Chapter 1 Flashcards
What did Peter Drucker suggest in The Practice of Management, 1968?
Economists do not take the role of management seriously and how management calculations and business analysis can improve decision making
What is “perfect competition”?
All factor inputs are already combined in an economically efficient way to meet required market price and all the owner needs to do is adjust output to price.
According to Drucker what does a good economist need to do?
Management agency in firm should not be passive and adaptive but rather active and purposive. And he should take responsibility of planning, initiating and carrying through changes in economic environments.
What had happened in the 1960s and 1970s to the economic theory?
Recognised that a separation of ownership and control had occurred.
What did economists Baumol & Marris say about management?
That objectives of management might interfere with single overriding objective of profit maximisation:
Basically, they have accepted the role of management as shaping overall goals but believe, that the detail of business analysis and calculations that shape the combination of factor resources in relation to output, are seldom connected.
An organisation needs to react to 4 external and internal factors..what are they?
Social
Political
Economical
Institutional
Management’s task is to…….? (Drucker, 1968)
make what is desirable first desirable then actual
Why is good management important?
To fight external competitive market forces
What is SWOT? (see diagram in notes)
It is a framework to:
- Gauge competitive environment
- Inform and direct > i) Strategic Management
ii) Choice of generic strategy
5 Advantages of SWOT? (Porter 1979)
- Helps make a strategic agenda of action
- Highlight strengths and weaknesses of firm
- Roughly says the position of firm in industry
- Show areas where strategic changes may give more profit
- Shows areas where industry would hold large opportunities & threats
According to Porter what is Business Analysis?
Process of collecting info for informing management action.
What is the 5 force model?
Where management action is systemised
What are the 5 forces (see digram in notes)?
Existing rivalry amongst INDUSTRY COMPETITORS Bargaining strength of SUPPLIERS Bargaining power of BUYERS Threat of NEW ENTRANTS Threat of EXISTING SUBSTITUTES
Once assessment with 5 forces is done…?
Assessment of strengths and weaknesses of competitors and own businesses emerge.
What is successful management?
Application of management knowledge to:
- Improve internal resources
- Strategically react to external rival forces
