doc1. The different purposes of organisations
download 
Report Transcription
1. The different purposes of organisations
PGPMA TERM 1 ORGANISATION AND MANAGEMENT http://proschool.imsindia.com/ 1 ORGANISATION AND MANAGEMENT ORGANISATION AND MANAGEMENT THE DIFFERENT PURPOSES OF THE DIFFERENT PURPOSES OF ORGANISATIONS http://proschool.imsindia.com/ 2 Organisation ‘Organization’ is derived from the Greek word ‘organon’ meaning tool • Organisations comprise two or more people p p ((social entity) y) engaged g g in a systematic and co‐ordinated effort (specialisation and co‐ordination), persistentlyy over a p p period of time (permanence), in pursuit of goals which convert resources into goods and/or services which are needed by consumers (goals). • Collective Goals • Social Arrangements • Controlled Performance http://proschool.imsindia.com/ 3 Importance of organisations Satisfy social needs Enable members to share skills and knowledge Promote specialization Save time Pool knowledge Centers of power http://proschool.imsindia.com/ 4 How organisations differ Factor Example Ownership Public Vs Private Profit/Non Profit Business Activity, NHS Legal Status Limited Company, Partnership Size Sole Trader, MNC Sources of Finance Share Issue, Borrowing from Banks Technology High use, Low use Activity Financial Institution Manufacturing Financial Institution, Manufacturing http://proschool.imsindia.com/ 5 Classifying organizations by profit orientation Profit Seeking organizations – Primary objective is to maximize wealth (continue in existence, maintain growth, make profit) Peter Drucker: Market standing k di Innovation Productivity Physical and financial resources Profitability Manager performance and development Worker performance and attitude Worker performance and attitude Public responsibility http://proschool.imsindia.com/ 6 Classifying organizations by profit orientation Public/Beneficiaries NFPs: NFP (govt depts, schools, hospitals charities clubs) hospitals, charities, clubs) Provision of goods/services Output (goods/services) Minimize primary goal cost Cost Inputs Revenue (taxation) http://proschool.imsindia.com/ 7 Private sector Meaning: Organizations not owned or run by central or local govt, or govt agencies Limited i i d Companies: i Ownership, control legally separate Perpetual succession Limited liability Directors appointed by shareholders to run the company http://proschool.imsindia.com/ 8 Private sector Limited Companies – Limited Companies types: 1. Private Limited Company 2 Public Limited Company 2. Public Limited Company Number of shareholders Transferability of shares y Directors as shareholders Source of capital http://proschool.imsindia.com/ Advantages‐ more money, reduces risk separate legal entity risk, separate legal entity, ownership, no restrictions on size, flexibility Disadvantages‐ Legal compliance costs, shareholders have little h h ld h li l practical power 9 Private sector Co‐operatives: An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. enterprise p Retail Store Network,, John Lewis Partnership p Ex: Co‐operative Open Membership Democratic Control (1 member, 1 vote) Distribution of surplus in proportion to purchase Promotion of education http://proschool.imsindia.com/ 10 Public sector Public sector The public sector is that part of the economy that is concerned with providing basic government services and is thus controlled by government organizations. Features: Accountability to the Parliament Funds obtained through raising taxes, making charges, borrowing Demand for services Limited Resources NHS Hospitals, H it l Armed A d forces, f G Government t Departments, D t t Public roads, Public transport http://proschool.imsindia.com/ 11 Mission Statements Mission Statements • Often summarises the firms reason for existing • The starting point for recognising the future direction of the firm and therefore the required direction of the firm and therefore the required strategic developments. • Should be: – Simple, Easily Remembered, Impactful – Positive, visionary & motivating • Should outline Should outline – Firm’s role – What it wishes to achieve http://proschool.imsindia.com/ 12 Four Elements in the: Mission Statement [1] Statement [1] • Adapted from the Ashridge School (1991) • 1)Purpose ) p – Why the firm exists and what it exists to do. • What would happen if the firm did not exist? • 2)Strategy – How the firm will achieve its aspirations. • • • • What is it offering? To whom? Why should people buy it? What are its competitive advantages? http://proschool.imsindia.com/ 13 Four Elements in the: Mission Statement [2] Statement [2] • 3)Values – What the firm believes in • Why the world will better if the firm succeeds? • 4)Behaviour standards – Th The routines, procedures and policies the firm adopt to fulfil its ti d d li i th fi d t t f lfil it values • What is the firm willing to do/not do in order to succeed? • How low will it go? H l ill it ? http://proschool.imsindia.com/ 14 Some Mission Statements Disneyland Paris: To turn the dreams of the young and young at heart into reality • TUI Nordic: Most satisfied customers TUI Nordic: Most satisfied customers and best best profitabilty in the business • Hilton International: To always exceed customer expectations by delivering quality service through exceptional teamwork" exceptional teamwork McDonald's Corporation: Quality food products; efficient, friendly service; and restaurants renowned for the friendly service; and restaurants renowned for the cleanliness and value they provide http://proschool.imsindia.com/ 15 Organisational Objectives [1] g j [ ] • ‘Is an organisation a single period profit maximiser?’ Johnson & Scholes • ‘An organisation's objectives tend to emerge as the wishes of the most dominant coalition.’ ih f th td i t liti ’ based on R M Cyert based on R M Cyert & J G March & J G March'ss 'Behavioral Behavioral Theory Theory of the Firm' (1996) 16 http://proschool.imsindia.com/ 16 Organisational Objectives [2] g j [ ] • Generally ‘SMART’: – – – – – SSpecific ifi Measurable Achievable Realistic Timely • Consistent with the Mission and Aim. Consistent with the Mission and Aim • One direction, avoid dissonance!!! 17 http://proschool.imsindia.com/ 17 Objectives ‐ Examples Objectives A larger market share A l k h Quicker design‐to‐market times than rivals Higher product quality than rivals Higher product quality than rivals Lower costs relative to key competitors Broader / more attractive product line than rivals A stronger reputation with customers than rivals Superior customer service Recognition as a leader in technology and/or product Recognition as a leader in technology and/or product innovation • Wider geographic coverage than rivals • • • • • • • • http://proschool.imsindia.com/ 18 Objectives ‐ j Financial • • • • • • • • • Increased growth in revenues / earnings/ dividends per share Wider profit margins Attractive ROI Strong credit ratings Positive cash flows R Recognition as a blue chip company iti bl hi Stable earnings during periods of recession A more diversified revenue base A rising stock price 19 http://proschool.imsindia.com/ 19 Some Statements of Objectives Some Statements of Objectives McDonalds: To achieve 100% total customer satisfaction everyday y y in every restaurant, for every customer To provide our shareholders with superior returns by achieving double‐digit annual earnings per share growth, increasing g g p g , g dividends consistent with earnings growth, repurchasing shares when the opportunity is right, pursuing profitable international beer expansions, and generating quality earnings and cash flow returns returns To become the most competitive enterprise in the world by being No.1 or No.2 in market share in every business the company is in 30% of the company’s sales must come from products fewer than 4 years old 20 http://proschool.imsindia.com/ 20 Creating value for stakeholders g Control and co‐ordination Efficient production Facilitating innovation http://proschool.imsindia.com/ 21 Questions to be done from Kaplan E1 Study Text (Chapter 1) Study Text (Chapter 1) 1. Test Your Understanding 2 1 T Y U d di 2 2. Test Your Understanding 5 3 Case Style Question 3. Case Style Question http://proschool.imsindia.com/ 22
