Tuesday, March 30, 2010

Project Life Cycles

Phase 1: Conceptual
Phase 2: Planning
Phase 3: Testing
Phase 4: Implementation
Phase 5: Closure

Phase 1: Conceptual
 Includes the preliminary evaluation of an idea
 Most important is a preliminary analysis of risk and the impact on the time, cost, and performance requirements, and resources
 Feasibility study

Phase 2: Planning
 It is mainly a refinement of the elements in the conceptual phase and requires a firm identification of the resources and the establishment of realistic time, cost, and performance parameters

Phase 3: Testing
 Final standardization effort
 Almost all documentation must be completed in this phase

Phase 4: Implementation
 Execution of the project

Phase 5: Closure
 The final phase is closure and includes the reallocation of resources
 Consider a company that sells products to consumers. As one product begins the death phase of its life cycle, new products or projects must be established.
 Such a company would, therefore, require a continuous stream of projects to survive.
 As projects A and B begin their decline, new efforts (project C) must be developed for resource reallocation.

What is Project Management?

“Project management is the planning, organizing, directing, and controlling of company resources for a relatively short term objective that has been established to complete specific goals and objectives.”

Deliverables are outputs. Deliverables are measurable outputs and can take such forms as:
 Hardware Deliverables: These are hardware items, such as a table, a prototype, or a piece of equipment.
 Software Deliverables: These items are similar to hardware deliverables but usually paper products, such as reports, studies, handouts, or documentations.
 Interim Deliverables: These items can be either hardware or software deliverables. An example might be a series of interim reports leading up to the final report.

Project Manager’s role:
 Responsible for coordinating and integrating activities across functional lines to:
 Develop a project plan
 Execute the plan, and
 Make changes to the plan
 Understand operations of line organizations

Successful Project Manager:
A successful project manager is someone who has:
 Strong communication skills
 Strong interpersonal skills
 Ability to
 balance technical and managerial functions;
 overcome organizational constraints;
 cope with and survive risks
An executive with a computer manufacturer stated that his company was looking externally for project managers. When asked if he expected candidates to have a command of computer technology, the executive remarked: “You give me an individual who has good communicative skills and interpersonal skills, and I’ll give that individual a job. I can teach people the technology and give them technical experts to assist them in decision making. But I cannot teach somebody how to work with people.”

Project Success:
 Successful project management can then be defined as having achieved the project objectives:
 Within time
 Within cost
 At the desired performance/technology level
 While utilizing the assigned resources effectively and efficiently
 Accepted by the customer
 “Success equals met expectations!”

The Many Faces of Failure:
 Failure is when the final results are not what were expected.
 For simplicity’s sake, let us define failure as unmet expectations

What is a project?

A series of activities and tasks that
 Have a specific objective to be completed within certain specifications;
 Have defined start and end dates;
 Have funding limits;
 Consume resources (i.e., money, people, & equipment)

Finally, we can say that:
A project is a series of activities and tasks that have

Project versus Operation:
 Organizations perform work - either
 Operations, or
 Projects
 Shared characteristics of projects and operations
 Performed by people
 Constrained by limited resources
 Planned, executed and controlled
 Operations are ongoing and repetitive
 Projects are temporary and unique
 “A project is a temporary endeavor undertaken to create a unique product or service.”
 temporary - definite beginning and end
 unique - different in some distinguishing characteristic

Monday, March 29, 2010

Influence of Heredity & Environment on Leadership

Are leaders born or made?
Do you have to have the right stuff to be a leader?
Does heredity or environment contribute more to leadership effectiveness?
 Traits, motives & characteristics required for leadership effectiveness are a combination of heredity & environment
 People need right opportunity to develop their mental ability for leadership position

Physical factors Important genetic contribution to imaginative thinking include brain power & emotional expressiveness
These traits require the right environment to flourish that includes :-
 Encouragement from others and
 Opportunity to experiment with ideas

Leadership motives

1- Power Motive
2- Tenacity
3- Strong work ethic
4- Driver and achievement motive

1- The power motive is important Means … leader wants to influence others

o Effective leaders have strong need to control resources
o Leaders with high power motives :-
o Act with vigour & determination to exert power
o Spend time, thinking of ways to alter behaviour and thinking of others
o Care about personal standing with those around them

Personalized Power Motive:
o Leader with such motive seek power to further their own interest
o For them power is status symbols ( luxury & money )
Socialized Power Motive:
o Leader with such power motive use power to :-
o Achieve organizational goals or vision
o Help others & for the benefit of the entire organization

2- Drive & Achievement Motivation : o Leaders are known for investing strong efforts in achieving goals
o Importance of strong motivation for leadership is well accepted

o People with strong Ach Mot have consistent desire to:-
o Achieve through one’s own efforts & take responsibility for success or failure
o Take moderate risks that can be handled through one’s own efforts

3- Strong Work Ethics : Effective leaders have strong work ethics
Have firm belief in the dignity of work
Value hard work
They believe that group task is worthwhile

4- Tenacity: (persistence ,determination) Tenacious leaders are better at overcoming obstacles
Such leaders have a sense of purpose and a wilful determination to achieve what they want

Saturday, March 27, 2010

Task Related Personality Traits

1- Courage
2- Resiliency
3- Initiative
4- Internal Locus of Control
5- Flexibility and Adaptability
6- Sensitivity to others and empathy

o Taking action without support and stimulation from others
o Initiative is also related to problem finding ability.

Sensitivity to others and empathy:
o Understanding
o Who the group members are,
o What their position , and
o How to best communicate with and influence them
Achieving sensitivity to others requires empathy i. e
Ability to place oneself in the other person’s shoes.

Flexibility & adaptability:
o Flexibility is the ability to adjust to different situations
o Leader must adjust to demands of different situations
o Leader must facilitate change
o Must be flexible to cope with changes.

Internal Locus of Control:
o Closely related to self confidence
o Facilitates self confidence as the person feels that he can control circumstances and perform well

o Leaders need courage to :-
o Face the challenges of taking risk &
o Taking initiative in general
o Suggest new undertaking.

Ability to recover.
o Leaders, bounce back quickly from setbacks

General Personality Traits

Observable Traits within / outside the context of work related to success & satisfaction in work / personal life

1- Trustworthiness
2- Dominance
3- Extroversion
4- Self awareness/self objectivity
5- Emotional stability
6- Self confidence
7- Sense of humor
8- Assertiveness
9- High tolerance for frustration
10- Enthusiasm

Group expects honesty, integrity & credibility
Honesty & trust make a difference in effectiveness
Leader must generate and sustain trust

Leaders are energetic, lively and sociable people.

Dominant person imposes his will on others
Dominant leader is often bossy

Self Confidence:
Refers to behaviour exhibited in different situations
Important trait in all leadership settings
Leaders show self confidence in order to convince followers.
They are cool under pressure
They retain composure(calm) during crises

o Refers to being forthright in expressing demands, opinions, feelings & attitudes
o Helps leaders in task completion & goals achievement

Emotional Stability:
o An important trait ….
o Low emotional stability is associated with anxiety, depression, anger, worry

Sense of Humour:
o Effective use of humour … important part of leader’s role
o Relieves tension and boredom
o Diffuses hostility

o Great tool for motivating others
o Builds good relationship with team members

High tolerance for Frustration
o Leader encounters too many frustrations
o Ability to cope with the blocking of goal attainment

Self awareness and self objectivity
o Effective leader knows his strengths and limitations
o Awareness enables to :
o Capitalize on strengths &
o Develop on weaknesses

Traits Motives & Characteristics of Leadership

The complex of characteristics that distinguishes an individual.
TRAIT: A distinguished quality or an inherent characteristics.

Studies Indicate
Leaders have certain personality traits which contribute to leadership effectiveness as long as leadership style fits in the situation
Personality traits have two categories
General personality traits
Task oriented personality traits

Leader and The Boss

The leader works in open and boss in covert
The leader leads and the boss drives
Good leaders are made not born
If you have the desire and will power
you can become an effective leader
Good leaders develop
through a never ending process of
self study, education , training and experience

Friday, March 26, 2010


Role is an expected set of activities stemming from one’s job.

Team Builder
Team Player
Technical Problem Solver

Leaders spend some time in ceremonial activities
 Entertaining customers / clients
 Making oneself available to outsiders as org rep
 Official org rep in functions / gatherings
 Escorting official visitors

Manager as a spokesperson
 Emphasis is on answering letters or inquiries
 Formally reporting to groups outside organization

Leader as a spokesperson:
 Keeps 5 groups of people informed about units activities, plans capabilities and vision:
Upper level Management
Client / customer Labor unions
Professional colleagues
Labor unions
General Public

 Coaches team members
 Recognizes team’s achievements
 Gives feed back of ineffective areas
 Renders advice to team about ways and means to improve

 Making deals for needed resources.
 Bargains with superiors for needed funds /
facilities equipment etc
 Bargains with Org Units for facilities, staff, equipment etc.
 Bargains with suppliers / venders for services / schedules /
delivery times etc

Team Builder
 Builds effective team
 Initiates activities to build group morale
 Ensures recognition of members for their achievements.
 Holds meetings to know teams accomplishment, problems, concerns

Team Player
 Displays appropriate personal conduct
 Cooperates with other organizational units
 Displays loyalty to superiors… supports plans, decisions

Technical Problem Solver
 Supervisors need to give tech guidance
 Serve as tech expert / advisor
 Performs individual contributor tasks regularly (Making sale calls repairing machinery)

 Suggesting innovative ideas for furthering business
 Keeps abreast of latest developments of industry
 Talks with customers / others to keep aware of changing
 Explores outside environment to improve organization

Thursday, March 25, 2010

Antileadership arguments

According to the antileadership argument, leadership has a smaller impact on organizational outcomes.
The two major arguments against the importance of leadership are substitute for leadership, and leadership irrelevance.

 Leadership substitutes
 Leadership irrelevance

Leadership substitutes:
 Closely knit teams of highly skilled professionals(air traffic)
 Intrinsic satisfaction
 Computer technology
 Professional norms

1. Leadership is irrelevant to most organizational outcomes
Factors outside leadership control have large impact on outcomes
(1990s.. people working at home… demand for computers)
2. Limited control over consumers and stockholders.

Leadership and organizational performance

Leaders Affect Organizational Performance
They bring changes through their actions and personal influence

Michael Maccoby (Psychoanalyst)
 Conducted interviews with business executives
 Observed that organizations were confronting
 Increasing competition
 Technological advances
 Changing workers attitudes
 Concluded :
Orgs required higher level of leadership than ever before to survive and prosper.

Research on Retail Firm:
 Senior executive brought changes :-
 1970… upgraded store quality and fashion image
 1990… Shifted emphasis to appeal to youth market
 Result … upscale, more clients, remained profitable
 Reason… changing strategies / structures… VISION

Qualities Highlighted
 Vision
 Involving People
 Motivating / Inspiring
 Bringing Changes


 Leading is an important function of manager however, manager must also plan, organize
 Leadership deals with interpersonal aspects of a manager’s job, whereas planning, organizing, and controlling deal with the administrative aspects.
 According to latest concept :
Leadership deals with change, inspiration, motivation and influence and
Management deals with maintenance of status quo

1- Leadership:
- Creating an agenda: Establishes directions
- Developing network: Involves aligning people, gives direction for team making that understands vision and strategy and accepts its validity
- Execution: Motivates and inspires, satisfies basic human needs, energizes people for better outcome.
- Outcomes: Produces dramatic change, has potential to produce useful change,
2- Management:
- Creating an agenda: Plans and budgets, establishes steps and timetables for achieving needed results.
- Developing network: organizes and staffs, makes structures to achieve plans, delegates authority/responsibility, develops policies and procedures to guide people.
- Execution: Controls and solves problems, monitors results against plans, organizes to close the gap.
- Outcomes: Produces predictability, produces key results expected by stakeholders (meeting deadlines, paying dividends)

 Is more formal / scientific
 Relies on universal skill i.e
(Planning / Budgeting / Controlling )
 Is an explicit set of tools
 Involves a vision of what an organization can become
 Leadership requires cooperation / teamwork and
 Keeping key people motivated

Leader gives a vision – manager implements a vision.


Leadership is the process of influencing employees to direct their efforts towards attaining specific objectives.

According to Koontz and O’Donnell “Leadership is the ability of a manager to induce subordinates to work with confidence and zeal.”

Ability to inspire & stimulate others to achieve worthwhile goals

 Ability to inspire others support people who are needed to achieve organizational goals
 Act that causes others to act or respond in a shared direction
 Art of influencing people by persuasion
 Principal dynamic force that motivates and coordinates the organization in the accomplishment of its objectives
 Act of influencing people so that they strive willingly and enthusiastically to achievement of organizational / group goal

Two main theories of leadership:
GREAT MAN THEORY: An individual born with necessary traits for leadership
Recent & Realistic Approach: Leadership traits are not completely inborn .They can be acquired through learning.

Biography of Michael Maccoby

Michael Maccoby is a psychoanalyst and anthropologist globally recognized as an expert on leadership for his research, writing and projects to improve organizations and work. He has authored or co-authored twelve books and consulted to companies, governments, the World Bank, unions, research and development centers and laboratories, universities and orphanages in 26 countries.

Early life, education, and family:He was born in Mt. Vernon, NY March 5, 1933 where his father was a reform rabbi and his mother was a teacher. Except for two years at the Brandes School in Tucson, Arizona, Maccoby attended public school in Mt. Vernon. At age 15, he organized and led an interfaith organization, and in later years has worked closely with Catholic, Protestant, Muslim and Jewish organizations. He received a BA (magna cum laude) at Harvard in 1954 where he was president of the Crimson. He then studied philosophy with Stuart Hampshire and Bernard Williams at New College, Oxford on a Woodrow Wilson Fellowship. As a graduate student at Harvard he was a teaching fellow and secretary to the Committee on Educational Policy at the faculty of Arts and Sciences. He received a PhD from Harvard in Social Relations (combining social psychology and personality with anthropology) in 1960. At Harvard he worked with David Riesman, Jerome Bruner, B.F. Skinner, and McGeorge Bundy, and also studied with the anthropologist Clyde Kluckhohn. At the University of Chicago he studied with the anthropologist Robert Redfield and the psychoanalyst Bruno Bettelheim. Also at Chicago he studied Machiavelli with the political philosopher Leo Strauss. He married Sandylee Weille in 1959. Between 1960 and 1968 they lived in Mexico. They have four children, Annie Berglof, Izette Folger, Nora Hathaway and Max Maccoby.

WorkHe was awarded a Research and Training Fellowship from the National Institute of Mental Health to train as a psychoanalyst with Erich Fromm at the Mexican Institute of Psychoanalysis and study psychological factors in development. He completed this training with the Degree in Psychoanalysis in 1964. With Fromm he co-authored Social Character in a Mexican Village (1970, 1996), which reported their ten-year, multidisciplinary social science study which showed how family history, social character, and one’s work strongly determines the degree of social adaptation, psychopathology or well-being.

Between 1962 and 1988 Dr. Maccoby practiced clinical psychoanalysis, largely with high-functioning adult patients, and he trained and supervised psychiatrists and psychologists from the United States, Mexico, and Spain. In 1968 he worked in the Eugene McCarthy presidential campaign, traveling around the country organizing delegate hearings to persuade delegates to support McCarthy. He also organized intellectuals, including some like Daniel Patrick Moynihan who had supported Robert Kennedy.

In 1969, as a fellow at the Center for Advanced Study in the Behavioral Sciences, he was awarded a grant from Harvard’s Program on Technology and Society to study the companies and their managers who were creating the new information and communication technology. This research in HP, Texas Instruments, IBM and other high tech companies was reported in his book The Gamesman (1977) which was a best-seller, reviewed on the front page of the New York Times Sunday book review. It was a pioneering application of socio-psychoanalytic understanding to personality and leadership in business.

He was a Fellow of the Institute of Policy Studies from 1969 to 1977. In 1972, he directed the Bolivar Project, the first modern joint management-union partnership (Harman Industries and the United Auto Workers) to improve the quality of working life in the auto industry.It was supported by the Ford Foundation, the Sloan Foundation and the National Productivity Commission. As a result of this project, he was invited to lead quality of worklife programs in the U.K. and with AT&T and the Communication Workers of America. (see The Leader (1981), Why Work? (1988, 1995) and Agents of Change (2003), with Charles Heckscher, Rafael Ramirez and Pierre-Eric Tixier).

During the Carter administration at the Department of Commerce he led a project to improve the quality of working life and at the Department of State he created a participative project that determined the kind of leadership needed. During the Reagan administration he helped the US ambassador in New Delhi to develop a collaborative embassy team and under the auspices of State he provided lectures to Chile's business community on Democracy and Free Enterprise before the plebiscite of 1988. From 1969-1990 he directed the Program on Technology, Public Policy and Human Development at the Kennedy School at Harvard. Since 1980 he has been the President of the Maccoby Group, a consultancy, and Director of the Project on Technology, Work and Character, a not-for-profit research center.

In The Productive Narcissist (2003) and The Leaders We Need, And What Makes Us Follow (2007), Dr. Maccoby has applied psychoanalytic concepts, including the theory of social character, to the study of leadership and followership. Building on Fromm, he proposes that social character is the internalized culture which is formed in childhood to enable people to adapt to the demands of work and social patterns in that culture. In his books and writings he contrasts social character formed by peasant, industrial-bureaucratic, and knowledge-service dominated cultures. He has also developed interpretative interview and survey instruments and methodology for revealing a person’s social character and personality.

In 1973, Volvo management asked Dr. Maccoby to help develop innovative factories. He was then invited by the Swedish Council on Leadership (FA rådet) to direct a study of Swedish leaders and to propose the kind of leaders Sweden needed for the future. He published the results in Dagens Nyheter, Sweden’s largest newspaper and in two books, one in Swedish (Ledare fur Sverige, 1987), and the other in English (Sweden at the Edge, 1990). Dr. Maccoby has consulted on leadership to numerous Swedish organizations. In 2008, King Carl XVI Gustav made him Commander of the Royal Order of the Polar Star for his services to Sweden. In 2004, Dr. Maccoby facilitated the National Coalition on Health Care in developing specifications for a comprehensive health care policy in America. With a grant from the Robert Wood Johnson Foundation, he studied some of the most effective health care organizations in America, resulting in the report Leadership for Health Care (2001). He is a Fellow of the American Psychological Association and the American Anthropological Association, the Society for Applied Anthropology, and the National Academy of Public Administration. He is a member of Phi Beta Kappa, the Global Business Network, and the Cosmos Club.

From 1986 to 2009 he wrote a column, The Human Side for Research Technology Management and was recognized by The International Association of Management of Technology (IAMOT) as one of the top 50 authors of writings on technology and innovation management over the last 5 years. He has taught at [[Cornell University[[, the University of California at Santa Cruz, the University of Chicago, the National University of Mexico, Sciences Po (Paris Institute of Political Studies), the Mexican Institute of Psychoanalysis, the Brookings Institution, the Washington School of Psychiatry, and Templeton College and Said Business School of Oxford University. He has served on the boards of the Washington School of Psychiatry, the Albert Shanker Institute, the Tällberg Foundation, and Nuestros Pequeños Hermanos (NPH), an orphanage in nine Latin American and Caribbean countries based on humanistic principles that stimulate development. He was a close associate of Father William Wasson, the founder of NPH.

Strategy Evaluation

Strategy evaluation is the final Stage in Strategic Management.
Managers desperately need to know when particular strategies are not working; strategy evaluation is the primary means of obtaining this information.
The following are the main activities performed in the evaluation stage.
1. Reviewing external and internal factors that are the bases for current strategies.
2. Measuring performance
3. Taking corrective action.

Strategy Evaluation is becoming increasingly difficult with the passage of time because of the following reasons.
1. A dramatic increase in the environment's complexity.
2. The increasing difficulty of predicting the future with accuracy.
3. The increasing number of variables.
4. The increase in number of both domestic and world events affecting organizations.

The Process of Evaluating Strategies:
Numerous external and internal factors can prohibit firms from achieving long term and annual objectives. Externally, actions by competitors, changes in demand, changes in technology, economic changes, demographic shift, and governmental changes. Internally, ineffective strategies may have been chosen or implementation activities may have been poor.
External opportunities and threats and internal strength and weaknesses that are bases for current strategies should continually be monitored for change.

1- Reviewing External & Internal Factors:
Some key questions to address are as follows:
1. Are our strengths still strengths.
2. Have we added other strengths? If so, what are they?
3. Are our internal weaknesses still weaknesses?
4. Do we now have other internal weaknesses? If so, what are they?
5. Are our external opportunities still opportunities?
6. Are there mow other external opportunities? If so, what are
7. Are our external threats still threats?
8. Are there now other external threats? If so, what are they?

2- Measuring Organizational Performance:
This activity includes:
• Comparing expected results to actual result.
• Investigating deviations from plans
• Evaluating individual performance
• Examining progress made toward meeting stated goals.
Both long term and annual objectives are commonly used in this process. Criteria for evaluating strategies should measurable and easily variable.

3- Taking Corrective Actions:
This is the final strategy evaluation activity. It requires changes to reposition a firm competitively for the future.

Some examples of change that may be needed are:
• Altering an organization’s structure,
• Replacing one or more key individuals
• Selling a division
• Or revising business mission

Other changes could include:
• Establishing or revising objectives
• Devising new policies
• Issuing stock to raise capital
• Adding additional salespersons
• Allocating resources differently
• Or developing performance incentives

Wednesday, March 10, 2010

Management issues

- Annual Objectives
- Policies
- Resources
- Organizational Structure
- Restructuring
- Reward/Incentives
- Resistance to change
- Supportive culture
- Production/Operations

Annual Objectives:Annual objectives are short term milestones that organizations must achieve to reach long term objectives
 Decentralized activity
 Directly involve all managers in the organization

Purpose of Annual Objectives:
 Basis for resource allocation
 Mechanism for management evaluation
 Metric for gauging progress on long-term objectives
 Establish priorities (organizational, division, & departmental)

Requirements of Annual Objectives:
 Measurable
 Consistent
 Reasonable
 Challenging
 Clear
 Understood
 Timely

Policies Establish:• Refer to specific guidelines, methods, procedures, rules,
forms, and administrative practices established to support
and encourage work toward stated goals.
 Boundaries
 Constraints
 Limits

Policies examples:
• To promote on the basis of merit or on the basis of seniority.
• To use one or more suppliers.
• To buy, lease or rent new production equipment.
• To promote from within or to hire from outside.

Resource Allocation:• Resource allocation is a central management activity
that allows for strategy execution.
• Strategic management enables resources to be
allocated according to the priorities established by
annual objectives.

4 types of resources:
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources

Managing conflict:
 Conflict: is a disagreement between two or more parties on one or more issues.
 Conflict not always “bad”
 No conflict may signal apathy (boredom)
 Can energize opposing groups to action
 May help managers identify problems

Conflict Management & Resolution:
 Avoidance
 Diffusion
 Confrontation

1. Avoidance Ignoring the problem and hoping that the conflict will resolve itself or physically separating the conflicting individuals (groups).
2. Diffusion: Playing down differences between conflicting parties and while emphasizing similarities and common interests, compromising so that there is no clear winner or loser.
3. Confrontation Exchanging members of conflicting parties or holding a meeting at which conflicting parties present their views and work through their differences.

Matching Structure with Strategy:-- Changes in strategy = Changes in structure

Structure & Strategy:
 Structure dictates how objectives & policies will be established
 Structure dictates how resources will be allocated

Restructuring:-- Reducing the size of the firm – # of employees, divisions and/or units, # of hierarchical levels
It is also called:
 Downsizing
 Rightsizing
 Delayering
Involves reducing the size of the firm in terms of number of employees, number of divisions or units and number of hierarchical levels in the firm’s organizational structure.
It is concerned primarily with shareholder well being.

Reengineering:-- Reconfiguring or redesigning work, jobs, & processes to improve cost, quality, service, & speed
Reengineering is concerned more with employees and customer.
Also called:
 Process management
 Process innovation
 Process redesign

Linking Pay/Performance to Strategies:
 Dual bonus systems (Based on both annual objectives and long term objectives.
 Profit sharing systems (DuPont Canada has a 16 percent return on equity objectives. If these objectives is met, the company’s 400 employees receive a “performance sharing cash reward.
 Gain sharing systems (Requires employees and departments to establish performance targets; if the actual results exceeds objectives, all members get bonus.

Nature of Strategy Implementation

• Successful strategy formulation does not guarantee successful strategy implementation
• Formulation positions forces before the action
• Implementation manages forces during the action’
• Formulation focuses on effectiveness
• Implementation focuses on efficiency
• Formulation is primarily an intellectual process
• Implementation is primarily an operational process
• Formulation requires good intuitive & analytical skills
• Implementation requires special motivational & leadership skills
• Formulation requires coordination among a few individuals
• Implementation requires coordination among many individuals

Levels/Types of Strategy

• In large firms there are four levels of functional and operational. However, in small firms, there are three levels: company, functional and operational. strategies: corporate, business or divisional,
• Corporate: Type of strategy addressing what businesses the organization will operate, how strategies of those businesses will be coordinated to strengthen the organization's competitive position and how resources will be allocated among businesses.
• Strategic Business Unit: Distinct business with its own competitors, which can be managed relatively independently of other businesses within the organization.
• Business Level Strategy
• Functional Level: Type of strategy focusing on action plans for managing a particular functional area within a business in a way that supports business level strategy.
• Operational Level: is the “lowest” level of strategy. It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria.

Types of Strategy:
The following are the alternative strategies that an organization can peruse.
1. Integration Strategies
a. Forward Integration
b. Backward Integration
c. Horizontal Integration
2. Intensive Strategies
a. Market Penetration
b. Market Development
c. Product Devlopment
3. Diversification Strategies
a. Concentric Diversification
b. Horizontal Strategies
c. Conglomerate Diversification
4. Defensive Strategies
a. Retrenchment
b. Divestiture
c. Liquidation

1. Integration Strategies Integration strategies allow a firm to gain control over the distributors, suppliers and/or competitors.
a. Forward Integration: Involves gaining ownership or increased control over distributors.
b. Backward Integration: is a strategy of seeking ownership or gaining a firm’s supplies.
c. Horizontal Integration: Refers to a strategy of seeking ownership of or increased control over a firm’s competitors.

2. Intensive Strategies They require intensive efforts if a firm’s competitive position with existing products is to improve.
a. Market Penetration
A market penetration strategy seeks to increase market for present product or services in present market through greater marketing efforts.
b. Market Development
Market Development involves introducing present products or services into new geographic areas.
c. Product Development:
is a strategy that seeks increased sales by improving or modifying present products or services.

3. Diversification Strategiesa. Concentric Diversification
Adding new but related products or services is called concentric diversification.
b. Horizontal Diversification
Adding new unrelated products or services for present customers is called horizontal diversification.
c. Conglomerate Diversification.
Adding new but unrelated products or services is called conglomerate Diversification.

4. Defensive Strategiesa. Retrenchment:
Occurs when an organization regroups through cost and asset reduction to reverse declining sales and profit.
b. Divestiture:
Selling a division or a part of an organization.
c. Liquidation:
Selling all of a company’s assets , in parts, for their tangible worth is called liquidation.

Means for Achieving Strategies:
1. Joint Venture
Joint venture is a popular strategy that occurs when two or more companies form temporary partnership or consortium for the purpose of capitalizing opportunity.
2. Merger/ Acquisition
Merger occurs when two organizations of about equal size unite to form one enterprise.
Acquisition occurs when a large organization purchases (acquires) a smaller firm or vice versa.

First Mover Advantage: First mover advantages refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms. Some advantages of being first mover include:
 Securing access to rare resources
 Gaining knowledge of key factors and issues
 Carving out market shares and a position that is easy to defend and costly for rival firms to overtake.

Outsourcing: Business-Process outsourcing (BPO) is a rapidly growing new business that involves taking over the functional operations such as human resources, information systems, payroll, customers service and even marketing of other firms. Reasons for outsourcing are as follows:
 Less expensive
 Allows business to focus on it core businesses
 Enables the firm to provide better service.

Long Term Objectives

• Long term objectives represent the results expected from pursuing certain strategies.
• Strategies represent the actions to be taken to accomplish long term objectives.
• The time frame for objectives and strategies should be consistent, usually from two to five years.

The Nature of Long Term Objectives:
1. Objectives should be quantitative, measurable, realistic, challenging, hierarchical, obtainable and congruent among organizational units.
2. Each objective should be associated with a time line.
3. Objectives are commonly stated in terms of such as growth in assets, growth in sales, profitability, market share, degree and nature of diversification.
4. Clearly established objectives offer many benefits. They provide direction, allow synergy, aid in evaluation, establish priorities, minimize conflicts and aid in allocation of resources and the job designs.
5. Long term objectives are needed at the corporate, divisional and functional levels of an organization.
6. Without long-term objectives, an organization would drift aimlessly toward some unknown end.
7. It is hard to imagine an organization an organization or individual being successful without clear objectives.

Financial versus Strategic Objectives:
1. Financial objectives:
Financial objectives include those associated with growth in revenue, growth in earning, higher dividends, larger profit margins, greater return on investment, higher earning per share, a rising stock price, improved cash flow, and so on.
2. Strategic objectives:
Strategic objective includes things such as a large market share, quicker on time delivery than rivals, lower costs than rivals, higher quality products than rivals, wider geographic coverage than rivals, achieving ISO certification and so on.

Areas in Which Objectives are Established:
• Market Standing: the position of an organization relative to its competitors
• Innovation: any change made to improve the methods of conducting organizational business.
• Productivity: the level of goods and services produced by an organization.
• Resource levels: the relative amount of resources held by an organization such as inventory, equipment and cash.
• Profitability: the ability of organization revenue dollars beyond the expenses necessary to generate the revenue.
• Manager Performance and Development: the quality of managerial performance and the rate at which managers are developing personally.
• Worker Performance and Attitude: the quality of non-managers performance and such employee’s feeling about their work.
• Social Responsibilities: the obligation of business to help improve the welfare of society while it strives to reach organizational objectives.

Vision versus Mission

A mission statement answers the question “what is our business”
The vision statement answers the question “What do we want to become”
Vision is” a possible and desirable future state of an organization” that includes specific goals whereas mission is more associated with behavior and the present.
When employees and managers together shape or fashion the vision and mission statements for a firm, the resultant documents can reflect the personal visions that managers and employee have in their hearts and minds about their future.
Shared vision creates a commonality of interests that can lift workers out of monotony of daily work and put them into a new world of opportunity and challenge.

The Process of Developing a Mission Statement:
It is important to involve as many managers as possible in the process of developing a mission statement because through involvement, people become committed to an organization.
A widely used approach to developing a mission statement is;
1. Select several articles about mission statement and send them to all managers to read these as background information.
2. Ask managers themselves to prepare a mission statement for the organization.

3. A facilitator or committee of top managers should merge these statements into a single document and then distribute this draft mission statement to all managers.
4. Request for modifications, additions and deletions.
5. Meeting is hold to revise the document.
• During the process of developing a mission statement, some organizations use groups of managers to develop and modify the mission statements.
• Some Organizations hire an outside consultant or facilitator to manage the process and help draft the language.

Importance of Vision and Mission Statements:
Research has found:
1. Firms with formalized mission statement have twice the average return on shareholder’s equity that those firms without ` a formalized mission statement have. ( Rarick and Vitton)
2. Found a positive relationship between mission statements and organizational performance. ( Bart and Baetz).
3. Business Week reports that firms using mission statements have a 30 percent higher return on certain financial measures than those without such statements.
4. Some studies have found that having a mission statement does not directly contribute positively to financial performance.

Developing a mission statement is important for the following reasons:
1. To ensure unanimity of purpose within the organization.
2. To provide a basis or standard for allocating organizational resources
3. To serve as a focal point for individuals to identify purpose and direction, and to deter those who can not from participating further in organizational activities.
4. To facilitate the translation of objectives into a work structure involving the assignment of tasks to responsible elements within the organization.

Characteristics of a Mission Statement:
1. A Declaration of Attitude
• A mission statement is more than a statement of specific details; it is a declaration of attitude and outlook.
• A mission statement is broad in scope for two reasons:
 A good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity.
 A mission statement needs to be broad to effectively reconcile among and appeal to an organization’s diverse stakeholders.
2. A Customer Orientation
• A good mission statement reflects the anticipation of customers. Rather than developing a product and then trying to find a market, the operating philosophy of organizations should be to identify customer’s needs and then provide a product or service to fulfill those needs.
• Good mission statements should identify the utility of a firms product to its customers. For instance:
i. Do not offer clothes. Offer attractive look.
ii. Do not offer shoes. Offer comfort for feet and pleasure of walking.
iii. Do not offer books. Offer hours of pleasure and benefit of knowledge.
3. A Declaration of Social Policy
• The term social policy embraces managerial philosophy and thinking at the highest level of an organization for this reason social policy affects the development of a business mission statement.
• The impact of society on business and vice versa is becoming more and more pronounced each year.
• Social policies directly affect a firm’s customers, products and services, markets, technology, profitability, self concept and image.
• An organization’s social policy should be integrated into all strategic management activities, including the development of a mission statement.

Components of a Mission Statement:
Because a mission statement is the most visible and Public of strategic management process, it is important that it includes all these essential components.
1. Customers: who are the firm’s customers?
2. Products and services: what are the firm’s major products and services?
3. Markets: geographically where does the firm compete.
4. Technology: is the firm technologically current?
5. Concerns for survival, growth, and profitability: is the firm committed to growth and financial soundness?
6. Philosophy: what are the basic beliefs, values, aspirations and ethical priorities of the firm?
7. Self-concept: what is the firm’s distinctive competence or major competitive advantage?
8. Concern for public image: is the firm responsive to social, community and environmental concerns?
9. Concerns for employees: are the employees the valuable assets of the firm?

Example of the Nine Essential Components of a Mission Statement:
1. Customers
We believe our first responsibility is to the doctors, nurses, patients, mothers, and all others who use our products and services (Johnson & Johnson)
2. Product or Services
AMAX’s principal are molybdenum, coal, iron ore, copper, lead, zinc, petroleum and natural gas, potash, phosphates, nickel, tungsten, silver, gold and magnesium. ( AMAX Engineering Company)
3. Markets
Our emphasis is on North America Market, although global opportunities will be explored. ( Blockway)
4. Technology
We will continually strive to meet the preferences of adult smokers by developing technologies that have the potential to reduce the health risks associated with smoking. ( RJ Reynolds)
5. Concern for survival, growth and profitability
In this respect, the company will conduct its operations prudently and will provide the profits and growth which will assure Hoover’s ultimate Success. (Hoover University)
6. Philosophy
Our world-class leadership is dedicated to a management philosophy that holds people above profit. ( Mary Kay Cosmetics)
7. Self-Concept
Crown Zellerbach is committed to leapfrogging on going competition within 1,000 days by unleashing the constructive and creative abilities and energies of each of its employees. ( Crown Zellerbach)
8. Concern for Public Image
To share the world’s obligation for the protection of environment. ( Pfizer)
9. Concern for Employees
To compensate its employees with remuneration and fringe benefits competitive with other employment opportunities in its geographical area and commensurate with their contributions toward efficient corporate operations. ( Public Service Electric & Gas Company)

Tuesday, March 9, 2010

SWOT Analysis

 A scan of internal and external environment is an important part of strategic management process.
 Environmental factors internal to the firm can be classified as strengths (S) and weaknesses (W).
 And those external to the firm can be classified as opportunities (O) and threats (T).
 Such an analysis of the environment is referred to as SWOT Analysis
1. Strengths
 A firm’s strengths are its resources and capabilities that can be used as basis for developing a competitive advantage.
 Examples:
 Patents
 Strong brand names
 Good reputation among customers
 Low Cost Structure
2. Weaknesses
 The absence of certain strengths may be viewed as a weakness.
 Examples
 Lack of patent protection
 Weak brand name
 Poor reputation among competitors
 High cost structure
3. Opportunities
 The external environmental analysis may reveal certain new opportunities for profit and growth
 Examples:
 An unfulfilled customer needs
 Arrival of new technology
 Loosening of regulations
 Removal of international trade barriers
4. Threats
 Changes in the external environment also may present threats to the firm.
 Examples:
 Shifts in tastes away from the firm’s products.
 Emergence of substitute products
 New regulations

 S-O Strategies Pursue opportunities that are a good fit to the company’s strengths.
 W-O Strategies Overcome weaknesses to pursue opportunities.
 S-T Strategies identify the ways that the firm uses its strengths to reduce its vulnerability to external threats.
 W-T Strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats.

Monday, March 8, 2010

Key Terms in Strategic Management

1. Competitive Advantage
 Anything that a firm does especially well compared to rival firms.
 Getting and keeping competitive advantage is essential for the long term success in an organization.
 A firm must strive for sustained competitive advantage.
2. Strategists
 Strategists are individuals who are most responsible for the success and failure of an organization.
 Strategists have various job titles such as CEO, President, Owner, Chair of the board, Executive Director, Chancellor, Dean, Entrepreneur.
3. Vision statement
• Answers the question “ what do we want to become”
• It is the first step in strategic Management.
• Many vision statements are single statements
“Our vision is to take care of your vision”
4. Mission Statements
Are enduring statements of purpose that distinguish one business firm from other similar firms.
A mission statement identifies the scope of a firm’s operations.
5. External Opportunities and Threats
• Are factors which could harm or benefit the organization.
• Comprise of the following:
• Economic
• Social
• Political
• Technological
• Cultural
• Demographic Environment
6. Internal Strengths and Weaknesses
• Controllable activities that are performed especially well or poorly.
• Relate to functional area
• Marketing
• Management
• Finance/Accounting
• Production/Operations
• Strengths and weaknesses are determined relative competitors.
• Relative deficiency or superiority is important information
7. Long Term Objectives
• Objectives can be defined as specific results that an organization seeks to achieve.
• Long term means more than five years.
Objectives are essential for organizational success
8. Strategies
Are the means by which long term objectives will be achieved.
Levels of Strategies
a. Corporate Strategy
b. Business Strategy
c. Functional strategy
d. Operational Strategy
9. Annual Objectives
• Annual objectives are short term milestones that organizations must achieve to reach long term objectives.
• Annual objectives should be stated in terms of management, marketing, finance/accounting, production/operations, research and development and MIS accomplishment.
10. Policies
• Policies are the means by which annual objectives will be achieved.
• Policies include guidelines, rules, and procedures established to support efforts to achieve stated goals.

Strategic Management: Three Phases

1. Strategy Formulation (new business, joint venture or any other, because the firms have scare resources)
2. Strategy implementation or action stage (annual objective,polices allocate resources etc)
3. Strategy Evaluation for future modification due to change in internal and external factors.

Strategy Formulation:
Strategy formulation includes:
 Developing a vision and a mission statement.
 Identifying external opportunities and threats
 Determining internal strengths and weaknesses
 Establishing long term objectives.
 Generating alternative strategies.
 Choosing particular strategies to follow.

Strategy Implementation:
Strategy implementation is called the action stage of strategic management. It includes:
 Establishing annual objectives
 Creating effective organizational structure
 Devising policies
 Motivating employees
 Allocating resources

Strategy Evaluation:
a. Reviewing external and internal factors that are the bases for current strategies.
b. Measuring performance.
c. Taking corrective actions.

Monday, March 1, 2010

Strategic Management

- Strategy is the direction and scope of an organization over the long term which achieves advantage for the organization through its configuration of recourses within a changing environment to meet the needs of markets and to fulfill stakeholder expectations.
- Corporate strategy is the pattern of major objectives, purposes or goals and essential policies or plans for achieving these goals, stated in such away as to define what business the company is in or is to be in and the kind of company it is or is to be.
- Strategic Management can be defined as the art and science of formulating, implementing and evaluating cross functional decisions that enable an organization to achieve its objectives.
- It is the determination of long term objectives, allocation of resources, and course of action.

Strategic Management and its Nature:
1. Change
2. Globalization: Survival of Business
3. Technology:
4. E-Commerce: Now an essential business tool
5. Earth’s environment has become a strategic issue. ( Conserve and Preserve Resources)

What Motivates People?

 People can be motivated by providing them rewards
 Extrinsic Rewards: include benefits, praise and recognition, status symbols and money (Salary, wages, bonuses, company-paid insurance, medical facilities)
 Intrinsic Rewards: include a feeling of achievement, accomplishment and self-actualization

Motivating People at Work:
 Provide financial benefits like basic salary, incentives, bonuses and raise in salary
 Allow them the autonomy to be productive
 Reward with educational opportunities
 Reward with recognition
 Express interest in what they are doing
 Provide flexible work, leave, and pay schedules
 Provide child and elder care benefits
 Provide challenging projects

Challenges of Motivating Employees:
 Changing workforce
 younger generation employees have different needs and expectations to senior workers
 people have more diverse values – results in more variety in what motivates employees
 Cultural values
 globalization has added to diversity

Other 4 Theories

ERG Theory (Clayton Alderfer):
 Similar as Maslow’s Theory
 Classifies Needs into three broader classes
1. Existence Needs: (Physiological and Safety Needs)
2. Related Needs: (Social Needs)
3. Growth Needs: (Esteem & Actualization Needs)
 People may be motivated by needs on several levels at the same time

Satisfaction Progression Principle:
 Satisfaction of one level of need encourages concern with the next level.
Frustration Regression Principle:
 when we are continually frustrated in our attempts to satisfy higher level need, we may cease to be concerned about that need and may focus on a lower level needs

Herzberg’s Two Factor Theory:
Herzberg believes that there are two types of factors:
1. Dissatisfiers or Maintenance Factors: basic need necessary for our existence
2. Satisfiers or Motivating Factors: factors which can motivate us to do something more

1. Maintenance Factors: (Extrinsic)
Factors such as pay, working conditions, supervisors, company policies and other benefits.
2. Motivating Factors: (Intrinsic)
Factors such as achievement, recognition, the work itself, responsibility, advancement, and growth.
 Herzberg concludes that Maintenance factors are necessary to keep workers from feeling dissatisfied but only Motivators can lead workers to feel satisfied and motivated.

Skinner’s Reinforcement Theory:
 Law of Effect: Behaviors having pleasant or positive consequences are more likely to be repeated and behavior having unpleasant or negative consequences are less likely to be repeated.
 This phenomenon is called as Reinforcement

Types of Reinforcement:
1. Positive Reinforcement: Techniques aimed at increasing a desired behavior by providing pleasant or rewarding consequences.
2. Negative Reinforcement: Techniques aimed at increasing a desired behavior or decreasing an undesired behavior that involves providing unpleasant consequences

 Individuals can be motivated by proper design of their work environment and by praise for their performance
 Punishment for poor performance produces negative results

The Equity Theory:
 This theory argues that we prefer a situation of balance, or equity.
 Input: Employees contribution to the organization
 Outcome: Rewards employee receive from the organization.
 Outcome/Input Ratio: Comparison between rewards and efforts.

Maslow’s Hierarchy of Needs

 One of the most widely quoted motivation theories with its applications in Marketing, Economics, Psychology, Management, HRM
 Human needs are in the form of a hierarchy, ascending from lowest to the highest (as a ladder)
 When one set of needs is fulfilled, it does not motivate people anymore and they seek for the fulfillment of next level needs

Maslow’s Hierarchy of Needs:
1- Self- Actualization
2- Esteem Needs (Power, Status, Self-respect)
3- Social Needs (Affection, Belongings and Friendship)
4- Safety Needs (Security and protection)
5- Physiological Needs (Food, Water, Shelter, Sleep)

Application of Maslow’s Theory:
General Examples:
 Food
 Stability
 Friendship
 Status
 Achievement

Organizational Example:
- Basic Salary
- Pension Plan
- Friends at Work
- Job Title
- Challenging Job

The Motivation Theories

Theory X and Theory Y
Maslow’ Hierarchy of Needs
ERG Theory
Two Factors Theory
Reinforcement Theory
The Equity Theory

McGregor’s Theory X and Theory Y:
 Provide an insight into the nature of people in relation to their work and about their work behaviors
 These theories are based on the managers’ assumptions about the people they are managing
 There is nothing “good” or “bad” about these theories

Theory X vs. Theory Y:
 Average human beings have an inherent dislike of work and will avoid it if they can
 People must be controlled, directed and threatened to make them work
 People prefer to be directed, wish to avoid responsibilities, have relatively little ambition, and want security above all
 Work activities are as natural as rest or play
 People will work willingly for the achievement of objectives to which they are committed
 Commitment level is related to the rewards expected
 People will not only accept responsibilities, but also seek it
 The two theories lead to two different approaches towards managing people
 Theory X is pessimistic, static, and rigid. Control is primarily external i.e. imposed by the supervisor
 Theory Y is optimistic, dynamic, flexible with an emphasis on self-direction and matching individuals needs with the organizational demands

What is Motivation?

 Motivation is a general term applying to the entire class of drives, desires, needs, wishes and similar forces that makes us work
 Different people have different motives
 For effective Human Resource Management, it is important to know what really motivates people
 Activities in HRM related with helping employees work at high energy levels
 Motivation is a function of willingness and ability (skills) to do the job
 The formula for success:
(Knowledge + Skills) x Attitude = Performance