Modern Approaches to Management

Frederick A. IgnacioDanang University of Economics

The Old Organization

Hierarchal

Tall Structure

Single function specialisms

Focus on tasks and responsibilities

Systems

The New Organization

Everything is international

Everything is new

Everything is faster

Everything is turbulent

Dimensions of Modern Management

Market-driven Cultures - From competitive individualism

to teamwork and co-operation

- From security to flexibility

Flexibility

Empowerment

Social responsibility

I. Management by Objectives

A system that was originally conceived at DuPont and General Motors in the early twentieth century under the name "MBO and self-control“. Its most important proponent is Peter Drucker.

Core Concepts of MBO

All managers should:

participate in the strategic planning process, in order to improve the implementability of the plan, and

implement a range of performance systems, designed to help the organization stay on the right track.

II. Total Quality Management

Focuses on managing the total organization to deliver quality to customers.

Requires a shift from an inspection-oriented approach to employee involvement in the prevention of quality problems.

Elements of TQM

EMPLOYEE INVOLVEMENT TRAIN, INVOLVE, EMPOWER WORKERS

FOCUS ON THE CUSTOMER FIND OUT WHAT THE CUSTOMER WANTS

BENCHMARKING COMPARE PRODUCTS/SERVICES

WITH COMPETITORS

CONTINUOUS IMPROVEMENT SMALL, INCREMENTAL IMPROVEMENTS ALL THE

TIME

III. Michael Porter: Strategic Management

Competitive Rivalry, eg:

number and size of firmsindustry size and trendsfixed v variable cost basesproduct/service rangesdifferentiation, strategy

Supplier Power, eg:

brand reputationgeographical coverageproduct/service level qualityrelationships with customersbidding processes/capabilities

Product and Technology Development, eg:

alternatives price/quality market distribution changesfashion and trendslegislative effects

Buyer Power, eg:

buyer choicebuyers size/numberchange cost/frequencyproduct/service importancevolumes, JIT scheduling

New Market Entrants, eg:

entry ease/barriersgeographical factorsincumbents resistancenew entrant strategyroutes to market

5 Forces Model

IV. Activity-based Costing

Activity-Based Costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control.

ABC allows managers to attribute costs to activities and products more accurately than traditional cost accounting methods.

V. Balanced Scorecard

A strategic planning and management system that is used extensively by organizations worldwide to align business activities to its vision and strategy, improve internal and external communications, and monitor organization performance against strategic goals.

Traditional Measures

Return on Investment

Profit Margin

Acid test ratio

Turnover ration

Management: Japanese Style

VI. Japanese Style of Management

STRATEGIES

1. Development of an internal (closed) labor market

2. Employee Oriented

3. Cooperative company philosophy

4. Careful socialization and development of personnel

SPECIFIC TECHNIQUES USED

Job Rotation Slow evaluation and promotion Group and team emphasis Open, face-to-face

communications Consultative decision making Intimate employee concern

Japanese Style of Management

Japanese Style of Management

KEYS TO SUCCESSFUL APPLICATION

1. Articulate a company philosophy2. Provide long tenure3. Practice job rotation4. Practice consultative decision-making

Theories in Practice

Surveyed 475 companies in 1999

Results:

Benchmarking – first in Europe, third in North America

Strategic Planning- first in US (89%)

Mission/Vision- second in both continents

Activity

Do you agree that “the end justifies the means” or “the means justify the end”. Explain your answer