Lecture 1: Project and Asset Management Flashcards
What are the 2 types of good managers?
- Ones that take interest in your development, have an open door, delegate and interact with staff
- Ones that leave you alone
Why is it important to learn about management?
- The basic requirements and processes of management are more or less constant in every organisation
- Most managers have a lot to gain from studying the principles of management and using them as a basis for personal practice.
What is management?
Getting things done in organisations through other people.
This includes organisations, work related to the creation of goods and services, and other people.
What are organisations?
- Formal entities in which a complex interaction of people, materials, and money is used for the creation and distribution of goods and services.
- There is a common set of objectives.
- There is a governing body and an organisational structure.
What are the goals of management?
- Maximising shareholder value
- Profitability
- Other goals coming out of objectives
- Employee welfare
- Social responsibility
- Personal goals (agent problem)
What are the management processes?
- Planning
- Organising
- Leading
- Controlling
What does planning include?
Determining goals and how they are to be achieved.
What does organising include?
Dividing work into a set of individual tasks related by a structure and assigning staff.
What does leading include?
Influencing staff to perform their tasks efficiently.
What does controlling include?
Gathering information about what has been done, and taking action to correct deviations from the plan.
What are important skills of a manager?
- Technical skills
- Human skills
- Conceptual skills
What are the characteristics of managerial work?
- Decision making
- Working with people
- Carry responsibility
- Getting around the organisation
- Fragmented and interrupted
- Multi focused
What is the history of management thought?
- Classical Management Theory
- Socio-political Approaches
- Cultural Approaches
What is Classical Management Theory?
- Bureaucratic management
- Scientific management
What are Socio-political approaches to management thought?
- Human relations movement
- Behavioural science
- Quantitative approach
What are cultural approaches to management thought?
- Group thinking
What is bureaucracy?
The organisational structure in place to control activities. Has rationality as its basis.
What are the cons of bureaucratic management?
- It requires a high degree of forward planning
- Some cases are unique and fall outside the rules
- Impersonal, no compassion
- No control over jobs, which may lead to less job satisfaction
- Rigid and often fails to cope with rapidly changing situations
What are the pros of bureaucratic management?
- Formal rules ensures honesty
- For standard work, it enables quick throughput
- No whims
What are some examples of bureaucratic management?
- Governments
- Armed Forces
- Large corporations
- Hospitals
- Courts
- Universities
What is scientific management?
The analysis of workflow processes to improve labour productivity.
What are characteristics of bureaucracy?
- formal rules and procedures
- division of responsibility (work broken down into tasks)
- hierarchy of authority
- impersonal (rules are applied uniformly)
- career system (advance through the hierarchy in organisational careers)
What are the characteristics of scientific management?
- ) It uses the scientific method to study work and determine the most efficient way to perform specific tasks.
- ) It matches workers to their jobs based on capability and motivation, and train them to work at maximum efficiency.
- ) It monitors worker performance, and provides instructions and supervision to ensure that they’re using the most efficient ways of working
- ) It allocates the work between managers and workers so that the managers spend their time planning and training, allowing the workers to perform their tasks efficiently.
What are the cons of scientific management?
- Relatively workers are less well off
- Specialised tasks lead to repetitive work
- Not applicable to complex jobs
- No creative influence by workers leads to lower job satisfaction and reduction in the company’s reservoir of ideas.
- Disagreement over the distribution of productivity may trigger resentment or counter-productive conflict
What are the pros of scientific management?
- Higher wages (at first)
- Production increase
- Lower costs in production leads to lower prices for consumers
- Use of unskilled workers
What are the characteristics of human relations movement (HRM)?
- Work is social experience, people work to satisfy social needs
- Organisations should be natural groups, in which social aspects take precedence over organisational structures
- Considerate supervision leads to job satisfaction which in turns leads to increased productivity
What are the cons of HRM?
- Managers need to be socially as well as technically skilled
- Relation between considerate leadership and production is doubtful
- No leadership
- Based on the idea of a positive human nature
What are the pros of HRM?
- Job satisfaction
- Possibility to be creative
- Control over job
What are some examples of HRM?
- Art workshops
- Marketing company
- Starbucks coffee
Explain how Starbucks Coffee uses HRM.
- Uses an informal and social working environment in which employees can enjoy themselves and be enthusiastic. Every employee is treated equally and called ‘partner’ to make them feel more familiar and closer to their work place.
- Every employee is expected to participate in developing plans and achieving their goals.
- Tools and courses are in place to support and train employees towards their future career development.
What is the goal of behavioural science?
To find a scientific basis for human behaviour and develop behavioural techniques
- Action
- Reward
What is the goal of quantitative approaches?
To enable better managerial decision making by providing quantitative information through tools such as mathematics, statistics, and information aids.
E.g. management accounting, information systems, quantity surveying, etc.
What are the characteristics of cultural approaches (CA) to management?
- Organisational philosophies are as important as formal and informal rules and procedures.
- CA use the fact that results are made by teams instead of individuals and that the team can have a ‘moral’ system that leads to common behavioural code of conduct.
What are the cons of CA?
- Individuals can ‘forget’ their own values
- Requires able managers to start group feeling
- Requires able managers to lead groups
What are the pros of CA?
- Very strong motivation is achievable
- People generally want to belong to a group
What are some examples of CA to management?
- Armed forces subgroups (SAS etc.)
- Sports teams
- Audit teams
- Project teams
Conclusion
All businesses will use a mix of mentioned management philosophies.
Some will turn towards a particular thought but most have rules (bureaucratic), strive for efficiency (scientific), use HRM to motivate their employees and create a ‘we’ feeling (cultural) to set them apart from competitors.
True or False.
Larger companies have less rules than smaller ones.
False
True or False
Higher skilled jobs rely more on personal motivation and creativity of the worker.
True
True or False
In highly competitive industries, companies can use cultural approaches to set them apart.
True
Explain the principle of work specialisation.
Management should organise work so that each worker specialises in the narrowest possible task, thereby increasing his or her expertise and speed of work, and reducing the amount of time and effort spent in training.
This is a key concept of scientific management.
Explain why workers sometimes operated far below their optimum levels of productivity prior to scientific management in Woolsworths New Zealand.
- Hourly paid workers gained no personal benefit from working harder
- Piece- rates workers (i.e. according to how much they produced) worried that by working too hard they would work themselves out of a job.
What are the 5 forces in Porter’s Five Forces Model?
The state of competition in an industry depends on:
1-threat of new potential entrants
2-bargaining power of suppliers
3-bargaining power of buyers
4-threat of substitute products or services
leads to…
5- Industry competitors and rivalry among existing firms
The weaker the forces collectively, the greater the opportunity for superior performance.
Strategy is…
a plan of action or policy in business or politics etc.
What are Sun Tzy’s 5 essentials for victory:
- Know when to fight and when not to fight
- Know how to handle both superior and inferior forces
- Team is animated by the same spirit throughout all its ranks
- Prepared himself, waits to take enemy unprepared
- Has military capacity and is not interfered with by the sovereign.
Carl con Clausewitz take on strategy
Waging war with all strength leads to difficulties, and lending ears to all these difficulties results in weakness and inactivity.
We can triumph over such obstacles only with very great exertion, and to accomplish this, the leader must show a severity bordering on cruelty.
Only when he knows that everything possible is always being done, can he be sure that these small difficulties will not have a great influence on his operations.
What is the purpose of strategy?
- provide direction
- provide coherence
- basis for assessment and risk analysis
- basis to make decisions
Levels of Organisational Strategy:
Corporate Strategy: Corporate Head Office
Business Strategy: Division A/ Division B
Functional Strategy:
- R&D
- Human Resources
- Production
- Marketing/ Sales
True or false.
The choice of business strategy is estimated to be 5 times as important as the choice of industry.
True
Different strategies for all price and quality ranges..
E.g. high price & high quality = premium
low price & high quality = super bargain
high price & low quality = hit and run
low price & low quality = cheap goods
What is the Hawthorne Effect?
The effect of people behaving and performing differently because they know they have been singled out for special attention.
The key factor underlying the success was what might be termed ‘morale’.
What did Elton Mayo, a key management pioneer in the human relations movement conclude about work satisfaction and performance?
Work satisfaction and performance depended more on informal social patterns of the work group than on the factors of formal organisational structure, job design, and financial incentives in which classical theorists would have been more interested.
Explain the ‘Bank-Wiring Room’ experiment.
The company sought to impose rational ‘administraive’ methods of work. However the administrative system malfunctioned because it triggered the development of a social political system which was more powereful than it in determining behaviour.
What is an appropriate response for conflict between adminstrative and socio-political systems?
To try to modify both systems so that they are in harmony with each other; or to develop an overarching cultural system as a common value base against which both systems can be evaluated and modified.
Exaplain the idea of informal organisation.
People have a strong need for socail relationships, and that often it is the informal network of relationships at work which determine how they will act.
Explain the management tactic of the human relations movement.
Rather than fragmenting work, ordering workers what to do, and planning and controlling every step of the process, management should seek to build groups - teams - or workers who felt good about themselves and good about the team.
With positive attitudes, they would get on with the job, and productivity would look after itself.
Explain Douglas McGregor’s “Theory X” of managers.
Managers view that people dislike work and will try to avoid it, that people seek security rather than responsibility, that people want to be directed, and that they must be coerced, threatened and controlled if they are to achieve anything.
Explain Douglas McGregor’s “Theory Y” of managers.
Managers assume that people find work natural, that they will respond to rewards of self-esteem and self-actualisation and that they will seek to exercise self-direction and to take responsibility.
Explain behavioural science approaches.
It sought to make the study of human behaviour in organisations more scientific and to develop practical behavioural techniques. It also developed human relations ideas.
What is the ‘break-even’ point?
The point at which the decision to produce becomes profitable. Found from studying the costs of producing a product in variable numbers v.s the demand for it at different levels of price.
What is operations management?
Operations management (OM) is concerned with managing the production of the organisation’s products or services with the assistance of quantitative techniques.
What is management science?
Management science is a disciple that attempts to aid managerial decision making by applying a scientific/ systematic approach to managerial problems that include quantitative factores.
This often includes using mathematical models to provide predictive information to management enabling managers to take decisions based on a much more precise knowledge of likely outcomes.
What do management information systems provide?
They provide much of the detailed information aboout organisational functioning necesary for management control.
(e.g. figures on production, sales, and costs)
What does management accounting provide?
It provides quantified financial information.
Tools for achieving greater precision in information and prediction and thereby assisting management decision making.
What is socio-technical systems?
How we tend to think about, analyse and design social systems and technical systems should be closely integrated.
Such that work takes account of the social needs of the workers as well as the technical advantages of mechanisation, resulting in much more positive outcomes.
What is the systems theory?
A theory saying that oranisations need to be considered in its totality, with an analysis of the way each component part interacts with each other part, and of the way the whole interacts with its environment.
What are the benefits of system theory?
- It helps us to widen our perspective on organisations
- It helps managers to think beyond an immediate problem to the wider causes and ramifaications elsewhere in the total system
- ‘big picture’ perspective which is necessary to make strategic decisions without being unpleasantly suprised by effects which were not anticipated
Explain the contingency theory.
Contingency theory advocated that there re no ‘universal’ principles of management. There is no universally correct answer. Every situation is unique and that means every problem has its own solutions.
In this view, the most important skill of management is that of making a good interpretation of factors relevant to a decision.
What does the contingency theory say is a problem with management?
A problem with management thought is the constant desire to establish the ‘right answer’ to any problem. Based on the idea that for every problem there is a single ‘right’ answer.
What is a corporate strategist’s goal?
To find a position in the industry where the company can best defend itself against the Porter’s Five Forces or can influence them in its favour.
Analyse the sources of competitve pressure to provide the groundwork for a strategic agenda of action.
How does analysing the sources of competitive pressure provide groundwork for a strategic agenda of action?
- It highlights the critical strengths and weaknesses of the company
- Animates the position of the company in the industry
- clarify the areas where strategic changes may yeild payoff
- Highlight the places where industry trends promise to hold the greatest significance as either opportunities or threats
- Helps consideration for areas of diversification
Explain the impact of contending forces.
The strongest competitive force or forces determine the profitability of an industry and so are of the greatest importance in strategy formulation.
Explain how the threat of entry impacts competition.
New entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources.
What are the 6 major sources of barriers to entry?
- Economies of Scale
- Product differentiation
- Capital Requirements
- Cost disadvantages independent of size
- Access to distribution channels
- Government policy
What is economies of sale?
The cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.
How is product differentiation a barrier to entry?
Brand identification creates a barrier by forcing entrants to spend heavily to overcome customer loyalty. Advertising customer sercice, being first in the industry, and product differences are among the factors fostering brand identification.
How is capital requirements a barrier to entry?
The need to invest in large financial resources in order to compete creates a barrier to entry, particularly if the capital is required for unrecoverable expenditures in up-front advertising or research and developement.
Explain cost disadvantages independent of size as a barrier to entry.
Entrenched companies may have cost advantages not available to potential rivals, no matter what their size and attainable economies of scale.
Explain how access to distribution channels is a barrier to entry.
The new comer on the block must secure distribution of its products or services. The more limited the distribution channels, the toughter that entry into the industry will be. Sometimes this barrier is so high that the contestant must create its own distribution channels.
Explain how government policy can be a barrier to entry.
The government can limit or even forclose enty to industries with controls such as license requirements and limits on access to raw materials. The government can also play a major indirect role by affecting entry barriers through controls such as air and water pollution standards and safety regulations.
Explain how existing competitors expected reaction may influence a new contestants decision on whether to enter.
If other companies are likely to lash out at the new entrants or if they have substantial resources to fight back, if they seem likely to cut prices to keep market shares, or if industry growth is slow.
Explain how powerful suppliers and buyers impact competition.
Suppliers can exert bargaining power on participants in an industry by raising prices or reducing the quality of purchased good and services.
Customers likewise can force down prices, demand higher quality or more service, and play competitors off against each other.
Explain the characteristics of a powerful supplier.
- It is dominated by a few companies and is more concentrated than the industry it sells to.
- Its product is unique or at least differntiated, or has built up switching costs.
- It is not obliqued to contend with other products for sale to the industry.
- It poses a cridble threat of integrating forward into the industry’s business
- The industy is not an important customer of the supplier group.
Explain the characteristics of a powerful buyer.
- It is concentrated or purchases in large volumes.
- The products it purchases from the industry are standard or undifferentiated.
- The products it purchases from the industry form a component of its product and represent a significant fraction of its cost.
- It earns low frofits, which create great incentive to lower its purchasing costs.
- The industry’s product is unimportant to the quality of the buyers’s products or services.
- The industry’s product does not save the buyer money.
- The buyers pose a credible threat of integrating backward to make the industry’s product.
What is the strategic action in terms of suppliers and buyers?
A company can improve its strategic posture by finding suppliers or buyers who possess the least power to influence it adversely.
A company can sell to powerful buyers only if it is a low-cost producer in its industry or produces unique features.
Otherwise, elling to everyone is self defeating because the more sales it achieves the more vulnerable it becomes.
Explain how substitute products impact competition.
Substitute products are those that
(a) are subject to trends improving their price-performance trade-off with the industry’s product
(b) are produced by industries earning high profits.
Substitutes compe into play if some development increases competition in their industries and causes price reduction or performance improvement.
Explain how jockeying for position impacts competition.
Rivalry among existing competitors takes the familiar form of jockeying for position- using tactics like price competion, product introduction, and advertising slugfests.
Explain factors that affect competition rivalry.
- Competitors are numerous or are roughly equal in size and power.
- Industry growth is slow
- The product or service lacks differentiation or switching costs
- Fixed costs are high or the product is perishable
- Capacity is normally augmented in large increasements
- Exit barriers are high
- The rivals are diverse in strategies, origins, and “personalities”
Explain the formulation of strategy.
Assess the forcing affecting competition in an industry and their underlying causes such that the company’s strengths and weaknesses can be identified. Then devise a plan of action that may include:
- positioning of the company so that its capabilities provide the best defence against the competitive forces.
- Influencing the balance of forces through strategic moves, improving the companies position
- Anticipating shifts in the factors underlying the forces and responding to them
What are Henri Fayol’s 14 principles of management?
- Division of work
- Authority
- Unity of command
- Unity of direction
- Subordination of individual to general interests
- Remuneration
- Centralisation
- Scalar chain
- Order
- Equity
- Stability of tenure
- Initiative of tenure
- Esprit de corps
