanction: a trade prohibition on certain types of products, services to another country  Embargo: a complete ban or prohibition of trade with another country so that no goods and services can be imported or exported Sabrina Flück 7 Semester 1 Principles of Management Cultural Awareness A nations culture is the shared set of beliefs, values, knowledge and patterns of behaviour Hofstede’s Model of Cultural Dimensions  Power Distance: the society believes that inequalities among people should be minimized  Individualism: a strong belief in individual rights (people prefer to see themselves as individuals)  Masculinity: the society places a high value in competition, achievement and success  Uncertainty Avoidance: people prefer clear rules and organized situations because they make them feel safe and secure  Long-term Orientation: the society encourages saving and preparing for the future. The GLOBE Project (Global Leadership and Organizational Behaviour E ectiveness)  Power Distance  Uncertainty Avoidance  Institutional collectivism  In-group collectivism  Gender egalitarianism  Assertiveness  Future Orientation  Performance Orientation  Humane Orientation Other Cultural Variations Language, Interpersonal Space, Communication (High or Low Context), Time Orientation, Religion, Law and Political Stability Successful International Managers embraces geocentric views (best practices from all cultures) over ethnocentric views (home country preference). 05 – Managerial Decision Making Definition of Decision: A choice among available alternatives Types of Decisions Managers make:  Strategic Decisions: Setting long-term goals  Operational Decisions: Managing daily operations  Financial Decisions: Allocating resources e ectively  HR-Decisions: Recruitment, performance evaluation Sabrina Flück 8 Semester 1 Principles of Management Rational Decision Making (Classical Model) Decisions are based on systematic analysis, goal is the optimal decision aligned with organizational interests. Four Stages: Identify the problem -> Gather Information -> Evaluate Alternatives -> Make decision Problems:  Bounded Rationality: Limited by time and resources  Hubris: Overconfidence may distort rational judgement Nonrational Decision Making Models Intuition Model: decisions are based on intuition, hunches, subconsciousness, visceral feelings, automated experience Satisficing model: satisfy + su ice = good enough, a process that strives for satisficing rather than optimal results. Ethical Decision Making What’s the right thing to do -> decision making tree Evidence-based Decision Making (Integrative model) The process of gathering big data (large quantity of data) and integrating data analytics with AI The 5Vs of Big Data:  Volume: the quantity of data and the capacity needed to store it  Variety: di erent sources  Velocity: speed at which the data accumulates  Veracity: quality and reliability of data  Value: the degree to which analysing data proved insights that are helpful Data Analytics Process: Data Collection -> Data Cleaning -> Data Analysis -> Data Visualization  Data: raw, unsummarized facts  Information: organized data presented meaningfully Types of Data Analytics:  Descriptive Analytics: What happened in the past  Diagnostic Analytics: Why did it happened  Predictive Analytics: What will happen  Prescriptive Analytics: How can we make it happen Artificial Intelligence in Decision Making: + Lower costs, discover valuable insights, improve decision making, increase revenue _ experts are needed, data issues, cost, ethical issued (human replacement) Sabrina Flück 9 Semester 1 Principles of Management Decision Making Styles Ambiguity = Mehrfachbedeutung Decision Making Biases Rules of Thumb (simple Guidelines often based on experience or practice, provide quick solutions) and Heuristics (shortcuts that allow quick decisions, experience based) both play an important role in decision making: E iciency, Simplification, Experience-based, Practical application, but they also have potential for bias: Ten common decision making biases:  The Availability Bias: Judging based on little information  Representativeness Bias: Overgeneralizing based on small samples  Confirmation Bias: Seeking information that supports existing beliefs  Sunk-Cost Bias: Continuing due to prior investment  Anchoring & Adjustment Bias: Relying heavily on the initial information  Overconfidence Bias: Overestimating abilities or outcomes  Escalation of Commitment: Sticking to a failing course of action  Framing Bias: Decision influences by how information is presented  Hindsight Bias: Believing past events were predictable  Categorical Thinking Bias: Stereotyping based on limited experiences Group decision making + Knowledge diversity, di erent perspectives, information accumulation, _ a few people dominate or intimidate, groupthink, satisficing, What is Groupthink? Prioritize group harmony at the expense of good decision-making Group Problem Solving Techniques: Sabrina Flück 10 Semester 1 Principles of Management  Brainstorming: Encourages creative idea generation  Devil’s Advocacy: Assigns a critic to improve decision quality  Dialectic Methos: Fosters discussion by presenting opposing views  After-Action Review: Evaluates recent decisions for future improvement 06 – Leadership and Management Manager vs Leader Management: Involves planning, organizing, leading, controlling and implementation Leadership: Focuses on influencing, inspiring, and providing emotional support, innovating Power & Authority Authority: Right to command within a role Power: the ability to influence behaviour  Legitimate Power: because of the formal position  Reward Power: by promising or giving rewards  Coercive Power: by threatening or giving punishment  Expert Power: because of ones expertise  Referent Power: because of ones personal attraction  Informational Power: because of the logical or valuable information one communicates Influencing Tactics Most e ective in getting Commitment:  Rational persuasion  Inspirational appeals  Consultation E ective in getting Compliance  Ingratiation  Personal appeals  Exchange May lead to Resistance  Coalition tactics  Pressure  Legitimating tactics Leading means influencing and guiding people to work together towards common goals Actions: Influencing others, Providing direction, building relationships, empowering team members, facilitating communication, adapting to change Managers need to understand how people behave and find ways to motivate employees Sabrina Flück 11 Semester 1 Principles of Management 07 – Managing Individual Differences & Behaviours Organizational Behaviour (OB): Focuses on explaining and predicting behaviour in the workplace, including: Individual Behaviour: Personality, Values, Attitudes, Perception Group Behaviour: Norms, Roles, Teamwork Dynamics Work Related Personality Traits Personality: consists of psychological traits and behavioural attributes that gives a person the identity Traits are qualities or characteristics of a person, Attributes include traits but also refer to skills Big Five Dimensions:  Extroversion: outgoing, talkative, sociable and assertive  Agreeableness: Cooperative, trusting, soft-hearted  Conscientiousness: Responsible, achievement focused, respondible, persistent  Emotional Stability: relaxed, secure, unworried  Openness to Experience: Intellectual, curios, imaginative Core Self-Evaluations (CSE):  Self-E icacy: Confidence in task Performance  Self-Esteem: Sense of self-worth  Locus of Control: Belief in controlling one’s fate  Emotional Stability: Calmness under pressure People that score high in those traits tend have a high job satisfaction, performance Emotional Intelligence (EI): Ability to manage one’s emotions and understand others feelings to guide actions Values, Attitudes and Behaviours Values: Global beliefs that guide behaviours across situations, such ideals of right and wrong Attitudes: Specific evaluations of people or situations including:  A ective Component: How we feel  Cognitive Component: What we believe  Behavioural Component: Intended actions Values and Attitudes influence workplace behaviour and judgements Perception and Individual Behaviour Perception: the process of interpreting and understanding one’s environment -> how an individual perceives one’s role and how one is viewed by others Sabrina Flück 12 Semester 1 Principles of Management The perceptual Process: 1. Selective Attention : “did I notice something?” 2. Interpretation & Evaluation: “What was it I notices, what does it mean?” 3. Storing in Memory: “Remember it as an event, concept or person?” 4. Retrieving from memory to make judgments & decisions: “What do I recall about that?” Five Distortions in Perception  Stereotyping  Implicit Bias  The Halo E ect  The Recent E ect  Causal Attributions The Self-Fulfilling Prophecy (Pygmalion E ect) Peoples expectations of themselves or others lead them to behave in ways to make those expectations come true Work Related Attitudes Employee Engagement: Level of enthusiasm and involvement in work task Positive Outcome: higher satisfaction, creativity, productivity, profitability Negative Outcome: Absenteeism, turnover What can Managers do to improve?  Create meaningful work  Improve supervisor-employee relations  Provide learning and development opportunities  Reduce stressors Job Satisfaction: feelings towards their job (work environment, pay, opportunities) Organizational Commitment: emotional attachment they have to their organization, influencing loyalty and dedication to the goals Work Related Behaviours  Organizational Citizenship Behaviours (OCB’s)  Counterproductive Work Behaviour  Performance Productivity  Absenteeism Turnover Sabrina Flück 13 Semester 1 Principles of Management Understanding Stress & Individual Behaviours Stress: Tension from demands or constraints that exceed one’s ability to cope Sources:  Individual Di erences: Personality  Roles: Expectations from others  Task: Job Demands  Work-Family Conflict: Balancing professional and personal life  Group & Organizational Demands: coworkers, culture, environment Reducing Stress: Build resilience, o er employee assistance programs (EAP’s), recommend holistic wellness, create supportive environment, make jobs interesting, make career counselling available  Resilience: ability to bounce back from adversity, challenges or setbacks (adapting well, maintaining a positive outlook Key Aspects: Mental toughness, Emotional regulation, Adaptability to changes, Relationship building, Problem solving skills 08 – Strategic Management Strategic Positioning: Aims to achieve a competitive advantage by creating unique and valuable market position. Key approaches include:  Few Needs, Many Customers: Serving many customers with limited needs  Broad Needs, Few Customers: Focusing on broad needs but nattor customer base  Broad Needs, Many Customers: Addressing broad needs across a wide customer base Trade-O s: Strategy requires making choices that di erentiate the organization Creating “Fit”: Aligning organizational activities to reinforce the strategic position Levels Of Strategy Corporate Level: Focus on overall scope and direction of the company Business Level: Adress how each business unit competes within its industry Functional Level: Support business and corporate strategies at an operational level Strategic Management Process (Five Steps) 1. Establish Mission, Vision and Values:  Mission: Purpose of the organization  Vision: Future goals and desired achievements  Values: Core principles that guide behaviour and decision making 2. Asses Current Reality:  SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats Sabrina Flück 14 Semester 1 Principles of Management  VRIO Analyses: Analyses resources for value, rarity, imitability and organization  PESTLE and Porters Five Forces: Tools to analyse external factors and competitive forces  Forecasting: Predicts futures scenarios, including positive, neutral, and negative outcomes  Benchmarking: Compares performance against industry leaders 3. Formulate Strategy: Corporate, business, and functional levels Corporate strategies: Defensive: involves reduction in the organizations e orts Stability: involves little or no significant change Growth Strategies: involves expansion, as in sales revenues, market share, number of employees, or number of customers/markets Di erent types of Growth corporate strategies: Concentration on a single industry: reinvesting profits to strengthen its competitive position in its current industry -> market penetration, development, product development Vertical Integration: Expanding operations within supply chain, either backward (towards supplier) or forward (towards consumer) -> greater control, reduced costs, more insights Diversification: Related -> entering new but related industries, Unrelated -> expanding into completely new industries BCG Matrix  Stars: High growth, high market share. Requires investment to maintain position  Cash Cows: high market share in low growth markets. Generate cash for other investments  Question Marks: Low market share in high growth markets. Require resources to grow  Dogs: Low market share in low growth markets. Often divested to free resources Investment Strategy for Stars and Question Marks: invest in the market and development Skimming Strategy for cash cows: end investments in the products and use profit to finance other products Divestment Strategy for Dogs and Question Marks: take the products of the market Business Level Strategies: Porter’s Generic Strategies:  Cost Leadership: minimizing costs and prices for a broad audience  Di erentiation: Delivering unique and superior value for a broad market  Focus Cost Leadership: Targeting low costs for a specific, narrow market  Focus Di erentiation: Providing unique products or services for a niche market  Stuck in the Middle: A potential risk of failing to secure either a low-cost or di erentiated position, resulting in competitive disadvantage Implement Strategy: Putting strategic plans into action Sabrina Flück 15 Semester 1 Principles of Management Requirements for Strategies  Lost Cost Requirements: access to capital in order to invest in technology that will bring costs down, develop e icient logistics, a low cost base  Focus Requirements: Goos research, development and innovation, the ability to deliver high quality, e ective sales and marketing An executive approach towards strategy development -> what does the market look like now, what does the competition do? What are we doing? What’s going to happen in the future? What is our winning move? 4. Strategic Implementation Functional Level Strategy Guiding departments such as marketing, finance, HR, Operations, IT and distribution to align with overall organizational goals. The three Core Processes of Business  People -> you need to consider who will benefit you in the future  Strategy -> you need to consider how success will be accomplished  Operations -> you need to consider what path will be followed Execution Roadblocks Obstacles to implementation may arise across the hierarchy:  C-Suite Challenges: high-level management obstacles  Hierarchy Barriers: issues encountered at various levels within the organization 5. Evaluate Strategy: Monitoring results and making adjustments Maintaining Strategic Control: Engage People, Keep it Simple, Stay focused, Keep moving Sabrina Flück 16 Semester 1 Principles of Management Career Readiness Model  Understand the Business -> understand a potential or current employers business ans strategies, extend your knowledge by networking, seeking monitoring, practicing in job rotation, and attend cross-functional or business meetings  Broaden you task and functional knowledge -> make connections between concepts, ideas, people and events 09 - Organizational Structure and Culture Managers must ensure that culture (shared assumption) , structure (who reports to whom) and HR Practices (how they manage talents) are aligned to support the strategic goals of the organization, much like tightly woven strands in a rope. These elements collectively drive successful strategy execution. Three Levels of Organizational Culture  Artifacts: Visible and tangible aspects like logos, o ice design, and dress code  Espoused Values: Expressed beliefs, missions and goals  Underlying Assumptions: Deep seated, often unspoken beliefs about the organizations purpose and values How employees learn culture Employees internalize culture through -> symbols, stories, heroes, rites and rituals, organizations socialization (processed that guide employees) Four type of Organizational Culture  Clan Culture: Emplosee-focused, valuing flexibilitx and collaboration  Adhocracy Culture: Risk taking and innovation-focused, valuing flexibility  Market Culture: competitive, prioritizing profit and customer satisfaction  Hierarchy Culture: Structured, emphasizing stability and e ectiveness Person-Organization Fit P-O Fit The alignment between and employees values and the organizational culture, which impacts job satisfaction and performance. Poor PO Fit leads to employees looking for other jobs Preparing to assess person -> list of personal values, strengths, and weaknesses, compare it to the organization Major Features of Organizations  Common Purpose: the means for unfying members  Coordinated e ort: working together for common purpose  Division of labor: work specialization for greater e iciency  Hierarchy of authority: the chain of command  Span of Control: Narrow versus Wide  Authority: accountability, Responsibility, and Delegation  Centralization versus Decentralization of Authority Sabrina Flück 17 Semester 1 Principles of Management The Organization Chart  Vertical hierarchy of Authority: who reports to whom  The horizontal specialization: Who specializes in what work Eight Types of organizational Structure Traditional Designs:  Simple Structure: There is only one hierarchical level of management beneath the owner  Functional Structure: Vice Presidents for Marketing, Finance, Production, Human Resources -> specialized and e ective, clear chain of command, limited flexibility and innovation  Divisional Structure: divided by product, customers, or geographic (regions) -> focused expertise on products or regions, improved responsiveness to market changes, duplication of resources,  Matrix Structure: Functional Structure + Project Structure -> encourages collaborations and flexibility but often leads to complex reporting lines Horizontal Designs:  Horizontal Design: eliminates functional barriers to improve problem solving and cross- functional collaboration, Functional Structures then leads to Project Teams Designs that open boundaries between organizations:  Hallow Structure: Outsources non-core processes, focusing the organization on core capabilities  Modular Structure: Outsources certain parts of a product or service, while maintaining control over the core product  Virtual Structure: operates trough digital networks, often involving partnerships and temporary teams Sabrina Flück 18 Semester 1 Principles of Management 10 – Controlling Last core function of a manager, that ensured that an organizations activities align with the goals Why is it needed? Control is crucial for the following reasons:  To detect deviations from plans  To manage uncertainty and risks  To ensure resource optimization  To comply with regulations  To maintain quality and customer satisfaction  To achieve organisational goals Steps in the Control Process 1. Establish Standards: Define what success looks like 2. Measure Performance: Track the actual outcomes 3. Compare Performance to Standards: identify gaps between expected and actual resul 4. Take Corrective Action: adjust strategies to address deviations Stages / Types of Control  Input Stage -> Feedforwards Control (Präventive Kontrolle): Anticipates problems before they occur  Current Stage -> Concurrent Control (Laufende Kontrolle): monitors as they happen  Output Stage -> Feedback Control (Nachträgliche Kontrolle): evaluates results after activities are completed The Balance scorecard A tool for comprehensive managerial control, focusing on four perspectives  Customer Perspective (Kundensicht): measures customer satisfaction and retention (ratings, new customers)  Financial Perspective (Finanzansicht): focuses on financial success indicators (gain, equity)  Internal Business Perspective (Interne Geschäftsprozesse): ensures operational e iciency (process quality and quantity)  Innovation and Learning Perspective: Encourages continuous improvement and employee development (employee satisfaction) Sabrina Flück 19 Semester 1 Principles of Management Total Quality Management (TQM) Key Principles:  People Orientation: delivering customer value  Improvement Orientation: continuous improvement of work processes Companies should aim at improving the system, not blaming workers PDCA Cycle: uses hard data  Plan: Identify Issues  Do: Implement solutions  Check: Measure Results  Act: Standardize successful solutions Tools and Techniques of TQM  Outsourcing (Auslagerung): Hiring external companies for specialized tasks  Reduced Cycle Time: speeding up work processes  Statistical Process Control (SPC): Using data samples to monitor quality  Sigma: o Six Sigma: focuses on eliminating defects trought data-driven methodologies o Lean Six Sigma: combines defect elimination with waste reduction  ISO Standards (global quality and environmental benchmarks): o ISO 9000: Quality management standards o ISO 14000: Environmental management standards Contemporary Control Issues  Using Artificial Intelligence: enhances productivity and reduces erros  Employee Tracking and Monitoring: Improves accountability and productivity but invades privacy and a ects morale TQM in Service vs. Manufacturing Service Industries: focuses on customer interactions and satisfaction Manufacturing Industries: focuses on tangible product quality and defect reduction Sabrina Flück 20 Semester 1 Principles of Management 11 – Organizational Change Defined as the “movement of an organization away from its present state toward some desired future” Types of Change: Reactive Change: Responding to external pressures or events Proactive Change: Planned initiatives to take advantage of opportunities or improve processes Forces Driving Change Internal Forces:  Shifts in company strategy  Employee dissatisfaction or engagement levels  Innovation or leadership changes External Forces:  Technological advancements  Market competition  Regulatory changes or global trends Models and Approaches Iceberg Model Focuses on visible and invisible aspects of organisational change:  Visible: Tasks, objectives, and measurable outcomes  Invisible: Values, norms, networks, and deeper meanings Three Forms of Change: 1. Adaptive Change (Least threatening)  Incremental and low-risk adjustments  Examples: Adding new online payment option, upgrading to newer software version, hiring replacement for an employee  Requires managers to control and guide these changes methodically 2. Radical/Transformational Change (Most threatening)  Involves a fundamental rethinking of business models, structures, or products  Triggered by significant external factors like market disruptions or technological innovations  Examples: IKEA’s shift to e-commerce and omnichannel strategies  Managers must act as visionaries and persuaders, motivating teams to embrace the new vision 3. Innovative Change (In-between)  Neither fully adaptive nor radical, but often a combination of predictable and transformative shifts  Example: transitioning from informal to formal management structures in growing businesses  Success requires e ort in aligning processes, systes, and team dynamics without necessarily changing the core strategy Sabrina Flück 21 Semester 1 Principles of Management Change Management Frameworks Lewin’s Change Model: Resistance to Change vs Forces to Change 1. Unfreezing:  Creating awareness of the need for change  Overcoming resistance by challenging current mindsets and preparing employees mentally  Example: Communicating the urgency of adapting to market demands 2. Changing:  Implementing the change trough new strategies, training and adjustments  Example: rolling out new customer relationship management system 3. Refreezing:  Stabilizing the change by embedding it in organizational culture  Example: Establishing new performance metrics to support the change Organisational Development (OD) A systematic, long-term approach to improving e ectiveness, solving problems, and building adaptability OD Process: 1. Diagnosis: Assessing current organizational challenges 2. Intervention: Implementing strategies to address identified issues 3. Evaluation and Feedback: Measuring outcomes and refining approaches Innovations Systems: Innovation for the Product or Process, Focus on Improvement or New Direction Supporting Forces: Appropriate Resources, Necessary Human Capital, Innovation Strategy, Committed Leadership Two types of innovation:  Incremental: Gradual improvements, such as product enhancements or e iciency improvements  Radical: Breakthrough changes that redefine industries, such as shifts from chemistry- based to biology-based drug development Resistance to Change Common Causes:  Fear of the Unknown: Employees may feel uncertain about their roles, security or benefits of the change  Loss of Control: Change can disrupt routines, causing discomfort  Mistrust and Miscommunication: Employees may resist due to unclear messaging or lack of transparency  Organizational Inertia: Resistance can stem from deeply rooted habits and traditional processes  Lack of Trust in Leadership … Sabrina Flück 22