The Most Popular Management Concepts of 2010
Global Top 10 Management Concepts
2010(2009)
1. 14 Principles of Management by Fayol (1)
2. Five Forces by Proter (2)
3. Mind Mapping by Buzan (3)
4. SWOT Analysis (4)
5. Break-even Analysis (10)
6. Value Chain by Porter (7)
7. Marketing Mix by McCarthy (5)
8. Organization chart (-)
9. BCG Matrix (6)
10. Competitive Advantage by Porter (8)
The 9 out of 10 global top management concepts of 2010 are common with 2009. The top 10 management concepts are explained briefly as follows;
14 Management Principles
- DIVISION OF WORK: Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization.
- AUTHORITY: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility
- DISCIPLINE: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.
- UNITY OF COMMAND: Workers should receive orders from only one manager.
- UNITY OF DIRECTION: The entire organization should be moving towards a common objective in a common direction.
- SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS: The interests of one person should not take priority over the interests of the organization as a whole.
- REMUNERATION: Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered in determining a worker’s rate of pay.
- CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working
- SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful
- ORDER: For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible
- EQUITY: All employees should be treated as equally as possible.
- STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.
- INITIATIVE: Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction.
- ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among employees.
Five forces model of porter
1. The threat of the entry of new competitors
2. The intensity of competitive rivalry
3. The threat of substitute products of services
4. The bargaining power of customers ( buyers)
5. The bargaining powers of supplies.
Mind mapping
A mind map is a diagram used to represent words, ideas, tasks, or other items linked to and arranged around a central key word or idea. Mind maps are used to generate, visualize, structure, and classify ideas, and as an aid to studying and organizing information, solving problems, making decisions, and writing.
SWOT Analysis
A SWOT analysis is a tool, used in management and strategy formulation. It can help to identify the Strengths, Weaknesses, Opportunities and Threats of particular company.
Break-even Analysis
A company’s break-even point is the amount of sales or revenues that it must generate in order to equal its expenses. In other words, it is the point at which the company neither makes a profit nor suffers a loss. Calculating the break-even point (through break-even analysis) can provide a simple, yet powerful quantitative tool for managers. In its simplest form, break-even analysis provides insight into whether or not revenue from a product or service has the ability to cover the relevant costs of production of that product or service. Managers can use this information in making a wide range of business decisions, including setting prices, preparing competitive bids, and applying for loans.
Value Chain
The primary value chain activities are:
· Inbound Logistics: the receiving and warehousing of raw materials, and their distribution to manufacturing as they are required.
· Operations: the processes of transforming inputs into finished products and services.
· Outbound Logistics: the warehousing and distribution of finished goods.
· Marketing & Sales: the identification of customer needs and the generation of sales.
· Service: the support of customers after the products and services are sold to them.
Marketing Mix
The major marketing management decisions can be classified in one of the following four categories:
- Product
- Price
- Place (distribution)
- Promotion
These variables are known as the marketing mix or the 4 P’s of marketing. They are the variables that marketing managers can control in order to best satisfy customers in the target market
Organization Chart
Every organization has both a formal and an informal organizational structure. Examples of organizational structure are:
· Hierarchical structure ( typical for the small, entrepreneurial organization)
· Line-staff structure
· Functional or departmental structure (based on function, products/service,customer type, geographic region)
· Matrix structure ( dual reporting lines )
BCG Matrix
The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s. It is based on the observation that a company’s business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share". Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these two important determinants of profitability.
BCG Growth-Share Matrix
Competitive Advantage
Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.
There are two main types of competitive advantages: comparative advantage and differential advantage. Comparative advantage, or cost advantage, is a firm’s ability to produce a good or service at a lower cost than its competitors, which gives the firm the ability sell its goods or services at a lower price than its competition or to generate a larger margin on sales. A differential advantage is created when a firm’s products or services differ from its competitors and are seen as better than a competitor’s products by customers.
References:
1- http://www.12manage.com/description_top10.html#userforum
2- http://www.netmba.com/strategy/value-chain/
3- http://www.netmba.com/strategy/matrix/bcg/
4- http:/www.investopedia.com/c/competitive_advantage.asp
5- http://managementinnovations.wordpress.com/2008/12/04/henri-fayols-14-principles-of-management/
6- http://www.netmba.com/strategy/matrix/bcg/