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Introduction to Organizations

and Management
IPE 4203

Mahjabin Moon
Lecturer
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology
What Is An Organization?
Organization

A deliberate arrangement of people to accomplish some specific purpose


that individuals independently could not accomplish alone.
Common Characteristics of Organizations
 Composed of people

 Have a deliberate structure

 Have a distinct purpose (goal)


What Is Management?
Management

Coordinating work activities so that they are completed efficiently and


effectively with and through other people.

Managerial Concerns

 Efficiency
“Doing things right”
Getting the most output from the least amount of inputs

 Effectiveness
“Doing the right things”
Completing activities so that organizational goals are attained
Efficiency Vs. Effectiveness

Efficiency Effectiveness

Doing things right Doing the right things

Getting the most output from the Completing activities so that


least amount of inputs organizational goals are attained

Takes the present state into Takes the long term strategy into
consideration consideration

Quantity based Quality based


Exhibit 1–2 Effectiveness and Efficiency in Management
Importance of Management

 It helps in achieving group goals

 It arranges the factors of production

 It assembles and organizes the resources

 It improves productivity and efficiency

 It improves the customer experience and increases profitability


Why Study Management?

The Value of Studying Management

 The universality of management

 The reality of work

 Rewards and challenges of being a manager


Why Study Management?
 The universality of management
Why Study Management?
 The reality of work
- employees either manage or are managed.
 Rewards and challenges of being a manager

- Management offers challenging, exciting and creative


opportunities for meaningful and fulfilling work.

- Successful managers receive significant monetary rewards for


their efforts.
Exhibit 1–12 Rewards and challenges of being a manager
Rewards

 Create a good work environment

 Have opportunities to think creatively and


use imagination

 Help others to find meaning and fulfillment


in work

 Support, coach and nurture others

 Work with a variety of people

 Receive recognition and status in organization and community etc.


Exhibit 1–12 Rewards and challenges of being a manager
Challenges

 Need to do hard work

 Have to deal with a variety of


personalities

 Often have to do things with limited resources

 Motivate workers in chaotic and uncertain situations

 Success depends on others’ work performance


Who Are Managers?
Manager

Someone who works with and through other people by coordinating their
work activities in order to accomplish organizational goals.
Classification of Managers
 First line managers

 Middle managers

 Top managers
Classification of Managers
First line managers

 Managers at the lowest level of the


organization

 Manage the work of non managerial employees

 First-line managers may be called supervisors or even shift managers,


district managers, department managers, or office managers.
Classification of Managers
Middle managers

 Managers between the first line level


and top level of the organization

 Manage the work of first line managers.

 They may have titles such as regional manager, project leader, store
manager, or division manager.
Classification of Managers
Top Managers

 Managers at the top level of the organization

 Responsible for making organization wide


decisions and establishing the goals and plans that affect the entire
organization.

 Typically have titles such as executive vice president, president,


managing director, chief operating officer, or chief executive officer.
What Do Managers Do?
Management Functions

 Planning

 Organizing

 Leading

 Controlling
Management Functions

Planning

Management function that involves

 defining goals

 establishing strategies to achieve those goals

 developing plans to integrate and coordinate activities.


Management Functions
Organizing

Management function that involves

 determining what tasks are to be done

 who is to do them

 how the tasks are to be grouped

 who reports to whom

 where the decisions are to be made.


Management Functions
Leading

Management function that involves

 motivating subordinates

 influencing individuals or teams as they work

 selecting the most effective communication channels

 dealing in any way with employee behavior issues.


Management Functions
Controlling

Management function that involves

 monitoring actual performance

 comparing actual to standard

 taking action, if necessary.


What Do Managers Do? (cont’d)
Mintzberg’s Managerial Roles

 Interpersonal roles

 Informational roles

 Decisional roles
Mintzberg’s Managerial Roles
Mintzberg’s Managerial Roles
Interpersonal roles

Managerial roles that involve people and other duties that are ceremonial
and symbolic in nature

The three interpersonal roles include

- figurehead
- leader
- liaison
Mintzberg’s Managerial Roles
Interpersonal roles

Figurehead

 Symbolic head

 Obliged to perform a number of routine duties of a legal or social


nature

Examples of activities

 Greeting visitors

 Signing legal documents


Mintzberg’s Managerial Roles
Interpersonal roles

Leader

 Responsible for the motivation of subordinates

 Responsible for stuffing, training and associated duties

Examples of activities

 Performing virtually all activities that involve subordinates


Mintzberg’s Managerial Roles
Interpersonal roles

Liaison

 Maintains self developed network of outside contacts and informers


who provide favors and information.

Examples of activities

 Acknowledging mail

 Performing other activities that involve outsiders.


Mintzberg’s Managerial Roles
Informational roles

Managerial roles that involve collecting, receiving, and disseminating


information.

The three informational roles include


- monitor
- disseminator
- spokesperson
Mintzberg’s Managerial Roles
Informational roles

Monitor

 Seeks and receives wide variety of internal and external information to


develop thorough understanding of organization and environment.

Examples of activities

 Reading periodical and reports

 Maintaining personal contacts


Mintzberg’s Managerial Roles
Informational roles

Disseminator

 Transmits information received from outsiders or from subordinates to


members of the organization.

Examples of activities

 Holding informational meetings

 Making phone calls to relay information


Mintzberg’s Managerial Roles
Informational roles

Spokesperson

 Transmits information to outsiders on organization’s plans, policies,


actions, results etc.

Examples of activities

 Holding board meetings

 Giving information to the media


Mintzberg’s Managerial Roles
Decisional roles

Managerial roles that revolve around making choices.

The four decisional roles include

- entrepreneur
- disturbance handler
- resource allocator
- negotiator
Mintzberg’s Managerial Roles
Decisional roles

Entrepreneur

 Searches organization and its environment for opportunities and


initiates improvement projects to bring about changes.

Examples of activities

 Organizing strategy and review sessions to develop new programs


Mintzberg’s Managerial Roles
Decisional roles

Disturbance handler

 Responsible for corrective actions when organization faces important,


unexpected disturbances.

Examples of activities

 Organizing strategy and review sessions that involve disturbances and


crises.
Mintzberg’s Managerial Roles
Decisional roles

Resource allocator

 Responsible for the allocation of organizational resources of all kinds.

Examples of activities

 Scheduling

 Requesting authorization

 Performing any activities that involves budgeting and the


programming of subordinates’ work
Mintzberg’s Managerial Roles

Decisional roles

Negotiator

 Responsible for representing the organization at major negotiations

Examples of activities

 Participating in union contract negotiations


Management Skills

Managers need certain skills to perform the duties and activities


associated with being a manager.

Research by Robert L. Katz found that managers needed three essential


skills-

 Technical skills
 Conceptual skills
 Human skills
Management Skills

Technical skills

 Job-specific knowledge and techniques needed to proficiently perform


work tasks.

 More important at lower levels of management


Management Skills
Conceptual skills

 The ability to think and to conceptualize about abstract and complex


situations concerning the organization.

 More important at top levels of management


Management Skills
Human skills

 The ability to work well with other people individually and in a group.

 These skills are equally important at all levels of management.


Exhibit 1–5 Skills Needed at Different Management Levels
How The Manager’s Job Is Changing
Managers have always had to deal with changes taking place inside and
outside their organization. Three important changes are-

 Importance of customers

 Importance of innovation

 Importance of sustainability
Management History
Scientific Management

Fredrick Winslow Taylor

 The “father” of scientific management

 Published Principles of Scientific Management


Scientific Management

Taylor’s Four Principles of Management

1. Develop a science for each element of an individual’s work

2. Scientifically select then train, teach and develop the worker

3. Cooperate with the workers to ensure all the work is done according
to the principles of science.

4. Divide work and responsibility almost equally between management


and workers.
Scientific Management

Frank and Lillian Gilbreth

 Frank and his wife Lillian, a psychologist, studied work to eliminate


wasteful hand-and body motions.

 The Gilbreths also experimented with the design and use of the proper
tools and equipment for optimizing work performance.
Scientific Management

How Do Today’s Managers Use Scientific Management?

 Use time and motion studies to increase productivity

 Hire the best qualified employees

 Design incentive systems based on output


General Administrative Theorists
Henri Fayol

 He first identified five functions that managers perform: planning,


organizing, commanding, coordinating, and controlling.

 Developed principles of management that applied to all organizational


situations.
Fayol’s 14 Principles of Management
1. Division of work 7. Remuneration
2. Authority 8. Centralization

3. Discipline 9. Scalar chain


4. Unity of command 10. Order

5. Unity of direction 11. Equity

6. Subordination of individual 12. Stability of tenure of personnel


interests to the general 13. Initiative
interest
14. Esprit de corps
Thank You

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Understanding Management’s Context:


Constraints and Challenges

IPE 4203

Mahjabin Moon
Lecturer
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology

Learning Objectives
1

 Actions of managers: omnipotent vs. symbolic views

 Constraints and Challenges from the external environment

 Organizational culture.

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Manager: Omnipotent or Symbolic 2

Omnipotent view

Managers are directly


responsible
for an organization’s success
or failure

Omnipotent View 3

 Good managers

- anticipate change

- exploit opportunities

- correct poor performance and

- lead their organizations

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Omnipotent View

CEO of Cott Corporation was fired

– because some of its largest customers were


threatening to leave and the company’s share
prices had declined sharply

Manager: Omnipotent or Symbolic 2

Symbolic view

An organization’s success
or failure is due to external
forces outside managers’
control

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Symbolic View 4

 Managers symbolize control and influence

 Managers have little control on various


external factors such as
- economy,
- customers,
- governmental policies
- competitors’ actions
- industry conditions and
- decisions made by previous managers.

Symbolic View
Example of Cisco

 1990:

- Success, Rapid growth


- Brilliant strategy, masterful management of acquisitions and superb
customer focus.

 After 10 years:

- Declined performance
- Flawed strategy, haphazard acquisition approach, and poor customer
service

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Constraints on Managerial Discretion

External Constraints Internal Constraints

Organizational Managerial Organizational


Environment Discretion Culture

Defining the External Environment

External Environment

Those factors and forces outside the


organization that affect the organization’s
performance.

Components of the External Environment

 Specific environment
 General environment

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Components of the External Environment

Specific environment

 have a direct and immediate impact on the


organization.

General environment

 broad economic,
 socio-cultural
 political/legal
 demographic
 technological
 global conditions

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The External Environment

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The External Environment

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The External Environment


Economic
- Interest rates, inflation, changes in disposable income, stock market
fluctuations, and business cycle stages.

Demographic

- Age, race, gender, education level, geographic location, income, and family
composition.

Political/legal
- Federal, state, and local laws, as well as global laws and laws of other
countries.
- Political conditions and stability.

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The External Environment

Sociocultural
- Values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of
behavior.

Technological
- Scientific or industrial innovations.

Global component
- Globalization and a world economy.

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How the Environment Affects Managers

Environmental Uncertainty

The extent to which managers have knowledge of and are able to predict
change their organization’s external environment is affected by:

 Complexity of the environment

 Degree of change in environmental components

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How the Environment Affects Managers

Complexity of the environment

 The number of components in an organization’s external environment.

Example: Hasbro Toy company, the second largest toy manufacturer (behind
Mattel) has simplified its environment by acquiring many of its competitors
such as- Tiger Electronics, Wizard of the Coast, Kenner Toys, Parker
Brothers and Tonka Toys.

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How the Environment Affects Managers

Degree of change in environmental components

 How dynamic or stable the external environment is.

Stable environment
- no new competitors
- few technological breakthroughs by current competitors

Dynamic environment
- Opposite

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Environmental Uncertainty Matrix

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Organizational Stakeholders

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The Organization’s Culture

Organizational Culture

- A system of shared meanings and common beliefs held by organizational


members that determines, in a large degree, how they act towards each
other.
- “The way we do things around here.”
Values, symbols, rituals, myths, and practices

Implications:
Culture is a perception.
Culture is shared.

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Dimensions of Organizational Culture

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Strong Versus Weak Cultures

Strong Cultures
- Cultures in which key values are deeply and widely held.
- Have a strong influence on organizational members.

Factors Influencing the Strength of Culture


Size of the organization
Age of the organization
Rate of employee turnover
Clarity of cultural values and beliefs

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Benefits of a Strong Culture

 Creates a stronger employee commitment to the organization.

 Aids in the recruitment and socialization of new employees.

 Fosters higher organizational performance by instilling and promoting


employee initiative.

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Strong Versus Weak Cultures

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How Employees Learn Culture


 Stories
Narratives of significant events or actions of people that convey the spirit of the
organization.
 Rituals
Repetitive sequences of activities that express and reinforce the values of the
organization.
 Material Symbols
Physical assets distinguishing the organization.
 Language
Jargon of terms, phrases, and word meanings specific to an organization.

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How Culture Affects Managers

Cultural Constraints on Managers


 Whatever managerial actions the organization recognizes as proper or
improper on its behalf
 Whatever organizational activities the organization values and encourages
 The overall strength or weakness of the organizational culture

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Managerial Decisions Affected by Culture

 Planning
 Organizing
 Leading
 Controlling

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Managerial Decisions Affected by Culture

Planning

 The degree of risk that plans should contain


 Whether plans should be developed by individuals or teams
 The degree of environmental scanning in which management will engage

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Managerial Decisions Affected by Culture

Organizing

 How much autonomy should be designed into employees’ jobs


 Whether tasks should be done by individuals or in teams
 The degree to which department managers interact with each other

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Managerial Decisions Affected by Culture

Leading

 The degree to which managers are concerned with increasing employee job
satisfaction
 What leadership styles are appropriate
 Whether all disagreements—even constructive ones—should be eliminated

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Managerial Decisions Affected by Culture

Controlling

 Whether to impose external controls or to allow employees to control their


own actions
 What criteria should be emphasized in employee performance evaluations
 What repercussions will occur from exceeding one’s budget

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Organization Culture Issues

 Creating an Innovative Culture


- Challenge and involvement
- Freedom
- Trust and openness
- Idea time
- Playfulness/humor
- Conflict resolution
- Risk-taking etc.

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Thank you

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Presented by
Mahjabin Moon
Lecturer, MPE, AUST
Management by Stephen P. Robbins & Mary Coulter (11th Ed)

Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

 Strategic management is what


managers do to develop the
organization’s strategies.
 The decisions and actions that
determine the long-run
performance of an organization.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Business Model is a strategic design for how a company intends


to profit from its strategies, work processes, and work activities.

Whether customers will

Focuses on
two things
value what the company
is providing

Whether the company


can make any money
doing that

Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

https://www.chiefmarketer.com/wal-mart-launches-new-marketing-slogan/ 4

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

 It results in higher organizational performance.


 It requires that managers examine and adapt to business environment
changes.
 It coordinates diverse organizational units, helping them focus on
organizational goals.

Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

The strategic management process contains six-steps –

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Page 226: EXHIBIT 9-1

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Step 1: Identifying the Organization’s Current Mission, Goals, and


Strategies

Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Components of a mission statement

Customers
Products or services
Markets
Concern for survival, growth, and
profitability
Philosophy
Concern for public image
Technology
Self-concept
Concern for employees
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Page 227: EXHIBIT 9-2

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Step 2: Doing an External Analysis

 In an external analysis, managers should examine the economic, demographic,


political/legal, sociocultural, technological, and global components to see the
trends and changes.

 Managers need to pinpoint opportunities that the


organization can exploit and threats that it must
counteract or buffer against.
 Opportunities are positive trends in the external
environment; threats are negative trends.

Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Step 3: Doing an Internal Analysis

 Internal analysis provides important information about an organization’s


specific resources and capabilities.
 After completing an internal analysis, managers should be able to identify
organizational strengths and weaknesses.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

A SWOT analysis is an incredibly simple, yet powerful tool to


help you develop your business strategy, whether you’re
building a startup or guiding an existing company.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Step 4: Formulating Strategies

Step 5: Implementing Strategies

Step 6: Evaluating Results

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

An organizational strategy that determines what businesses a


company is in or wants to be in, and what it wants to do with
those businesses.

 It’s based on the mission and goals of the organization and the roles that
each business unit of the organization will play.
 The other part of corporate strategy is when top managers decide what to do
with those businesses: grow them, keep them the same, or renew them.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

“To be the world’s premier consumer products company


focused on convenient foods and beverages.”

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Growth Strategy
A corporate strategy that’s used Stability Strategy
when an organization wants to A corporate strategy in
expand the number of markets which an organization
served or products offered, either continues to do what it is
through its current business(es) or currently doing.
through new business(es).

Renewal Strategy
A corporate strategy designed
to address declining
performance by examining of
organizational weaknesses.
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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Growth Strategy
 Concentration – Focusing on a primary line of business and increasing the
number of products offered or markets served.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Growth Strategy
 Vertical Integration –

Backward Vertical Integration: attempting to gain


control of inputs (become a self-supplier).

Forward Vertical Integration: attempting to gain


control of output through control of the distribution
channel or provide customer service activities
(eliminating intermediaries).

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Growth Strategy
 Horizontal Integration –
Combining operations with another competitor in the same industry to
increase competitive strengths and lower competition among industry
rivals.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Growth Strategy
 Diversification –

Related Diversification: Expanding by combining


with firms in different, but related industries that
are “strategic fits.

Unrelated Diversification: Growing by combining


with firms in unrelated industries where higher
financial returns are possible.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Stability Strategy
 Offering the same products to the same clients, not introducing new
products, maintaining market share, and more.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Renewal Strategy
 Developing strategies to counter organization weaknesses that are leading
to performance declines.
Retrenchment: A short-run strategy used for minor performance problems.
It helps an organization stabilize operations, revitalize organizational
resources and capabilities, and prepare to compete once again.
Turnaround: Addressing critical long-term performance problems through
the use of strong cost elimination measures and large-scale organizational
restructuring solutions..

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Renewal Strategy

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

 When an organization’s corporate strategy encompasses a number of


businesses, managers can manage this collection, or portfolio, of businesses
using a tool called a corporate portfolio matrix.

 This matrix provides a framework for understanding diverse businesses and

helps managers establish priorities for allocating resources.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

 Developed by the Boston Consulting Group (BCG).


 Considers market share and industry growth rate
 Classifies firms as:

 Cash cows: low growth rate, high market share


 Stars: high growth rate, high market share
 Question marks: high growth rate, low market share
 Dogs: low growth rate, low market share

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

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Page 231: EXHIBIT 9-4

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Stars
 Invest large amounts of cash and should also generate large amounts of cash.

 Eventually develop into cash cows as their markets mature and sales growth
slows.

Cash Cows
 Profitand cash generation should be high, because of the low growth,
investments should be low.
 The cash generated by cash cow is reinvested in stars & question mark.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Dogs
 Avoid & minimize the number of dogs in a company.

 Should be sold off or liquidated.

Question marks
 Low relative market share & high growth industry business. So business require
large amount of cash to maintain or gain market share.
 Question mark therefore may become stars if enough investment is made or they
may become dogs if ignored.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

https://www.superheuristics.com/bcg-matrix-of-nestle-detailed/
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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

 A strategy focused on how an organization will compete in each of its


SBUs (strategic business units).
 When an organization is in several different businesses, those single
businesses that are independent and that have their own competitive
strategies are referred to as Strategic Business Units (SBUs).

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Strategic Business Units (SBUs)

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

What sets an organization apart; its distinctive edge.

Competitive Advantage can come

 either from the organization’s core


competencies by doing something that
others cannot do or doing it better than
others can do it.
 or from the company’s resources
because the organization has something
that its competitors do not have.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

1. Quality as a Competitive Advantage

 Differentiates the firm from its competitors.

 Can create a sustainable competitive advantage.

 Represents the company’s focus on quality management to achieve


continuous improvement and meet customers’ demand for quality.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

1. Quality as a Competitive Advantage

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

2. Sustaining Competitive Advantage

 Continuing over time to effectively exploit resources and develop core


competencies that enable an organization to keep its edge over its industry
competitors.
 Sustainable competitive advantages are company assets, attributes, or abilities
that are difficult to duplicate or exceed; and provide a superior or favorable
long term position over competitors.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

Cost Leadership Differentiation Focus


Strategy Strategy Strategy

Attempting to
Seeking to Using a cost or
create a unique
attain the differentiation
and distinctive
lowest total advantage to
product or
overall costs exploit a
service for
relative to particular market
which
other industry segment rather a
customers will
competitors. larger market.
pay a premium.

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

 The strategies used by an organization’s various functional


departments to support the competitive strategy.

Marketing Production

Purchase/
Human
procurement
Resources
department

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Ahsanullah University of Science & Technology IPE 4203: Industrial and Business Management

40

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Organizational Structure and Design
IPE 4203

Presented By
Mahjabin Moon
Lecturer
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology

Chapter 10, Stephen P. Robbins, Mary Coulter, and Nancy


Langton, Management, Eleventh Edition.
Copyright © 2005 Pearson Education Canada Inc. 1
◦ Organizational Structure
◦ Work specialization
◦ Departmentalization
◦ Chain of Command
◦ Span of Control
◦ Centralize vs. Decentralize
◦ Formalization
◦ Organizational Design

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Organizational Structure
The formal arrangement of jobs within an organization.

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 Divides work to be done into specific jobs and departments.

 Assigns tasks and responsibilities associated with individual jobs.

 Coordinates diverse organizational tasks.

 Establishes relationships among individuals, groups, and departments.

 Establishes formal lines of authority.

 Allocates and deploys organizational resources.

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A process that involves decisions about six key elements:

1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control
5. Centralization and decentralization
6. Formalization

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Work Specialization
The degree to which work activities
are divided into separate job tasks.

Individual employees “specialize” in


doing part of an activity rather than
the entire activity to increase work
output.

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Work Specialization
Overspecialization can result in
human diseconomies from boredom,
fatigue, stress, poor quality, increased
absenteeism, and higher turnover.

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Departmentalization
 The basis of grouping common work activities together so the
work gets done in a coordinated and integrated way.
 Five common forms of departmentalization-
1. Functional

2. Geographical
3. Product

4. Process

5. Customer

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Functional
 Grouping jobs by functions performed.

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Functional
• Advantages
 Efficiencies from putting together similar specialties and people
with common skills, knowledge and orientations.
 Coordination within functional area.
 In depth specializations.

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Functional
• Disadvantages
 Poor communication across functional areas
 Limited views of organizational goals

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Geographical
 Grouping jobs on the basis of territory or geography.

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Geographical
• Advantages
 More effective and efficient handling of specific regional issues
that arise.
 Serve needs of unique geographic market better.

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Geographical
• Disadvantages
 Duplication of functions.
 Can feel isolated from other organizational areas.

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Product
 Grouping jobs by product line.

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Product
• Advantages
 Allow specialization in particular product and services.
 Managers can become experts in their industry.
 Closer to customers.

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Product
• Disadvantages
 Duplication of functions.
 Limited views of organizational goals.

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Process
 Grouping jobs on the basis of product or customer flow.

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Process
• Advantages
 More efficient flow of work activities.

• Disadvantages
 Can only be used with certain types of products.

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Customer
 Grouping jobs by type of customer and needs.

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Customer
• Advantages
 Customers’ needs and problems can be met by specialists.

• Disadvantages
 Duplication of functions.
 Limited views of organizational goals

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Chain of Command
The continuous line of authority
that extends from upper levels of an
organization to the lowest levels of
the organization and clarifies who
reports to whom.

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Authority
◦ The rights to tell people what to do and to expect them to do
it.
◦ Acceptance theory of authority

Acceptance theory of authority


 The view that authority comes from the willingness of
subordinates to accept it.

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Acceptance theory of authority
Barnard contended that subordinates will accept orders only if the
following conditions are satisfied:
1. They understand the order.
2. They feel the order is consistent with the organization’s purpose.
3. The order does not conflict with their personal beliefs.
4. They are able to perform the task as directed.

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Line Authority
 Authority that entitles a manager to direct the work of an
employee.
 The president, the production manager, and the sales manager
are examples of line managers.
Staff Authority
 Positions with some authority that have been created to
support, assist, and advise those holding line authority.

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Responsibility
◦ The obligation or expectation to perform.
Unity of Command
◦ The concept that a person should have one boss and should
report only to that person.

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Span of Control
 The number of employees who can be effectively and efficiently
supervised by a manager.
 It determines the number of levels and managers in an
organization

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 Width of span is affected by:
 Skills and abilities of the manager and the employees
 Characteristics of the work being done
 Similarity of tasks
 Complexity of tasks
 Standardization of tasks
 Strength of the organization’s culture etc.

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Centralization
Decision making is concentrated at a single point in the
organization.
Organizations where top managers make all the decisions
and lower-level employees simply carry out those orders.

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Decentralization
Lower-level employees provide input or actually make
decisions.
Employee Empowerment.

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Formalization
The degree to which jobs within the organization are
standardized and the extent to which employee behavior is
guided by rules and procedures.

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Structural decisions are influenced by:
Strategy and structure
Size and structure
Technology and structure
Environmental uncertainty and structure

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Traditional Designs
Simple Structure
- Low departmentalization, wide spans of control, centralized
authority, little formalization
Functional Structure
- Operations, finance, human resources, and product research
and development
Divisional Structure
- Composed of separate business units or divisions

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Contemporary Organizational Designs
Team Structures
Matrix & Project Structures
Boundary less structure
- Virtual
- Network
Learning structure

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Thank You

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