Transcript Chapter 1 Business Organisations - The Internal Environment ws

BUSINESS ORGANISATIONS:
THE INTERNAL ENVIRONMENT
Enterprise and its Business
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Topics Covered
• Introduction to business
• Purpose of a business organisation – Vision and
Mission.
• Strategic Direction of the Organisation: Industries and
Markets
• How Businesses Create Value
• How the Business Organisation Operates: The Role of
Management and Corporate Culture
• Aligning the Business Model with the Value Proposition
• Conclusions
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Key Concepts
• Introduction to Business?
The Business Organisation as a Transformation System
Enterprise
and its2009.
Business
See; Worthington and
Britton,
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Business as a Techno-System
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Business as a Socio-System
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Delivering Strategy
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Introduction to Business
• What is an Industry & What is a Market?
Communication
Goods/service
Industry
Market
(a collection of sellers)
(a collection of buyers)
Money
Information
Note: We Might Call this Process - Trade; Commerce; Exchange
(See; Kotler, 2007)
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Introduction to Business
• Marketing…. What is it?
• What is the Difference Between Sales &
Marketing?
• Note Down Your Answers!!
• You Can Discuss Questions with those
Sitting Around You…
• Be Prepared To Give Feedback...
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Definitions of Marketing
• Kotler (2000);
• “Satisfying human wants and needs at a profit” (Kotler, 2000)
• Chartered Institute of Marketing (CIM);
• Marketing as a management process: “which identifies, anticipates
and supplies consumer requirements efficiently and effectively”
• Peter Drucker (1999):
• “Because the purpose of business is to create and keep customers,
it only has two central functions - marketing and innovation. The
basic function of marketing is to attract and retain customers at a
profit”
• A Marriage of Philosophy & Economics
• The philosophy of customer satisfaction
• Economics of supply and demand
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Key Concepts
• What is the Difference Between Sales &
Marketing?
• Sales Assumes a Product - Marketing Does Not!!!
• Marketing Starts Before the Product is Ever
Produced - it Starts with Needs & Wants!
• It is Used to Evaluate the Scale, Extent & Salient
Characteristics of Demand & How the Product
Can Be Flexed to Meet Them…
• Levitt (1960) “Selling Focuses on the Needs of
the Seller; Marketing on the Needs of the Buyer”
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The Differences….
Marketing
Sales
Approach
Determine future needs and has a strategy in
place to meet those needs for the long term
relationship.
Makes customer demand match the products the
company currently offers.
Process
One to many
Usually one to one
Focus
Fulfil customer's wants and needs thru products
Fulfil sales volume objectives
and/or services the company can offer.
Horizon
Longer term
Scope
Identifying customer needs (research), creating Once a product has been created for a customer need,
products to meet those needs, promotions to
persuade the customer to purchase the product to fulfil
advertise said products.
her needs
Strategy
Concept
Priority
Identity
Short term
Pull
Push
Marketing is a wider concept
Sales is a narrower concept
Marketing shows how to reach to the customers
Selling is the ultimate result of marketing.
and build long lasting relationship
Marketing targets the construction of a brand
identity so that it becomes easily associated
with need fulfilment.
Sales is the strategy of meeting needs in an
opportunistic, individual method, driven by human
interaction. There's no premise of brand identity,
longevity or continuity. It's simply the ability to meet a
need at the right time.
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Focus
Product
Means
Ends
Selling &
Profits Through
Promoting
Sales Volume
(A) The Selling Concept
Customer
Needs
Integrated
Marketing
Profits Through
Customer
Satisfaction
(B) The Marketing Concept
See; Kotler: 2000
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How Do Businesses Satisfy Needs & Wants?
• Reviewing Customers’ Needs & Wants & Offering
the Customer Value Through the Value Chain
The Value Chain within an Organisation
Value
Proposition
Offered to
Customers
See; Porter, 1985
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The Business Model Canvas
Enterprise
and
its Business
Source: Osterwalder, A., and Pigneur, Y,. (2010)
Business
Model
Generation: A Handbook for
Visionaries, Game Changers, and Challengers,
London: Wiley.
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© Goodfellow
Alignment of Business Model &
Value Proposition
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The Elements of Managing this Process
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The Importance of Management
• Its About Adding Value to Resources To Survive!!!
◦ Everyone Manages Part of that Value-adding Process
◦ Ryannair – A Group of Entrepreneurs Saw an Opportunity
in The Market & Created an Organisation to Take
Advantage of it – Can You Name Any Others?
◦ They Bring Together Resources & Transform them into a
Product/Service that they Provide to Customers
◦ Worked Out What Customers’ Value:
◦ Cost Rather Than Luxury & Delivered This (Their Unique Value
Proposition)
◦ Carried 65 Million Passengers 2009
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Systems Approach to Management
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Functional Areas of a Business
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Figure 1.1: Managing Organisation & Environment
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Transforming Inputs into Outputs
Figure 1.2 The Tasks Of Management
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Management & Organisation
• A World of Managed Organisations on Which
We Depend – Supermarkets, Retailers, E-tailers…
• Management is to Create Organisations that
Work – That Add Value to Resources they Use
• “Value” Is Subjective – Value to A May Be
Waste to B
• What Types of Value People Who Buy the
Following Brands of Jeans Are Looking for From
the Product
• Prada Jeans
• Next Jeans
• Tesco Jeans
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People Define it in Different Ways
• Zeithaml (1988) Found Four Main
Definitions:
• 1 Value is Low Price
• 2 Value is Whatever I Want in a Product
• 3 Value is the Quality I Get for the Price I
Pay
• 4 Value is What I Get for What I Give
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Other Functions of Organisations
• Create Value, Wealth & Human Well-Being
• Articulate & Implement Ideals
• Gain Power to Protect Sectional Interests
• Give People Work, Status, Social Contact
• Enrich Directors & Senior Managers
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Specialised Areas of Management
• General Management
• Functions
• Line
• Staff
• Project
• Hierarchies
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Performing Direct Operations
Managing Staff on Direct Operations
Managing Managers
Managing the Business
Managers Add Value By Influencing Others
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Influencing Through the Process of Managing
• Rosemary Stewart – Interrupted,
Fragmented, Diverse
• Mintzberg – Ten Management Roles, In
Three Groups
• Informational
• Monitor, Disseminator, Spokesperson
• Interpersonal
• Figurehead, Leader, Liaison
• Decisional
• Entrepreneur, Disturbance Handler, Resource Allocator,
Negotiator
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Roles & Performance (Luthans, 1988)
• Those Who Achieved Promotion
• Spent More Time Networking & Politicking
• Those Who Were Effective
• Spent More Time on Communications And
HRM (Managing the Human Side)
• Manager as Networker, Politician
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Influencing Through the Tasks of Managing
• Planning – Overall Direction of Work
• Organising – Allocating Resources, Time, Effort
• Leading – Generating Effort & Commitment
Towards Objectives
• Controlling – Monitor Progress, Compare With
Plan, Adjust if Needed
Apply to All Kinds of Tasks (Incl. Study);
& Are Done Iteratively
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Influencing Through Shaping the Context
• Internal – Elements of the Organisation – The
Immediate Context of Managing
• External – Micro & Macro Environment
Historical – Past, Present & Future Events
• These Interact with Each Other
• People Interpret their Context
• Work Within it or Act to Change it in Some Way
• People Interpret New Context, Work Within it, or
Seek to Change it…
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Critical Thinking
• Effective Managers Have Developed the
Skills of Critical Thinking, Whose
Components Are:
• Identifying & Challenging Assumptions
• Recognising the Importance of Context
• Imagining & Exploring Alternatives
• Seeing Limitations
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True Leadership Capabilities
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Conclusion
• Management Role is to Add Value to
Resources
• Managing a General Human Activity
• Scale of Responsibility for Resources Varies
• Managers Aim to Influence Others Through:
• Processes of Managing
• Tasks of Managing
• Shaping Contexts
• How Well they Do Depends on Thinking
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Critically
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References
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Boddy, D. (2002) Management an Introduction. 2nd Edition. Essex: Financial
Times/Prentice Hall.
Carson, D., Cromie, S., McGowan, P., and Hill, J. (1995) Marketing and Entrepreneurship
in SMEs An Innovative Approach. London: Financial Times/Prentice Hall.
Hannigan, T. (2002) Management: Concepts and Practices. 3rd Edition. Essex: Financial
Times/Prentice Hall.
Hellriegel, D., Jackson, S.E., and Slocum, J.W. (2002) Management a Competency Based
Approach, 9th Edition, Ohio: South Western.
Kotler, P., 1991. Marketing management. Englewood Cliffs, New Jersey: Prentice Hall.
Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (2002) Principles of Marketing; Third
European Edition. 3rd Edition. London:Financial Times/Prentice Hall.
Mullens, L. J. (2002) Management and Organisational Behaviour. 6th Edition. Essex:
Financial Times/Prentice Hall.
Palmer, A. and Hartley, B. (1996) The Business and Marketing Environment. 2nd Edition.
Berkshire: McGraw Hill.
Timmons, J. & and Spinelli, S., 2007. New Venture Creation Entrepreneurship for the 21st
Century. 7th ed. New York: McGraw Hill Publishing.
Luthans, F., Welsh, D.H.B., & Taylor, L. (1988, June). A descriptive model of managerial
effectiveness. Group & Organization Studies, 13(2), 148-162.
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