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.