Theories Flashcards
Porters five forces model
This is a system for analyzing the levels of competition in an industry.
It looks at the forces that determine the level of competitive intensity and the attractiveness of the industry in terms of profitability.
The five forces are
1. Threats of new entrants to the market- when new firms enter an industry they will take a share of the market and increase the competitive intensity.the greater the barriers to entry the smaller the threat will be.
2. Bargaining power of suppliers- when an industry has suppliers who can force up the price of their products through their strong power to bargain who will cut the profits that are available to the firms in the industry. The lack of bargaining power increases profitability of markets and lowers competitive industry
3. The bargaining power of customers- if the customers in a industry have strong bargaining power it will force prices down and reduce likely profitability
4. The threat of substitutes- threat of substitute products entering the market especially in technological products. Must keep up with changes and if businesses fail that they will lose market share
5. The degree of competitive intensity- where there’s high competitive intensity its likely the result will be innovation, price wars and higher spending on promotion. These reduce the levels of profit to be achieved
Models of strategic choice- porters generic strategies
Show how a company can achieve a competitive advantage in its industry.
3 strategies were suggested together with a 4th.
- Cost leadership- involves the aim of being the lowest cost producer in the field. To achieve this the firm will need to achieve economies of scale like reducing production costs or passing savings on to the consumer.
- Differentiation- involve the firm in producing a range of goods that’s either different or perceived as different from that of the competition. However if a patent doesn’t exist the product can be copied and the competitive advantage will be lost.
- Focus or niche strategy- producing for a particular sector of the market usually consumes in such a sector will be prepared to pay a premium for the status of being different
- Stuck in the middle- a business that tries to adopt all 3 strategies is unlikely to achieve success. It’s possible to please all consumers and trying to achieve everything suggests there’s no strategy at all.
Ansoffs matrix
It’s a strategic tool used to help a business that wishes to grow . He was interested in ways a business could identify their competitive advantage in existing and new markets.
The matrix looks at the businesses markets in terms of existing and new products and existing and new market opportunities. It identifies 4 possible strategies for growth.
- Market penetration- situation where the firm tries to sell more of its existing product of its existing market. To achieve this the business may need to use more aggressive promotion or it may need to product its price more competitively.
- Market development- involves selling the existing product to a new market segment. Careful market research is required in the first instance to identify possible markets. The business needs to ensure its prices promote the products with the new markets in mind.
- Product development- changes are made to the existing product but it continues to sell in the same market. This could involve new packaging, flavors or formulation for the product
- Diversification- this entails selling a new product in a new market and it’s a high risk strategy for a business. Thorough market research will be needed so the firm is aware of any threats that may exist particularly in the form of a competition.
Managmeent change models- Lewis’s 3 step change management model
Helps explain the basic method of putting change management into operation.
There’s 3 steps
1. Unfreeze-this involves trying to remove the forces that are creating inertia in the business by putting forward new ideas and persuading people of the need of change
2.transition- at this stage management will develop new ideas either in the production process or organization of the business. This stage may create uncertainty and confusion in the business
3. Freeze- at this stage the business needs to ensure that the new processes are reinforced otherwise there might be a tendency to revert to the old methods.
It’s seen as straightforward to use when managing change whether the changes are strategic or tactical. It makes it possible for the manager to identify the problems and see where change is needed. Benefits from including the workforce in the process.
Management change models- McKinsey 7-s model
This is a model that can be used to access internal change in a business, it can help management identify where there’s a need for change in the business. It can be used in any situation of change including growth, mergers, organizational change, new management and new working processes. For success a business needs to make sure all 7 components are aligned.
The 7s framework is made up of-
- strategy
- skills
- structure
- style
- systems
- staff
- with a overall goal of shared values by using all elements together
Split into 2 types of s’s hard and soft.
Hard- structure, strategy and skills
Soft- systems, staff and style
The objective of the model is to improve business performance, look carefully at the effects of change in all areas and to show how best to put change into operation with effective change management
Management change models- kotters 8 step change model
This model helps managers to understand and manage change in a business, each stage helps show peoples response to change and shows the process from seeing the need and then changing.
The 8 stages are-
1. Increase urgency- encourage people to make changes
2. Build the team for change- put in people who have commitment to change and a range of skills
3. Have a vision- establish a vision of what is to be achieved
4. Communicate- use communication to get everyone to accept the change, involving as many people as possible in the changes
5. Empower action- remove anything that will stop the change happening. Make sure any progress is recognized and rewarded
6. Create short term wins- don’t expect to be able to do everything immediately. Set achievable goals
7. Don’t let up- keep up the momentum
8. Make the change stick- don’t let things go back to what they were because of lack of management of the change or control.
Leadership theory- Carlyle and Galton trait theory
Their trait theory concentrates on the traits exhibited by successful leaders or the characteristics required of a leader.
The original thoughts suggested the characteristics of a good leader were attributes that such leaders had, they were not learnt. Once these ideas were looked at in 1980s the key characteristics of a effective leader were highlighted
-motivational- ability to motivate others
-integrity- showing a ethical approach
-self confidence- being assured
-creative- new ideas
- intelligent- able to reason and solve problems
A more recent approach has been put forward by zaccaro 2004-2007 whose model looks at leadership traits in more detail, listing around 15 key traits as opposed to the 5 listed by Carlyle and Galton. Zaccaro tries to suggest how these traits relate to leadership. He was concerned about the lack of consideration given to cognitive skills, motives and values of the leader as well as social skills and the ability to solve problems. All these were seen as important traits of effective leaders
Leadership theory-tannenbaum and Schmidt
They concentrate on the style of leadership and suggest that the style of leadership highlighted the degree of trade off better the control exerted by the leader and how this affected the interaction between the leader and employees.
This theory can be known as the contingency approach.
The continuum uses 4 styles although a more detailed version offers 7 styles.
Tell- this style is one in which the leader or manager just informs the employees of his or her decision and can be seen as an autocratic approach as the focus is on the leader. The employees will be expected to comply. This approach doesn’t give the employees an opportunity to be involved in the decision making process.
Sell- where a leader or manager makes a decision but attempts to sell the decision to the employees. This style suggested there’s some consideration of the employees rather than just telling them. A degree of persuasion is taking place. There’s also a opportunity for feedback
Consult- this style goes a step further than sell as the leader will present his or her ideas to the employees and invite discussion and therefore offers a more collaborative approach. The leader will listen to the ideas of the employees and 2 way communication will be the norm unlike tell.
Participate- shows the focus is now on the employees and not the leader. Under this style of leadership the leader or manager will ask the employees to make a decision, although usually within defined limited or boundaries. Nevertheless the emphasis is on the employees and is similar to a more democratic style of leadership.
Leadership theory- Adair
Adairs actio centered leadership highlighted the 3 elements for all the leadership situations which are…
1. Achievement of task
2. Team or group involved in the task
3. Individual members of team or group involved in task
Adair suggested the leader has to try and balance the needs of all 3 elements. A failure to consider all 3 elements is more likely to lead to failure. However there’s an acknowledgment that the 3 elements can conflict with each other. Ensuring the task is the key focus may be at the expense of the individuals who are involved with the task. Alternatively too much time spent on considering the welfare of the group or individual may be to the detriment of completing the required tasks. Adairs theory is very similar to that of Blake Morton’s leadership grid.
Leadership theory- mcgregor trait theory
Theory of how managers view employees. Known as theory X and Y.
Theory X-
- lazy, disliking work and responsibility
- lack will and ability to work unsupervised
- lacking indicative
- motivated by money
A manager adopting this view is likely to mange in an autocratic manner offering little if any scope for employee input. Communication will be very limited. The way in which work is carried out will take little account of job satisfaction because it assumed the employees driving force were money
Theory y-
- enjoying their work if the right conditions are created
- willing to accept responsibility and challenges
- creative and willing to contribute
- able to exercise self discipline
- not just motivated by money
A manager or leader adopting a theory y view will see employees as valuable assets rather than as a cost to be minimized. The style will be democratic with employees encouraged to set their own goals and exercise self control. Motivation comes from factors like variety, challenge and self development. Training needs will therefore be identified and employees encouraged to develop their skills
Leadership theory- Blake and mouton behavioral theorist
It concentrated on the trade off between task and people needs which would then influence the likely style of leadership.
Blakes gird is a method of identifying the actions, priorities and therefore leadership style of a manager. This is undertaken through an analysis of task and people needs.
People needs on side and task needs on bottom.
Low to high on side and low high on bottom.
Top to bottom- country club, team leader, impoverished, authoritarian
Country club leadership- this manager is concerned about the well being and feeling of his or her team of people rather than completing the required tasks. While morale may be high some employees may take advantage and if deadlines are missed there may be repercussions on other areas of the business which depend on the completion of a task by a certain date.
Authoritian leadership- they will be concerned with the task rather than the employees. This manager believes the needs of the employees must always take second place to completing the task. Leadership will be authoritian and motivation very much a secondary consideration. A lack of attention to employees needs can lead to resentment, lack of commitment and other hr problems
Impoverished leadership-this manager will have a lack of concern for either the task or people neeeds. He or she will be unable to devise procedures to ensure work is completed to the required standards or on time, or to stimulate and motivate the employee. This sort of leader is very ineffective at everything. Morale and productivity are both low and this leaders actions are therefore likely to affect other areas of the business negatively.
Team leadership- this manager will have a strong and equal regard for both employee and task needs. This is what a manager should aim for. These leaders believe that if employees are treated as genuine stakeholders then their needs and the businesses task needs will be in harmony. High levels of motivation will be accompanied by high productivity
Middle of the road leadership- this leader compromises between the 2 sets of needs. This implies that neither set of needs is truly met and less than optimal outcomes for each are achieved. Such leaders may be indecisive and timid. Once a person has identified his or her place on the grid, areas for leadership development can be identified, although the grid has to be used in context. Leadership styles have to be varied as the occasion demands. If a crucial contract needs to be fulfilled on time then a greater emphasis on task needs will be appropriate; whereas a country club approach may be adopted as the Christmas holiday period approaches
Leadership theory- Lewins style of leadership
In1939 himself and his co workers identified 3 styles of leadership decision making: autocratic, democratic and laissez faire.
Autocratic
- sets the work and expects it to be performed precisely as directed
- doesn’t involve employees in decision making
- very strict
- doesn’t believe in employee autonomy
- believes in top down communication and doesn’t encourage employees to contribute
- believes in close supervision
- thinks employees are motivated by money
Democratic
- encourage employee input into decision making
- believes in empl autonomy
- encourages 2 way communication
- allow employees to use their initiative
- believes the motivation of employees isn’t simply financial
Laissez faire
- remote from employees
- provides very little direction for employees
- adopts a let them get on with it approach
- requires employees to set their own task and objective
Paternalistic
This isn’t Lewins style
- wanting the workforce to feel involved in decision making
- consulting employees
- persuading employeees to accept his or her view regardless of the employees own views.
Motivation theories- McClelland (content theory) 1917-1998 the 3 needs theory
David was a psychologist whose original work was in the 1960’s where he developed a motivational model based on the proposition people have 3 needs which are…
- achievement
- affiliation
- power
