INTRODUCTION TO MANAGEMENT CONCEPTS & APPLICATION

Topic 1:
Introduction to business management competitive adv & situational analysis
Learning Outcome:
- To understand the management functions
- To understand briefly the concept of sustainability & its link to environment
- To discuss the 4 requirements/conditions for sustainable competitive advantage
- To discuss how the changing internal & external environments affect organisations using
SWOT analysis

What makes a great CEO?

 As a leader, you had to produce remarkable performance to make it into our top 50.
 On average, those CEOs delivered a total shareholder return of 997% (adjusted for
exchange-rate effects) during their time in office. That translates into a spectacular annual
return of 32%
Management is…
 Getting work done through others
o Efficiency – Getting work done with minimum effort, expense or waste
o Effectiveness – Accomplishing tasks that help fulfill organizational objectives
 Efficiency is doing things right, effectiveness is doing the right things

What skills/ roles/ functions do management perform?

Management skills at different levels

 Conceptual skills – The ability to think analytically and achieve integrative problem
solving
 Human skills – The ability to work well in cooperation with other people
  Technical skills – The ability to apply expertise and perform a special task with
proficiency

Management Roles: Mintzburg Studies

 Roles of a manager = Expectations for a manager’s behavior

} Egs of leading
function

Circles of Sustainability

Sustainability
 “Sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs” UN 1987
 “Three pillars of sustainability –economic, social & environment, commonly known as
the triple bottom line” World Summit 2005
o over fishing, over harvesting; and the future development will not be able to use
Sustainability & Competitive Advantage
 Sustainability –Refers to the way organizations scan the environment & make use of
limited resources to achieve competitive advantage
 Sustainable competitive advantages – Company assets, attributes, or abilities that are
difficult to duplicate or exceed; provide a superior or favourable long term position over
competitors
o E.g. strategic assets like patents, trademarks, copy rights, domain names, excellent
research & development

Requirements/ conditions for sustainable competitive advantage

1. Valuable resources
o A resource that allows companies to improve efficiency and effectiveness
2. Imperfectly imitable resources
o A resource that is impossible, or extremely costly/difficult, for other companies to
duplicate
3. Rare resources
o A resource that is not controlled or possessed by many competing organizations
4. Non-substitutable resources
o A resource that produces value or competitive adv. and has no equivalent
substitute or replacements
 if a company can have all those 4 resources, that company has a sustainable competitive adv.

Sustainable Competitive Advantage

 When a firm acquires attributes that allow it to perform at a higher level than others in the
same industry
o e.g. better technology & automation
 When a firm provides greater value for customers than competitors can
o e.g. better effectiveness in some kinds of medicinal drugs
 When competitors find it hard to offer the same value to customers and stop trying to
duplicate it for the time being
o e.g. in-house R&D, technology skills which are not applicable elsewhere

Sustainable Competitive Adv: Making sense of the changing environment

 Evaluating external environments
1. Environmental scanning
2. Interpreting environmental factors
3. Acting on threats and opportunities (Part of SWOT analysis)
 Organisations scan the environment (SWOT analysis) make use of resources (assets,
capabilities, information, knowledge etc) to achieve competitive advantage
Evaluating External Environment: How to make sense of the changing environment
1. Environmental Scanning is searching the environment for events or issues that might
affect an organization.
 Environmental Scanning:
o Keeps companies current on industry factors
o Reduces uncertainty
o Alters organizational strategies
o Contributes to organizational performance
2. Interpreting on environmental factors
3. Acting on threats & opportunities
 Environmental Scan
o Opportunities?
 Consider strategic alternatives for taking advantage of the event to
improve company performance
o Threats?
 Potential harm to an organization
 Managers must take steps to protect the company from further damage
Situational Analysis: SWOT
1. Strengths (Internal Environment: the organization itself)
2. Weaknesses (Internal Environment)
3. Opportunities (External Environment)
4. Threats (External Environment)

Analysis of Environment: SWOT ANALYSIS

 Objective: is to identify core competencies – Special strengths that give an organization
a competitive advantage because they are rare, difficult for competitors to imitate & are
strategically valuable or important
 Assess: Strengths & Weaknesses in internal environment Opportunities & Threats in
the external environment

Example of SWOT analysis

Internal Environment (Strengths & Weaknesses): Corporate Culture
 Comprises events and trends within the organization.
 Involves key values, beliefs, attitudes, understandings and norms that organizational
members share.
 Internal environments are important because they affect what people think, feel and do at
work
 The internal environment is all about organization or corporate culture, which is the
system of shared beliefs and values that develops within an organization and guides the
behavior of its members.

Creation and Maintenance of Organizational Culture

 Company Founder
o Organizational stories
o Organizational heroes
 Organizational Culture – The values, beliefs and attitudes shared by organizational
members
  Company founder- Imprint beliefs, attitudes and values on the company and is
instrumental in creating the organizational culture
 Organizational Heroes – People celebrated for their qualities and achievements within
an organization
o E.g., Founders like Bill Gates & Steve Jobs
 Organizational Stories – Stories told by organizational members to make sense of org.
events and changes and to emphasis culturally consistent assumptions, decisions, and
actions (when founders gone, org culture sustained through stories)

Level of Organizational Culture

1. Surface Level
a. Symbolic artifacts
b. Behaviors
c. SEEN (visible)
2. Expressed values and beliefs
a. What people say
b. How decisions are made
c. HEARD (invisible)
3. Unconsciously held assumptions and beliefs
a. Beliefs and assumptions
b. Rarely discussed
c. BELIEVED (invisible)

Examples of Core Values …

 Toyota
o How would you describe the core culture of Toyota? How might this reflect in its
observable culture?
 Toyota’s work culture reflects its core culture! Emphasis on quality,
reliability and continuous improvement
  Toyota’s Culture (corporate culture)
o Base your management decisions on a long-term philosophy even at the expense
of short-term goals
o Create continuous process flow to bring problems to the surface
o Use ‘pull’ systems to avoid overproduction
o Level out the workload
o Build a culture of stopping to fix problems to get quality right the first time
o Standardized tasks are the foundation for continuous improvement and employee
empowerment
o Use visual control so no problems are hidden
o Use only reliable, thoroughly tested technology that serves your people and your
processes
o Grow leaders who thoroughly understand the work, live the philosophy, and teach
it to others
o Develop exceptional people and teams who follow your company’s philosophy
o Respect your extended network of partners and suppliers by challenging them and
helping them improve
o Go and see for yourself to thoroughly understand the situation
o Make decisions slowly by consensus, thoroughly considering all options;
implement decisions rapidly
o Become a learning organisation through relentless reflection and continuous
improvement

Successful Organizational Cultures

 Adaptability
 Involvement
 Clear vision
 Consistency
o Profits
o Quality
o Return on assets
o Sales growth
o Employee satisfaction
 Research shows that organizational culture is related to organizational success!!!!!!!!!!