February 25, 2016

Consumer Behavior

Marketing Management Revision Article Series



Buyer’s needs, characteristics and decision making process interact with the stimuli created by the environment and marketers and buying decisions are made by the buyers.



Hence marketers have to understand what happens in the buyer’s consciousness between the arrival of outside stimuli and the buyer’s purchase decision.
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The field of consumer behavior studies how consumers (individuals and groups) select, buy, use, and dispose of goods, services, ideas to satisfy their needs.

To understand the consumers in the target market, marketing managers rely on the 7 O’s framework of consumer research.

7 Os: Occupants, Objects, Objectives, Organizations, Operations, Occasions, Outlets


Who constitutes the market?   Occupants
What does the market buy?    Objects
Why does the market buy?     Objectives
Who participates in buying?   Organizations
How does the market buy?     Operations
When does the market buy?   Occasions  
Where does the market buy?  Outlets

Buyer’s needs, characteristics and decision making process interact with the stimuli created by the environment and marketers and buying decisions are made by the buyers.

Hence marketers have to understand what happens in the buyer’s consciousness between the arrival of outside stimuli and the buyer’s purchase decision. They must answer two questions:

·        How do the buyer’s characteristics – socio-cultural (sociological), personal, and psychological influence buying behavior?
·        How does the buyer make purchasing decisions?

Socio-cultural (sociological), Personal, and

Psychological Characteristics


Various sociological factors of importance

Cultural Factors

They have  the broadest and deepest influence. 


Culture 
Culture is different for different societies. In the modern days, there are more common elements. Culture is the most fundamental determinant of a person’s wants and behavior.

Subculture 
Culture of a society is not uniform across all groups in the society. There can be subcultures with certain elements differing from other groups’ cultural elements. Many subculture elements make up important market segments. In a country like USA, that allows people from various countries to come and settle in it, subcultures arise due to the original nationality, religion, racial group apart from the geographical subcultures and age group subcultures.

Social class 
Sociology identified that social stratification is common among many societies. Social class is a type of stratification. Social classes are relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behavior.

Social Factors
They include reference groups, family, and roles and statuses of a person.

 Reference groups

Reference groups influence a person’s behavior directly or indirectly.
Groups having a direct influence on a person are called membership groups. People are influenced in the consumption and purchase decisions by groups in which they are members like family, friend circle, neighbors, co-workers, sports teams etc.
People are also influenced by groups to which they do not belong presently, but want to belong in course of time. Such groups are called aspirational groups.
  
Family 
Family members constitute the most influential primary reference group or membership group. Each person has a family of orientation that consists of his parents, brothers and sisters. He has a family of procreation consisting of spouse and children. 

Statuses and roles 
People choose products that communicate their status in society. Marketers have to aware of the status symbol potential of products and brands. Each status has a role or group of activities to be performed. Persons have multiples statuses in different groups to which they belong. Therefore the roles have some bearing on the consumption and purchase decisions.

Personal factors of importance


Age and stage in the life cycle
Children consume baby food. Old people may eat special diets. People diagnosed with specific ailments avoid certain food items. Hence it is easy to conclude thaat people buy different goods and services over their life time. 
Occupation
Occupation determines the types of items people buy. Certain occupations demand simple living  and certain occupations demand display of wealth and prosperity.

Economic circumstances
People’s economic circumstances consist of their disposable or spendable income, assets, debts, and attitude toward spending versus saving. Marketing of income-sensitive goods has to take into consideration the shifts in personal income and savings habits.
Life style
A person’s life style is the person’s pattern of living in the world as expressed in activities, interests, and opinions. People coming from the same subculture, social class, and occupation do lead quite different life styles. 
The life style is reflected in the consumption patterns. different agencies and authors have identified differnet life style categories. McCann Erickson London identifed among British, Avant-Gardians, Pontificators, Chamelons and Sleepwalkers. The advertising agency, D'arcy, Masius, Benton & Bowles identified five categories among Russians, Kuptsi, Cossacks, Students, Business Executives, and Russian Souls. 
Llifestyles among British people.
Avant-Gardians (interested in change)
Pontificators (traditionalists, very British)
Chamelons (follow the crowd)
Sleepwalkers (contented underachievers)

Psychological factors of importance


Personality and self concept 
Personality denotes a person’s distinguishing psychological characteristics that lead to relatively consistent and enduring responses to various stimuli.
Motivation 
Motivation to purchase and consume an item is to be understood by marketers. Need sets up drive that seeks a goal. Marketers want the goal a person desires has to be the product that they are offering. A drive is a strong internal stimulus impelling action.
Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.
Learning
 Learning involves changes in an individual’s behavior arising from experience. Most human behavior is learned
 Beliefs and attitudes
 A belief is a descriptive thought a person holds about something.
 An attitude is a person’s enduring favorable or unfavorable emotional feelings and action tendencies toward some object or an idea.

The Buying Process


Roles people play in buying process

In the buying decision a person can play any role in the list of roles given below.
 Initiator
He may initiate the purchase by another person by explaining to him the needs served by a product.
 Influencer
He may infuence another by suggesting which brand needs to be bought.

Decider
He is the decider to buy it.
 Buyer
He is the actual buyer who goes into the market and buys. 
User
He is the user of the product.

Example: A school teacher may suggest to a child that he needs to buy a computer. His classmates may tell him that they own a particular brand of computer and they are very happy with its features. His father could be the decider of the purchase. His mother may go to shop and buy the computer. The child is the user.

Buying behavior


Habitual buying behavior
In this buying situation, the purchaser is not involved in the product and there is not much risk and there is no appreciable difference between various brands available. He buys the brand by habit.
Variety seeking buying behavior
In this buying situation also, the purchaser is not that much involved, but likes to try various brands
Complex buying behavior
In this buying situation, the buyer is very involved and spends some time to learn about various alternatives available and buys the product/brand.
Less careful buying behavior with more chance of dissonance
In this buying situation, the differences between brands is not much and customer takes decisions quickly. But there is a possibility that he may experience some disappointment and tries to justify his purchase decision

The stages of buying decision process


Problem recognition
A potential purchaser first recognizes a need for a product

Information search
He goes around searching for information the available alternatives

Evaluation of alternatives
He evaluates the alternatives

Purchase decision
He makes the purchase decision

Post purchase behavior


Post purchase satisfaction
The buyer's satisfaction is a function of the closeness between the buyer's product expectations and the product's perceived performance.
Post purchase actions
If buyers are satisfied they may purchase again.
If they are dissatisfied, they may return the product. They will inform their friends not to buy.
Post purchase use and disposal
The marketer has to be monitor use of the product. If people bought the product but are not using it, sales will not grow. If people are using the product for additional uses not anticipated by the marketer, the information is of value in increasing sales.
 

Consumer Behaviors: Catherine Roe (Google) at TEDxUChicago 2012
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Consumer Behaviour - Full Course - 40 videos
NPTEL - IIT Kharagpur

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References

Philip Kotler, Marketing Management, 9th Edition

Marketing Management Online Text Book by Tanner and Raymond - Principles of Marketing


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Planned Revision schedule for marketing chapters is in February and March

Article on differentiating and positioning http://nraomtr.blogspot.com/2011/11/marketing-strategy-differentiating-and.html

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Article originally posted by me in
http://knol.google.com/k/consumer-behavior


Updated 25 Feb 2016, 3 Dec 2011

February 20, 2016

March 1st Week - MBA Management Knowledge Revision

February 4th Week MBA Management Knowledge Revision

Feb 3rd Week MBA Management Knowledge Revision

February 19, 2016

Communication - Koontz and O'Donnell - Review Notes

Communication is the transfer of information from a sender to a receiver, with the the intention or the objective that it is understood by the receiver. Communication is effective when the receiver understands the message.

Importance of communication in organizations is recognized by many authors. Chester Barnard gave the role of linking together people in an organization to communication. Group activity (even within two people group) is impossible without communication.


Four critical areas of communication are message quality, conditions for reception, maintenance of integrity of organized effort, and taking advantage of informal organization.

Principles useful for establishing good communications are:


1. Principle of clarity: Communicate in commonly understood language. It requires familiarity with language patterns of subordinates, peers and superiors. Following this principle will avoid badly mistakes in messages like badly expressed content, and unclarified assumptions etc.

2. Principle of attention: This principle is for the listener. Give attention to receiving the communication.

3. Principle of integrity: This principle relates to the purpose of communication. To a manager, a communication is always a means, never an end. It is one his tools for securing and maintaining cooperation in achieving enterprise objectives.

4. Principle of strategic use of informal organization: The informal organization is a reality and managers need to use this channel intelligently. But no orders should be given through this channel.

Adherence to these principles requires voluntary application by all members of the organization. No one can point out to dollar savings, for the cost of poor communication cannot be calculated. But all agree that there will be cost improvements from better communications.


Barriers and Breakdowns in Communications 

(Weirich and Koontz 10 Edition)

Communication breakdowns are one of the important problems in organizations. But communication problems may be symptoms of more deeply rooted problems also.  The plans of the organization may not have been accepted by large number of persons in the organization. The organization structure could have been poorly designed. The performance standards may have been vague. Hence managers may have to look for the causes of poor communication in the other functions of management also.

Specific communication barriers listed by the authors are:

Lack of planning
Unclarified assumptions
Semantic distortion
Poorly expressed messages
Loss by transmission and poor retention
Poor listening and premature evaluation
Impersonal communication
Distrust, threat, and fear
Insufficient period for adjustment to change
Information overload
Some more barriers

Making Communication More Effective

One approach is make a communication audit. Another approach is to apply communication techniques, with the focus on interpersonal and listening.


Crosswise Communications

This topic was covered in edition four of Koontz and O'Donnell

All enterprises not only permit but insist on voluntary crosswise or horizontal channels of communications at all levels, to speed information and improve understanding.


Updated 4 August 2014, 11 Dec 2011


References




Rogers, C.R., and F.J. Roethlisberger, " Barriers and Gateways to Communication," Harvard Business Review, vol. 30, no. 4, pp.46-52 (Julu August, 1952).

Communications Management - Video - PMP Prep Exam Career Academy
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MBA Core Management Knowledge - One Year Revision Schedule



Updated  19 Feb 2016, 30 Dec 2014

February 18, 2016

Success in Niche Marketing - Foundation for Growth






This paper presents a success study of recently established startups that have grown to become some of the largest firms in the United States within 30 years or less through niche marketing. For this purpose, the Fortune 500 indexes for the years 1993 and 2003 are compared.  In 2003, there were 358 new Fortune 500 entrants, and among them, 240 firms were incorporated as startups. The initial entry types of 358 new Fortune 500 entrants are tracked through Standard & Poor's Corporate Descriptions plus News.


The study examines 16 niche market creators among 44 new entrant startups, particularly those
founded after 1975.

Many previous studies concluded that the performance of first movers is superior to late movers’
(Michael, 2003; Thomas, 1996; Golder & Tellis, 1993; Mascardenhas, 1992; Parry & Bass, 1990;
Carpenter & Nakamoto 1989; Liberman & Montgomery, 1988; Urban, et. al. 1986). McDougall and
Robinson (1990) argue that first mover advantage can fasten the growth of new startups. Even under hostile business environments, niche marketing leads to better performance, which implies that new startups with market initiatives are invulnerable to exogenous market shocks (Covin, et. al. 1999). Niche marketing accompanies first mover advantage and thus can provide a shortcut for startups to achieve rapid growth in a short time period through market leadership (Gilbert & Newsberry, 1982), strong brand image  (Vanderwerf & Mahon, 1997), learning by doing (Robinson & Fornell, 1985), and foreign penetration (Li, et. al. 2003). Nevertheless, the longevity and survival rate of first and second movers are not significantly different (Lilien & Yoon, 1990).

This paper adopts a market-based performance approach because pioneer rapid-growth startups have diverse industry backgrounds. More specifically, this paper tackles several critical questions regarding their exploration of niche markets. At the same time, the threat of hostile M&As must be carefully considered once niche markets are proven to be profitable markets. In other words, large enterprises have strong incentives to pursue M&As because they are able to circumvent sunk costs while acquiring know-hows and marketing channels. Therefore, protecting themselves from hostile M&A attempts becomes a sufficient condition for the survival of rapidly growing pioneer startups.

This paper focuses, in particular, on testing which shock between quality shock and market shock
contributes more to the remarkable performance of pioneer rapid-growth startups highlighting with their early competitors; adjusted total market capitalization, sales, gross profits, and net income are used as performance measures. Adjusted total market capitalization and sales represent stock market evaluation and firm growth, which are proxies for measuring size expansion. Gross profits and net income represent profitability.

Quality shocks, estimated by total factor productivity (TFP), can capture such information as quality improvements in both manufacturing startups and service startups while market shocks capture exogenous business fluctuations.


At the meanwhile, this paper does not aim to scrutinize how each pioneer rapid-growth startup has
explored its niche market because each pioneer has its own unique success story. Therefore, this paper adapts the discrete-choice racing models introduced by Yim (2008) and Filson & Gretz (2004). This is an effective way to understand how pioneer startups have achieved remarkable rapid growths through strategic investments in niche markets. For simplicity, four growth scenarios, named as scenarios 1, 2, 3, and 4 are prepared, using the combinations of the quality and market shocks: {high quality, high market}, {high quality, low market}, {low quality, high market}, and {low quality, low market}. They represent four possible business scenarios. Simulation results predict that pioneer startups are more likely to maintain market leadership as larger shocks occur and, among the two types of shocks, quality shocks enhance the startups’ likelihood of winning innovation races more than market shocks do. Alternatively speaking, the startups under interests are more likely to enjoy first mover advantages when they experience higher quality shocks.

The predictions of the racing model are verified through empirical frameworks. For this purpose,
some panel firm, industry, and time fixed effect models are constructed. According to empirical results, the contributions of quality shocks on pioneer startups’ performances are significantly greater to those of their
early competitors. However, no evidences are found if pioneer rapid-growth startups benefit more from market shocks compared to their early competitors. Among four business scenarios, scenarios 1 and 2 have positive and significant effects on the performance of pioneer rapid-growth startups, and thus it is evident that firm specific innovation capability is the key success factor for pioneer rapid-growth startups. They can grow more rapidly if favorable market lucks occur. Schmalensee (1985), Rumelt (1991), and McGahan (1999) conclude that firm effects can explain a larger part of the variations in firm values of the U.S. manufacturers, but the main result of this paper using the censored data from Fortune 500 archives can suggest a slightly different interpretation. In that, the impact of market lucks cannot be simply neglected as trivial because market shocks are still significant to the performance of early competitor group that is composed of the nation’s largest enterprises. However, firm-level innovation capability is obviously crucial for successful startups with the strategic shortcut of niche marketing.



A Strategic Pathway to the Rapid-Growth of New Startups: Niche Marketing and Strategic Investment


Yim, Hyung Rok
(Assistant professor)

School of International Studies
Kyung Hee University (Korea)






February 17, 2016

Philip Kotler's Video Lectures, Presentations and Interviews on Marketing



Philip Kotler: Future of business is doing good (and the four Ps are safe)

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Marketing Magazine
Uploaded 22 Feb 2015

Marketing 1.0  -Rational appeal to consumers.
Marketing 2.0 - Emotional appeal to consumers
Marketing 3.0 - Think of consumer segment who cannot buy your present product. Think of cost reduction of the product and serve those sections out of philanthrophic feelings.


The Larger Context for Social Marketing
Marketing for Planned Social Change
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World Social Marketing upload
2013




The Larger Context for Social Marketing

Social marketing is one of six social change strategies. To be maximally effective, social marketers must work with other social change strategies. Social marketers must tie their work to new technologies that become available and also tie their work to current and emerging
social movements. The addition of upstream and mid-stream social marketing thinking is enriching the power of social marketers to more effectively bring about behavioral change, its main objective.

Leader has to innovate and increase productivity



Leader has to innovate and increase productivity.


Leaders have to be effective and efficient

Leaders have to improve top line (revenues) and bottom line (profits). To increase profits they have to reduce costs relatively. Unit costs have to come down.

Leader has to come up with new ideas to improve the product, or design a new product. He has to find new markets. This is a top line activity.

Leader has to increase productivity. Leader must help his followers to produce more, more of an improved product. This will reduce cost and increase contribution. Increase in contribution helps in providing more income to followers.  Productivity provides mental satisfaction first due to achievement, second due to the appreciation provided by leaders to follower. And then the extra income completes the feedback loop. If you have done some very good, you deserve a reward from the external environment.


Innovation distinguishes between a leader and a follower.  - Steve Jobs

February 16, 2016

Staffing - Global Management Issues

Japan

People are hired out of school. They stay with the company for life time employment.


Koontz and O'Donnell  13th Edition


Training and Development - The German/European Model


About half a million German firms train 1.8 million teenagers, or 6 percent of the workforce through vocational training system.

The Vocational Academy

In 1974, the German state of baden-Wuerttemberg, together with firms such as Daimler-Benz and Bosch, started the Vocational Academy (also called Stuttgarter Educational Model). This managerial training model focuses on technology, social sciences, and business.

Now this model is offered in 8 cities. 3000 enterprises are participating.

Cooperative training by industry and educational institutions is being successfully practised in Germany.


Updated  16 Feb 2016, 11 Dec 2011

Part of Feb Management Revision Plan (16 Feb 2016)


Organizing - Global Management Issues - Review Notes

Japan

The emphasis is on collective responsibility. Individual responsibilities are implied rather than explicitly stated.


In the organizing function ofmanagement, Koontz and O'Donnell described the development of Lexus y Toyota.

The goal for the product was a car that travels at 150 miles per hour and give mre than 22.5 miles per gallon.  (1983).

The design interations were done till the objective was realized.

Advanced manufacturing technology and automated inspection to assure quality were used.

The consumer was kept at the center everything was designed after validating that the features and benefits were to the satifaction of the consumer.

Updated 16 Feb 2016, 12 Dec 2011

Part of February Revision Plan (16 Feb 2016)

February 12, 2016

Productivity Control - Productivity Management

Productivity is a major concern in 1990s and will be one of the major concerns in the future also.

Productivity implies measurement and thus is connected to control in which also measurement is important.

Industrial engineering is the profession with focus on efficiency and productivity. IIE's describes itself as the global asseociation of efficiency and productivity professionals.

Productivity of knowledge workers is yet to be operationalized for measurement and improvement.

Koontz and O'Donnell and Weirich covered Operation related productivity improvement techniques in this chapter.

Operations research
Time event networks
Value engineering
Work simplification
Quality circles

In some editions of the book on Management, Koontz, O'Donnell and Weirich said, in reality, the entire book of management is about productivity.


14th Edition


In 14th Edition, Chapter 20 is titled as  Productivity, Operations Management, and Total Quality Management.

The authors, say in a real sense, this whole book is about the improvement of productivity. How it will receive special attention in this chapter.

Undoubtedly, productivity is one of the major concerns of managers in the 21st century.

Productivity is the output-input ratio within a time period with due consideration for quality. Measurement of skill work is relatively easy, but it is more difficult for knowledge work.

Good management results in improvement of productivity.


Tools and Techniques for Improving Productivity


Value Engineering


Specific Steps:

1. Divide the product into parts.
2. Identify the costss for each part.
3. Identify the relative value of each part with respect to the  lowest cost design alternative for a similar function.
4. Find a new approach for those items that appear to have a high cost and low value.

Work Simplification


This is a process of obtaining the participation of workers in simplifying their work. Training sessions are conducted to teach concepts and principles of techniques such as time and motion studies, work flow analyses, and the layout analysis methods.

Just-in-Time Inventory System


In this inventory system, safety stocks are drastically reduced. , Set up cost or ordering cost is also drastically reduced giving low batch quantities for production and ordering. There is emphasis on zero defects, and any defective part found during the subsequent operation is immediately sent back to the earliest state for repair and the reasons for the defect occurrence is investigated and corrected. For the system to work, dependable relations with suppliers are required and also well planned transport arrangement that collect parts frequently in a day from many suppliers in small quantities is required. Japanese companies have made successful implementation of JIT systems and rest of the world is now redesigning its systems to implement JIT system and improve productivity.

Lean Manufacturing


A study by MIT team on American, Japanese and European car manufacturers showed that Japanese were more productive as they use fewer workers, a shorter development time, lower inventories, few suppliers, less production space, and less investment to produce more models. Their delivery times are also small. MIT team named the Japanese systems as Lean Systems and popularised Lean manufacturing.

Lean manufacturing is creative application of industrial engineering by the Japanese IEs and managers and is now a popular productivity improvement methodology all over the world.



Updated 12 Feb 2016,  12 Feb 2014

Feb 2nd week MBA Management Knowledge Revision

February 3, 2016

Economic Model Based on Ekatma Manav Darshan (Integral Humanism)


First Published on 24 January 2016, 1.52 pm (Indian Standard Time)




|Self Interest, Others' Interests, Freedom subject to Principles of Dharma|
| (Kama),        (Moksh)                 (Dharma)                                               |






                                                       Leads to



| Individual learning,  Individual Activity, Increase in Knowledge,  Innovation, Major Adventures|
|     (Dharma),                 (Karma)                   (Jnana)                                         (Rajayogic ventures|


                                                        In turn leads to

|Growth in Wealth, Social stability, Socially Committed People|
|  (Artha,                                                     (Bhakti)                     |



Ideas for enlarging the model.



In the intermediate step we can include activities of  Consumers and Social Sector Organizations, Government and Political Parties, Business Organizations and Trade Unions. Thus we identify and brings activities of people in the society into the model.

Bhakti can be interpreted commitment to the society, commitment to the organizations and to the people managing the organizations. Commitment will come only when people take care of desires of other people (stakeholders) apart from their own.


Reference

Self Interest: The Economist's  Straight Jacket
Robert Simons, Professor, Harvard Business School
Working Paper, 2015
http://www.hbs.edu/faculty/Publication%20Files/16-045_2276e3cd-ab73-4ee8-b494-59488e6e1f0b.pdf





Deendayal Upadhyaya - Biography and Philosophy - Integral Humanism




POSTULATES OF HINDUTVA THEORY OF ECONOMIC DEVELOPMENT - Intergral Humanism - Subramanian Swamy
http://guide-india.blogspot.com/2016/01/postulates-of-hindutva-theory-of.html

A “postulate” (noun) is a statement that someone claims to be true and upon which
further discussion is based.
http://www.capitalism21.org/wp-content/uploads/2011/09/IMN-Paper-9-Postulates.pdf

Towards a Framework for a Hindu Economic Model
By Lall B. Ramrattan, Ph.D., UC Berkeley Extensionhttp://dharmacivilization.com/2012/11/towards-a-framework-for-a-hindu-economic-model/



Updated 26 Jan 2016, 24 Jan 2016

February 1, 2016

Febuary 1st Week - MBA Management Knowledge Revision

The Nature of Organizing - Review Notes

I would like to mention right at the start that Henri Fayol clearly wrote that material organization and people organization are to be be set up by managers after the planning function is completed for a project or a period. But in his brief note, Fayol discussed only people organization. Authors subsequent to Fayol have not progressed further. The development of material organization was not attempted by authors of books on management and principles of management. It is a big shortcoming in the theory of management and somebody has to fill it.

Koontz and O'Donnel explain organizing as (1) the identification and classification of required activities. (2) the grouping of activities necessary to attain objectives, (3) the assignment of each grouping to a manager with the authority (delegation) necessary to supervise it, and (4) the provision of coordination horizontally (on the same organizational level) and vertically( departments with headquarters etc.)

The first step identification and classification of required activities is based on the technology or techniques employed. One has to first create one person equivalent jobs from the total activities needed to be done by the organization. This one person equivalent jobs are to be created so that each person is effective and efficient (that is he able to produce the required product feature or service feature to the specification and he is able to have high productivity). Only when this stage is done that the second stage of grouping of the activities or people into units to be put under managers can be attempted.  A single person cannot do all the managing activities for all the activities to be done in an organization. So middle managers are necessary between a CEO (chief manager in more general terms) and actual operators who are predominantly technical people. Managers have business skills, people skills and training skills in the technical activities that they manage. As it has been stated at the starting management texts ignored the process involved in the first step totally.

Organization implies a formalized intentional structure of roles or positions.  Intentional structure means each person in the structure has a certain specified role designed to ensure that required activities to fulfill the objectives of the organization are carried out effectively and efficiently in groups.


While organization implies a formalized intentional structure of roles which is the formal organization built by managers, an informal organization comes into existence certain people help each other in their employment related work as well as personal work.

Formal organization

Formal organization must be flexible. There should be room for discretion, for advantageous utilization of creative talents, and also for adjusting roles based on individual likes and dislikes. Yet efforts of all individuals must be channeled toward group and organization goals.

Informal organization

Chester Barnard recognized informational organization.

Span of control or management

Span of control refers to the number of subordinates a person can supervise. This number is usually four to eight at top levels and eight to fifteen at lower levels.

Delegation

Logic of organizing



13th Edition by Heinz Weirich, Mark V. Cannice and Harold Koontz

They explain the process or logic or organizing in the following steps:

1. Establishing enterprise objectives.
2.Formulating supporting objectives, policies, and plans.
3. Identifying, analyzing, and classifying the activities necessary to accomplish these objectives. (Technology adopted is a major determinant of activities and then the capital equipment and raw materials also play a role in the activities necessary. Human resource requirement is arrived at on the basis of technology, capital equipment and raw material inputs)
4. Grouping these activities in light of the human and material resources available and the best way under the circumstances of using them.
5. Delegating to the head of each group the authority necessary to perform the activities.
6. Tying the groups together horizontally and vertically, through authority relationships and information flows.


The steps three and four are important steps but have not received attention and have not been developed in basic management theory.

3. Identifying, analyzing, and classifying the activities necessary to accomplish these objectives.
4. Grouping these activities in light of the human and material resources available and the best way under the circumstances of using them.

In the step 3 activities required to accomplish the objectives have to be identified. This requires identification various technologies, required equipment,  energy sources and materials. Even the feasibility of training personnel in the technology and use of materials has to be considered. An optimal combination that provides return on investment has to be identified. It is a complex and iterative process that needs to be developed and described for proper management practice.

4. Grouping these activities in light of the human and material resources available and the best way under the circumstances of using them.

Note that step 4 brings the material resources into picture to group activities. Hence organization process assumes that material resource decisions are taken before hand. But where and when in the management process. This aspect was not specified. This is the drawback that I am referred in the current theory of management.


Basic Questions for Effective Organizing of Human Resources


1. What determines the span of management and hence, levels of organization?
2. What determines the basic framework of departmentation, and what are the strengths and weaknesses of the basic forms?
3. What kinds of authority relationships exist in organizations?
4. How should authority be dispersed throughout the organization structure, and what determines this dispersion?
5. How should the manager make organization theory work in practice?


Please give your comments and suggestions on issues to be added to this short revision notes. Also please inform the recent research in this area.

Updated  1 Feb 2016,   2 Feb 2015,  5 Jan 2015, 28 July 2014, 12 Dec 2011


MBA Core Management Knowledge - One Year Revision Schedule


Related topics

Related topics

The Nature and Purpose of Planning
The Nature of Organizing
Resourcing - A Function of Management
Leading - Introduction
Planning and Execution - Theory and Practice
The System and Process of Controlling