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Summary of Management for BA1 Business Economics at the VUB.
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MANAGEMENT BUSINESS ECONOMICS IChapter 1: Managing and Performing. (each chapter starts with an action) (book p.16-50)
Learning objectives: (important, don’t skip it)
1. Summarize the major challenges of managing in the new competitive landscape.
2. Describe the sources of competitive advantage for a company.
3. Explain how the functions of management are evolving in today’s business environment.
4. Compare how the nature of management varies at different organizational levels.
5. Define the skills you need to be an effective manager.
6. Understand the principle that will help you manage your career.
What is management?
- Management:
= The Process of working with people and resources to accomplish organizational
goals.
o Good managers do those things both efficiently* and effectively*.
* = Achieve organizational goals.
* = Achieve goals with minimal waste of resources.
à Make the best possible use of money, time, materials and people.
- Organizing, learning, controlling, … The way a company does so in connection with decisions
making and analyzing internal and external environment.
- Management is a challenge requiring knowledge and skills to adapt to new circumstances.
- The context of business and the doing of business are changing, but there are still plenty of
timeless principles to make great managers and great companies… great.
- In the business world today, great executives not only adapt to changing conditions but also
apply their principles and methods:
o Fanatically
o Rigorously
o Consistently
o With discipline
Management in Action:
- Facebook’s Mark Zuckerberg: One well-known manager.
o Challenges? Facebook has a lot of challenges (a company is always facing challenges)
o Sources of competitive advantage?
o Skills and functions?
Managing in a competitive world:
Learning objective 1
- Four ongoing challenges that characterize the business landscape:
1. Globalization:
= Trade across borders, being connected across borders
• Many well-known enterprises are global, with offices and production facilities
all over the world.
• A company’s talent can come from anywhere à change of the workforce à
role of expats.
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• Effect on both small and large companies (Belgium has a lot of small and
medium sizes companies), (small businesses can be also known on
international scale while having challenges).
• Today’s enterprises are global, with offices and production facilities in
countries all over the world. Corporations operate worldwide, transcending
national borders. Companies that want to grow often need to tap
international markets.
• Today’s enterprises are global, with offices and production facilities in countries all over the
world.
o Corporations operate worldwide
o Company wants to grow? à Tap international markets.
• Change from local to global = irreversible
o 5 largest firms:
- Walmart (US)
- State Grid (China)
- China National Petroleum (China)
- Sinopec Group (China)
- Royal Dutch Shell (British-Dutch)
• Globalization also means:
o That a company’s talent and competition can come from anywhere.
• Globalization affects small companies as well as large:
o A lot of small companies export their goods.
o Many domestic firms assemble their products in other countries.
o Companies are under pressure to improve their products in the face of competition.
- Firms need to ask themselves à “How can we be the best in the world?”.
• Globalization has changed the face of the workforce. Managers in this competitive
environment needs to attract and effectively manage a talent pool from all over the globe.
2. Technological change
• Web 2.0/social networking start-ups.
• Web 2.0 “read-write-execute” à Internet of Things (IoT)
• Artificial intelligence
• Mobile Applications
• Big Data Analytics
• Cloud Computing
à it is evolving all the time (innovation takes into account while competing)
• The Internet of Things, artificial intelligence, mobile applications, Big Data
analytics, and cloud computing are only some of the ways that technology is
vitally important in the business world. Technology both complicates things
and creates new opportunities. The challenges come from the rapid rate at
which communication, transportation, information, and other technologies
change.
• The Internet:
o It provides a:
- Marketplace
- Means for manufacturing goods and services
- Distribution channel
- Information services.
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o The Internet:
- Drives down costs and speeds up globalization.
- Improves efficiency of decision making.
- Facilitates information flow and learning process.
• Treats: competitors may capitalize sooner on new development.
• Information is good for strategy, information triggers competition (all those
company know very well that the customer will check the price by similar
companies à keeps prices low the internet facilitates the information!
• Company does not only need to check the customers but also the suppliers
(who are balancing interest all the time).
• Technology both complicates things and creates new opportunities:
o Challenges:
- Rapidity of communication, transportation, information and other
technologies change.
- Ex.: After a couple of decades of widespread desktop use, customers
switched to laptop models (requires some accessories)
Then mini-laptops à tablets à smartphones à smartwatches etc.
• Rise of Internet and its effects:
o Internet:
- Positive:
o Digital marketplace, means for manufacturing goods and
services, distribution channel, information service, arena for
social activism etc.
o Drives down costs and speeds up globalization, improves
efficiency of decision making, managers can watch and learn
from what other companies from around the world are doing (in
real time)
- Negative:
o Creates treats, not only from hackers but from competitors as
they capitalize sooner on new developments than you do.
3. Knowledge management:
= Practices aimed at discovering and harnessing an organization’s intellectual
resources.
• Knowledge workers= Workers whose primary contributions are ideas and
problem- solving expertise, handling/using information.
• Knowledge management = Finding, unlocking, sharing, and altogether
capitalizing on the most precious (i.e. intellectual) resources of an
organization, to convert ideas into innovation.
à Practices aimed at discovering and harnessing an organization’s
intellectual resources.
o People’s expertise
o Skills
o Wisdom
o Relationships
• Knowledge management is the set of practices aimed at discovering and
harnessing an organization’s intellectual resources – fully using the intellects
of the organization’s people. Knowledge management is about finding,
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unlocking, sharing, and capitalizing on the most precious resources of an
organization: people’s expertise, skills, wisdom, and relationships.
• Companies and managers need god new ideas.
• Advanced companies:
o Become efficient at producing physical goods.
o Most workers have been freed up to provide services or “abstract goods” à
software, entertainment, data, and advertising
o Knowledge workers = workers whose primary contributions are ideas and problem-
solving expertise.
• Success of business depends on the knowledge used.
4. Collaboration across Boundaries
• Effective collaboration requires productive communications among different
department, divisions, or other subunits of the organization.
• Companies must motivate and capitalize on the ideas of people outside the
organization e.g. its consultants, advertising agencies, and suppliers.
• T-Shaped manager:
o Has a horizontal (sharing information and expertise) and at the same
time a vertical information (ex. Toyota bringing together design
engineers and manufacturing employees).
• Companies should never be complacent (feeling so satisfied with your own
abilities or situation that you feel you do not need to try any harder).
• Across the boundaries of the organization:
o Companies must realize that the need to serve the customer drives
everything else.
o Ex.: customer comments on Amazon, TripAdvisor…
• One of the most important processes of knowledge management is to ensure
that people in different part of the organization collaborate effectively with
one another. This requires productive communications among different
department, divisions, or other subunits of the organization.
• Ensure that people in different parts of the organization collaborate effectively with one
another.
o Productive communication
o Ex.: “T-shaped” managers break-out of the traditional corporate hierarchy to share
knowledge freely across the organization (horizontal part of the “T”) while remaining
committed to the bottom-line performance of their individual business units (vertical
part).
- T-shaped concept = way for its employees to view clients' problems from
both broad and deep perspectives.
• Companies today must motivate and capitalize on the ideas of people outside the organization.
o Customers can be collaborators by actively continuously listening and responding
(customers feedback)
Managing for competitive advantage:
Learning objective 2
- Staying ahead of the competition by doing better than your competitors at doing valuable
things = delivering performance.
o The best managers and companies deliver on multiple performance dimensions.
o Success drivers of performance:
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