MGTS1301 Notes UQAttic.

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GTS1301: Notes
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Note: These notes are from Semester 1 2010 and may need to be updated

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Week 2 – History of management

Classical management
Scientific management
● One best way to do a task
● Selection of best workers
● Training workers
● Worker incentive
● Support workers
● Stop motion studies

Administrative principles
5 administrative principles by Henri Fayol:

● Planning
● Organizing
● Commanding
● Coordinating
● Controlling

Bureaucracy
Opposes the traditional European business models at the time which were focused around
one person or family.

● Rational authority – not personal/family/religious

● Authority based on structure & position
● Rules, records and decisions were recorded
● Hierarchy of authority
● Management separate to ownership
● Allows the company to continue operation when the business owner passed

Behavioural management approaches

Hawthorne studies - Relay assembly experiment where workers were given improved
conditions and then removed.
This found that workers performed best when they felt valued and special personally.

Quantitative management approaches

Applied quantitative techniques such as:

● Mathematical forecasting
● Inventory modeling
● Simulation

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Modern Management approaches

Contingency theory – Meaning a mix of both scientific and behavioral techniques.
Managers need to identify key variables in a situation and use these to determine the best
approach to use.
Modern management themes:

● Quality & performance excellence

● Global awareness
● Organizational learning
● Quality leadership

Week 3 – Planning & Controlling

Planning process
Steps:

1. Define your objectives

2. Determine where you stand with regard to your objectives
3. Determine how your objectives fit within future conditions
4. Analyze and choose your methods of acting upon your objectives
5. Implement plan and evaluate results

Types of plans
Strategic plans
● Long term – 3+ years
● Top level management
● Organizational perspective

Tactical plans
● Intermediate term – 1 to 2 years
● Middle management
● Departmental perspective

Operational plans
● Short term – less than 1 year
● Low level management
● Individual perspective

Types within this

Single use plans

● Budgets
● Schedules

Standing plans

● Policies
● Rules

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● Procedures

Planning tools & techniques

● Forecasting
● Identifying alternative action courses
● Scenario planning
● Benchmarking
● Dedicated planners
● Participation & involvement of involved parties

Pros & cons to planning

Pros
● Improved focus & flexibility
● Increased focus on action
● Increased coordination
● Improved time management
● More control

Cons
● Being out of touch
● Inflexible
● Tunnel vision on objectives
● Potential for dishonesty due to pressure in attaining planned objectives

Controlling
Planning sets the direction, controlling ensures the results.

● Strategic control – Overall mission of the firm

● Tactical control – How departments fit within the mission
● Operation control – Ground level

Methods of controlling
● Compensation & benefits
● Discipline
● Operational control – focus on efficiency

Types of control
● Bureaucratic – Top down hierarchy of authority
● Decentralized – Organic and flat structure of authority

Characteristics of effective control systems

● Linked to strategy
● Rational & accurate
● Acceptable
● Flexible

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● Add cost-effectiveness

Week 5 – Ethics
Definition
Ethics is the code of moral principles that set standards of good or bad, or right or wrong in a
person’s conduct and thereby dictates their behavior.

Views
● Utilitarian view: Greatest good for the greatest number of people
● Individualism: Committed to one’s own long term interests
● Moral-rights view: Respects the fundamental rights of all people
● Justice view: Fair and impartial treatment based on rules and standards

Determining ethical approach

● Cultural relativism: Ethics are determined by the culture where the situation occurs
● Ethical imperialism: Ethics are always determined by the organizations “home” culture

Methods for maintaining high ethical standards

● Ethics training
● Whistleblower protection
● Ethical role models
● Codes of ethics

CSR – Corporate social responsibility

An obligation to act not only its own interests but also those of external stakeholders

For
● Adds long-run profits
● Better public image
● Avoids regulation
● Better environment

Cons
● Reduced profits
● Higher costs
● Dilution of business purpose
● Reduced business power

Strategies
● Obstructionist – Meets only economic responsibilities
● Defensive – Meets legal and economic responsibilities
● Accommodative – Meets economic, legal & ethical responsibilities
● Proactive – Meets all plus digressional responsibilities

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Government influence
Government's influence through regulation, business can influence governments as well.

Week 6 – External environment & culture

The nature of an environment
➢ External environment: Outside the boundaries of the organization
➢ Internal environment: Within organization

➢ General environment: The broader conditions that an organization exists within

➢ Specific or task environment: The people and groups an organization interacts with on a day to day
basis.

General environment
● Economic conditions: The broader health of the economy
● Sociocultural: The customs, social values, educational trends and demographics of society
● Legal-political: The state of government policies and philosophy
● Technological: The development and availability of current technology
● Natural environment: The state of the environment including public concern for it
● International: International events and conditions

Specific environment
● Customers
● Suppliers
● Competitors
● Regulators

Example: Ford motor company

Managing the external environment

Adapting
● Boundary spanning
● Forecasting and scenario planning
● Flexible structure
● Mergers and joint ventures

Influencing
● Advertising and PR
● Political lobbying
● Competitive strategy

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internal environment
● Observable culture: The physical culture demonstrated in the company
● Core culture: The “deep down” values and culture that underpins the observable culture

Managing culture
● Leaders should establish and maintain core values
● Symbolic leaders should be used to reinforce desired culture
● Leaders can influence culture by
o Paying attention and noticing
o The way they react to problems
o Role modeling
o Criteria for reward, promotion & punishment

Week 7 – Strategy
Strategy is a comprehensive action plan providing long-term direction and guiding resource
utilization to accomplish organizational goals and to sustain competitive advantage.
Competitive advantage means operating in a successful way that is difficult for competitors
to imitate.

Step 1 – Analyze current organisation

● Assess the mission statement and what it means
● Core values
● Company objectives

Step 2 – Analyse environment and industry

Analysis of environment
Swot analysis:

● Strengths
● Weaknesses
● Opportunities
● Threads

Analysis of the industry

Porter’s 5 forces model lists 5 forces that determine the level of competition in an industry:

● New entrants – Thread of new entrants

● Customers – Bargaining power
● Substitute products – How easy is it to substitute what you do
● Suppliers – Bargaining power

Step 3 – Choose a level of strategy

Corporate level – Long term strategy of whole enterprise
Business level – Sets strategic direction of business unit

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Corporate level
Growth strategies

● Concentration
● Diversification
● Vertical integration (going further up the supply chain)

Retrenchment strategies

● Liquidation
● Restructuring
● Divestiture

Cooperative strategies

● Strategic alliances
o Outsourcing
o Suppliers
o Distribution

e-Business strategies

● Business to business applications

● Business to customer applications

Business level strategy

● Cost leadership strategies
● Differentiation strategies
● Focused cost leadership
● Focused differentiation

Step 4 – Implementation
Challenges in implementing strategy:

● Failure of substance – Inadequate attention to planning elements

● Failure of process – Poor implementation

Week 8 – Organisational structure & design

Organizing: The process of assigning tasks, allocating resources, creating operational
systems, and arranging activities to implement plans.

Nature of structures
Formal:

● Official structure of organization

● Positions, job titles & lines of authority

Informal:

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● Lies behind structure

● Unofficial
● Interpersonal networks of support

Types of structures
Functional structure
● People with similar skills or performing similar tasks are grouped together
● Works well for small organizations

Pros

● Efficient resource use

● Tasks can be assigned more accurately to the areas of skill
● Clear career paths
● Good technical problem solving

Cons

● Poor communication between function groups

● Slow response to change
● Decisions concentrated at the top – delay
● Limited general management training for employees

Divisional structure
● Group people with various skills together who are working on the same product or process
● Common in complex organizations
● Avoids problems of functional structures

Pros

● Fast response, good in uncertain environments

● Expertise focused on a specific customers, products or regions
● Improved cross-functional coordination
● Develops management skills

Cons

● Duplication of resources across divisions

● Less technical depth & specialization
● Less management control
● Competition between divisions for resources
● Emphasis on division goals can be detrimental to organization as a whole

Matrix structure
Each team member reports to both their functional and divisional supervisor. This gives the
advantage of both divisional and functional structures.

Pros

● Better interfunctional cooperation

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● Flexible
● Better customer service
● More accountability
● Improved decision making
● Develops both generalists and specialists

Cons

● Dual chain of command can make things confusing

● Power struggle between managers
● More meetings and discussion required
● Increased cost of having twice as many managers

Team structures
Specialist teams designed to solve problems or complete special projects, may be temporary
or permanent.

Pros

● Reduced barriers among departments

● Quick decisions
● Improved morale

Cons

● Conflicting loyalties
● Many meetings required

Network structures
A central core that operates by interacting with contractors and outside suppliers, at “arms
length”.

Pros

● Fewer full time employees and less complex internal systems

● Reduced operating costs

Cons

● Control and coordination problems

● Loss of control
● Little culture

Boundaryless organisations
Eliminates internal boundaries amongst groups and external boundaries with the
environment. Combination of team and network structures.

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Good organisational design

● Fits well with the goals of the company
● Supports the implementation of strategies
● Supports technologies and allows them to be used to their full extent
● Handles change
● Supports and empowers workers to make the most of their potential

Trends in organisational design

● Shorter chains of command
● Less unity
● Wider spans of control
● More delegation
● Decentralization
● Reduced usage of staff

Week 9 – Innovation
Invention is the act of discovering a new idea, innovation is commercially exploiting an idea.

Types of innovation
● Process innovation – New or improved ways of manufacturing
● Product innovation – New technology or design to improve the product
● Incremental innovations – New products or processes that modify an existing one
● Radical innovations – Breakthrough that is a significant improvement

Forces driving innovations

● The need to stay competitive
● Potential to lower costs
● Possible first mover advantage
o Sometimes better to be second mover to learn from the mistakes of the first

The innovation process

1. Idea creation
2. Initial experimentation
3. Feasibility determination
4. Final application

UNCERTAINTIES IN INNOVATION
● Market – will people buy it
● Competitors – how will they respond
● Technological – Will it work
● Organizational – can our organization do it
● Production – Is it cost effective
● Financial – Will it generate a sufficient return

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Managing uncertainty
● External collaboration
● Orient leadership towards change and innovation

Week 10 – International strategic management

Required to manage operations in more than one country.

Step 1 – identify opportunities

● Increased market size – more people
● Improve return on investment – more market for your R & D
● Economies of scale and learning – more demand, cheaper product
● Local advantage – Demand for something in a locality

Step 2 – Identify a strategy

International strategy
● Transfer main products or services to foreign markets lacking them
● Keep development at home
● Manufacture in host country
● Limited customization
● Strong home business

Multidomestic strategy
● Decentralized business units for each region
● Products and services highly tailored to the local market
● Each unit is independent
● Assumes markets differ
● Focuses on local competition
● Popular in European firms

Global strategy
● Products are standardized across entire nations
● Decisions regarding business strategy are centralized at home
● Emphasizes economies of scale
● Can lack responsiveness
● Requires resource sharing – coordination required

Transnational strategy
● Seeks both global efficiency and local responsiveness
● Difficult to achieve because it required central control to be adaptive to individual markets
● Requires significant organizational learning

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Step 3 – choose entry mode

Exporting
● Easy
● Distribution through contractual arrangements
● No need to establish external operations
● High transportation costs
● Less control
● Difficult to customize

Licencing
● Licensee takes on risks
● Loss of control
● Low profit potential
● Risk of licensee learning technology

Strategic alliances
● Share risks and resources
● Foreign company knows the local market well
● Can be difficult to integrate cultures of the two companies
● May not fully understand company goals

acquisitions
● Expensive
● Very rapid
● Can be legal hurdles
● Requires complex and costly negotiations
● Potential for incompatible corporate cultures

New wholly owned subsidiary

● Most expensive
● Most control
● Very profitable if successful
● Need to gain local knowledge

Risks
● Cultural differences: Language, time & values
● Differences in effective management strategy
● Political issues
● Economic variation: change in dollar value
● Ethics: Differences in ethics

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Week 11 – Human resource management

Involves attracting, developing and maintaining a talented and energetic workforce to
support the organization’s mission, objectives and strategies.

Attracting a quality workforce

Planning
● What changes in the company do your foresee
● What type of people will you need and how many
● Determine the exact jobs that you need filled

Recruitment
1. Advertise
2. Contact potentials
3. Screening

Selection methods
● Application forms
● Interviews
● Tests
● References and background tests
● Physical examinations

Developing a quality workforce

Orientation
● Familiarize new employees with their tasks, coworkers and expectations
● Help to fit the employee into the culture of the company

Training and development

● Training: Teaches how to do their current job
● Development: Teaches them how to do future jobs
● Methods:
o Job rotation
o Coaching
o Mentoring
o Modeling

Maintaining performance
● Set standards
● Actively monitor and appraise performance

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o Graphic rating scales

o Behavioral rating scale
o Multiperson comparisons
o Peer appraisal

Contemporary issues
● Discrimination
● Equal opportunity
● Affirmative
● Diversity management
● Health and safety
● Industrial relations
● Human rights management

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