Revision

It is my last blog of this term. I would like to discuss what management theories we have learnt in this term. Let me introduce those theories first. We have learnt some methods for anglicizing the organization; the globalization; some types of organization structures. In this essay, I would mainly focus on the analysis of organization and globalization.

First of all, one of the analysis method, which is Porter five forces, there is a direction for us to analyze the micro environment of the organization. It means there are 5 forces would affect an organization- Threat of Substitute Products, threat of New Entrants, Bargaining Power of Suppliers and Bargaining Power of Buyers (Customers). The other method for analysis external environment of organization, which is PESTLE, it provides a quick and visual representation of the external pressures facing an organization and their possible constraints on strategy. PESTLE analysis includes 6 parts, which are political, economic, social, technical, legal and environmental. SWOT analysis also is very useful for the managers to find suitable plans between internal capabilities and external changes. It is a method for the management department to know the company’s saturation and set up the strategy. That includes Strengths of the organization, Weaknesses of the organization, Opportunities in the external environment and Threats in the external environment. Moreover, CSR is a good method to analyze a company which is a responsible organization or not.

 On the other hand, let me talk about the globalization. How to make an organization become global business? There are lots of methods. I would like to separate two parts to discuss- internal strategies and external strategies. Firstly, let me talk about what things the companies can do by their own. Exporting means selling goods or products to the other countries without establishing operation overseas. The company may promote their products through the internet, which called E- commerce. Also, the companies can do investment directly. It means setting up operations in other countries. This is a fast way but expensive. If the company wants to use this method, it must have a lot of resources. Let me move on to external strategies. Joint venture, which means two or more firms sharing the investment costs, risks and returns by creating a new business in another country, is a lower cost method for investment. Strategic alliance means two or more companies have cooperation with benefit on a project, such as human resource and financial resource. They can save the development cost in different countries because they share the resource. Franchising, which is fast way to make the companies, trade under its name, using its products, image, for example McDonald’s. Merger means two or more business amalgamate as a business. Acquisitions are similar advantages as a merger.

What may stop globalization? That’s tax, tariff, bans, quotas, subsidies, etc. Those causes almost are because of the local government. The government wants to protect the local companies. Avoiding increasing the competitive for the local companies.

Globalisation

The definition of globalisation is the worldwide movement toward economic, financial, trade, and communications integration. Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately. Globalisation concerns are trade in goods and services, investment, labour force movement, products, production, technology, research and development, exchange of ideas and knowledge and intellectual property.

There are lots of advantages of globalization. It can lead to improvements in efficiency and gains in economic welfare. Trade enhances the division of labour as countries specialize in areas of comparative advantage. Deeper relationships between markets across borders enable and encourage producers and consumers to reap the benefits of economies of scale. Moreover, it gains in efficiency should bring about an improvement in economic.

The main disadvantage of globalization is losing culture. It is because the majority cultures of the other countries would replace the local cultures. For example, the culture of US is the most popular culture in the world. The other con is a major long-term threat to globalization is the impact that rapid growth and development is having on the environment. Threats of irreversible damage to ecosystems, land degradation, deforestation, loss of bio-diversity and the fears of a permanent shortage of water are afflicting millions of the most vulnerable people are vital issues. Unemployment is also a very bad disadvantage. Investment and jobs in advanced economies will move to developing countries. This can lead to higher levels of structural unemployment and put huge pressure on government budgets.

Then, if companies want to go global, there are lots of methods. Exporting which is selling good to customers in another country. No need to establish operations overseas. Direct investment which is establishing operations in another country, ie, establishing a distribution network, production facility. This is a very expensive method.

International Business

If an organization wants to go international, they may have a lot of methods, such as outsource, exporting, importing, licensing, etc. International trade is a kind of international business. In this blog, I would mainly focus on international trade and globalization.

Firstly, let me talk about the ways to conduct business internationally. Outsource is the practice of contracting out defined functions or activities to companies in other countries that can do the work more cost- effectively, such as manufacturing. Companies in some developing countries now outsource some work to emerging economies where staffs are cheaper or more plentiful.

As for the exporting and importing, it means dealing with overseas customers and suppliers is by transporting physical products or delivering services across national boundaries.

Licensing is when one firm gives another firm the right to use assets such as patents or technology in exchange for a fee. When a business grants the right to a firm in another country to produce and sell its products for a specified period.

Franchising, which is the practice of extending a business by giving other organisations, in return for a fee, the right to use your brand name, technology or product specifications, is similar as licensing.

On the other hand, let me focus on the context of international business. When people managing international operations pay attention to the international aspects of the general business environment, they also can analyze through the PESTEL. Political risk is the risk of losing assets, earning power or managerial control due to political events or the actions of host governments.

Economic states that by specializing in the production of those goods which they can produce more cheaply than other countries, and trade them with others, nations will increase their economic well- being.

Sociology- cultural context is distinct from human nature and from an individual’s personality. It is a collective phenomenon, shared with people in the common social environment in which it was learned.

As for the technological context, some physical facilities support economic activities- ports, airports, surface transport and, increasingly, telecommunications facilities. That is also important for companies operating abroad.

Lastly, environmental context is a further aspect for business. One important aspect is the resources available in an economy, such as oil, coal, agricultural land, etc. These considerations affect the kind of businesses that people create in different countries, and on the pattern of world trade.

Organisational Strategy & Business Ethics

Organisational Strategy

There are lots of definitions of strategy. Above all, the general meaning is a long term plan and goal of organizations.

PESTLE is an analysis method for organisations through external environmental factors. It is because some organizations are easily changed by these factors. PESTLE analysis provides 6 main elements of macro- environment, which are political, economic, social, technical, legal and environmental. Let me discuss more specifically about each element.

First of all, I would talk about political factor, which is local of different country; include the changing of political at local, regional, national, the international level of the country, changing in legislation, kinds of laws, government stability……

Secondly, economic factor is an important element of business. It is analyzing the economic environment of organizations. It concerns interest rates, inflation rates, exchange rates, unemployment, fixed and variable business costs, energy costs, state investment and effects of changes in labour and product market.

Thirdly, social factor means the local culture, values, lifestyle, the attitudes of working and leisure, education, health, distribution of income and demographics. There would affect the market of the organization and incomes.

Moreover, technological would seriously affect some kinds of organizations, such as design, produce and distribute goods or services organizations. New production methods may run of time quickly. Communication methods may become more perfect and convenient with higher IT developments.

Otherwise, legal factor is mainly talk about laws. The changing of law, government policy employment and safety law and environmental laws, which limited and safeguard the development of organizations.

Lastly, environmental factor is a limitation of the organization acts. It is because the organizations must care about the green issues and protects the environment.

SWOT analysis is a method to understand the situation of the organization. There are 4 parts which is Strengths, weaknesses, opportunities and threats. The understanding of the organization is very important for the owners and shareholders. It is a common management analysis method.

Business Ethics

The definition of business ethics are moral principles that guide the way a business behaves. The same principles that determine an individual’s actions also apply to business. 

Management Theory & placing organisation in Context

Entry 3  Week 4-5

Management theory

Management theory has been created many years ago. It is a guideline for business action and help people to understand the process of management. Management theory has a lot of important value for today.

There are four main schools which are classical, human relations, systems and contingency. Systems is integrated by classical and human relations, which are mention about purpose, formal structure, hierarchy of management, technical requirements, and common principles of organization; social factors at work, groups, leadership, the informal organization and behavior of people.

Let me talk about the scientific Management. It is designed by F.W.Taylor. That is using scientific methods to analyze how to make the organization of work and structure for maximum efficiency. It would make the organization becoming simple, such as reducing some not essential jobs. Moreover it would decide a suitable employee to do a specific works and analyze almost workers entirely by pay. This idea still exists in some fast food outlets.

Organisational Context (environment)

Now, I know how to analyze the micro environment of organization. Intensity of rivalry within the industry, threat of substitute products, bargaining power of suppliers, bargaining power of buyers(Customers) and threat of new entrants, which are Porters 5 forces. Threat of substitute Products and threat of new Entrants, which are the competitive as similar type of other organizations. For example, Tesco cannot control the buyers must buy their goods. Buys are freedom to any goods from any supermarkets, such as Asda or Sainsbury. Therefore, that is a good method to analyse that organization’s micro environment. Bargaining Power of Buyers and bargaining power of suppliers, which mean the organization is in the passive position. It cannot fully control the selling price and the cost of raw material. It is because some products may not just unique of the companies. If the prices are set higher than the market, buyers would buy form other companies. That means the selling price is not fully controlled by the companies.

However, there is no answer of which forces are the most important for an organization. It is because depends on different industries. There is different value for different industries. For instance, KFC, a fast food shop, is mainly affected by substitute products and new entrants. It is because there are lots of fast food shops, which price maybe much lower. The attractive of the market may be higher than KFC. Also, some new entrants of fast food industries would attract the customs of freshness. Therefore, we can analyse KFC as threat of Substitute Products and threat of New Entrants.

Organisational design and structure

Week 3

Organisational design and structure

Every organization must have structures which help the organization run fluent. A structure means laying upon laying. At the top of the structure, there are a few chiefs and managers which lead more employees. A structure is very important for an organization. As for the division of work, when we need to divide the work in an organization, how to design different type of work to suitable employees? We should divide by function, product or service, location and customer.

For example, a global organization wants to build up their brand in the other countries. They can choose or hire some local employees to design the marketing of the company’s transnational business. It is because they understand the local culture. They can set up a more suitable business plan. Starbucks is a good example. Some stores of Starbucks’s style like a Chinese restaurant. This idea is designed by a group of Starbucks Chinese staffs.

 

Moreover, almost of an organization’s structures would be centralization or decentralization. There are different management skills, which suit for different situation. Centralization is easier management control and possibly a reduction in overhead costs. Decentralization can enable better decision making because the people closest to the customer and the market can make the decisions and they know their customers needs.

Lastly, Span of control and chain of command which are two main types of an organization structure. Those two structures also have some benefit and drawback. Span of control is suitable for an organization which aim having a good relationship and communication between subordinates and managers. Chain of command is for an organization which aims to run fast and smoothly. 

An organisation

Nowadays, there are lots of different type organizations everywhere, such as sole trader, partnership, charity and public limited company. It is a trend which is more efficiency to do almost businesses in this community of the World. Every organization has some common features. Let’s talk about these features.

Firstly, all organizations are more than a man. It’s because an organization means some of people work as a team. These each teammate is having different strength. Team is a powerful. Two heads are better than one head. When a team faces a problem or discuss a project, they can give a lot of ideas which are all rounded and suitable. That’s why so many organizations appear nowadays.

Secondly, they are all fighting for the same goals in an organization. Every organizations have been created because of they have the same goals. For example, the aims of a charity are helping people. They run the organization to let more people can be helped.

Moreover, an organization has structure and management. A structure can let the organizing work be developed and people’s efforts are directed to achieve the objectives.

As management, which is controlling the limited resources of the organization to be the maximum efficiency, can direct, control and co-ordinate. It is because management is going to understand each part of the organization and distribute suitable works for them. More specifically, the management department is basic on the abilities and the personality of every single employee to distribute works and positions for them. Management also has some basic functions. Deciding what needs to happen in the future and generating plans for action. Management also need job analysis, recruitment and hiring for appropriate jobs. Determining what must be done in a situation and getting people to do it.