Notes

CORPORATE STRATEGY

HERZBERG’S “MOTIVATION – HYGIENE” THEORY :

Frederick Herzberg explored the question “What do people want from their jobs”. He did this through asking various people about situations and events at work, when they felt exceptionally good or bad about their jobs.

Herzberg’s collection of information revealed that intrinsic factors are related to job satisfaction, whilst extrinsic factors created job dissatisfaction. In other words when people felt satisfied and happy at work the conditions present were directly affecting their inner feelings and self esteem. Yet dissatisfaction was created by the job environment people worked in and the interactions within that environment. This distinction is clearly illustrated in the table below.

:

Management Concepts

Motivators creating job satisfaction	Hygiene factors creating job dissatisfaction
Achievement	Supervision
Recognition	Company Policy
Work Itself	Relationship with Supervisor
Responsibility	Working Conditions
Advancement	Salary
Growth	Relationship with Peers
	Personal Life
	Relationship with Subordinates
	Status
	Security

As job satisfaction and job dissatisfaction are controlled by different factors Herzberg concluded that job satisfaction was not the opposite of job dissatisfaction. In contrast to the accepted theories at the time, Herzberg believed that job satisfaction was a distinct and separate entity from job dissatisfaction.

In other words the complete removal of job dissatisfaction will not cause an employee to feel job satisfaction. Similarly job satisfaction does not necessarily eradicate all elements of job dissatisfaction. Herzberg therefore decided that the opposite of job dissatisfaction was simply a work environment containing “no dissatisfaction” and the opposite of job satisfaction was an employee feeling “no satisfaction”.

As extrinsic factors do not motivate employees Herzberg referred to these as Hygiene factors and intrinsic factors were called motivators for obvious reasons. From the 1960s to the 1980’s Herzberg’s theory of motivators and hygiene factors was widely popular. After that other studies labelled it as simplistic but its principles can still be found within other motivation theories.

Maslow's hierarchy of needs

Abraham Maslow between 1943-1954 developed his 'Hierarchy of needs' motivation theory. It is probably the most popular and most read motivation theory. His theory suggests that within each person their is a hierarchy of needs and the individual must satisfy each level before they move onto the next. There are five hierarchical levels. These are:

Physiological needs: Food, shelter, sexual satisfaction i.e those needs needed for basic survival.
Safety needs: The need to feel safe within your environment. Also refers to emotional and physical safety.
Social Needs: The need for love, friendship and belongingness
Esteem needs: The need for self respect, status and recognition from others.
Self actualisation: The point of reaching ones full potential. Are you capable at excelling yourself?

Diagram: Maslow's Hierarchy of Needs

Maslow's hierarchy of needs

So an individual will need to satisfy their most basic need before they can move onto the next. Only when that individual knows that they have met their physiological needs will they move onto their safety needs. Maslow suggests that if you wanted to motivate an individual you will need to know where within the hierarchy they are placed. So how would an organisation use Maslows theory?

Application of Maslow's theory within the workplace.

Maslows level

What the organisation could do

Physiological

Competitive salary

Safety

Safe working condition

Social

Work social events

Esteem

Feedback via appraisal, generally praising staff

Self actualisation

Allocating more challenging and stimulating responsibilities

There are however problems with Maslows theory. Firstly it is difficult to tell at what level a person is at within their hierarchy and when that level has been satisfied. Also there is little statistical evidence to prove that this theory actually works. Neverless, it is popular and does have some weight behind it.

SCIENTIFIC MANAGEMENT

The theory of scientific management is the “brainchild” of Frederick Winslow Taylor. In its simplest form the theory is the belief that there is “one best way” to do a job and scientific methods can be used to determine that “one best way”.

Taylor developed his theory through observations and experience as a mechanical engineer. As a mechanical engineer Taylor noticed that the environment lacked work standards, bred inefficient workers and jobs were allocated to people without matching the job to the worker’s skill and ability. In addition to this the relationship of the workers with the managers included many confrontations.

Over a 20 year period Taylor devised the “one best way” to do each of the jobs on the shop floor. He then concluded that prosperity and harmony for both workers and managers could be achieved by following the 4 guidelines below:

Develop a science for each element of an individual’s work, which will replace the old rule of thumb method.
Scientifically select and then train, teach and develop the worker.
Heartily cooperate with the workers so as to ensure that all work is done in accordance with the principles of the science that has been developed.
Divide work and responsibility almost equally between management and workers.
Management takes over all the work for which it is better fitted than the workers (rather than most of the work and responsibility being assigned to the workers).

A well known example of the scientific management theory is the pig iron experiment. Iron was loaded onto rail cars by workers each lot weighing 92 pounds and known as a “pig”. On average 12.5 tons were loaded onto the rail cars but Taylor believed that scientific management could be used to increase this to 47/48 tons per day. Through experimenting with various procedures and tools Taylor achieved this. This is how he did it:

Taylor ensured that he matched each of the jobs to each of the workers skills and abilities.
Taylor ensured that he provided the workers with the correct tools.
Taylor ensured that he provided workers with clear instructions about how to do each job. Taylor ensured that the workers understood the instructions and then Taylor ensured that the workers followed the instructions exactly as he had explained.
Taylor then created worker motivation by providing a significantly higher daily wage.

It is believed that through the use of scientific management Taylor increased productivity on the shop floor by 200 percent. Taylor’s ideas and thoughts were adopted throughout the world including in France, Russia and Japan. In today’s world scientific management has been merged with other ideas and is used by managers in the form of time and motion studies to eradicate wasted motions, incentive schemes based on performance and hiring the best qualified workers for each job.

Management Styles

In many management text books the three most talked about management styles are democratic, autocratic and consultative. Selecting the correct management style may lead to greater motivation and productivity from your staff. However, it is not as easy as just 'picking' a style. Managers personalities and characteristics will influence the type of style adopted. For example a timid manager will find an autocratic management style difficult to adopt.

Democratic Management Style

A democratic manager delegates authority to his/her staff, giving them responsibility to complete the task given to them (also known as empowerment). Staff will complete the tasks using their own work methods. However, the task must be completed on time. Employees are involved in decision making giving them a sense of belonging and motivating individuals. Because staff feel a sense of belonging and are motivated the quality of decision making and work also improves. Although popular in business today, a democratic management style can slow decision making down because staff need to be consulted. Also some employees may take advantage of the fact that their manager is democratic by not working to their full potential and allowing other group members to 'carry' them.

Autocratic Management Style

In contrast to the above an autocratic manager dictates orders to their staff and makes decisions without any consultation. The leader likes to control the situation they are in. Decision are quick because staff are not consulted and work is usually completed on time. However this type of management style can decrease motivation and increase staff turnover because staff are not consulted and do not feel valued.

Consultative Management style

A consultative management style can be viewed as a combination of the above two. The manager will ask views and opinions from their staff, allowing them to feel involved but will ultimately make the final decision.

Laissez Faire Management style

A laisses faire manager sets the tasks and gives staff complete freedom to complete the task as they see fit. There is minimal involvement from the manager. The manager however does not sit idle and watch them work! He or she is there to coach or answer questions, supply information if required. There are benefits, staff again are developed to take responsibility which may lead to improved motivation. However with little direct guidance from the manager staff may begin to feel lost and not reach the goals originally set within the time frame.

Diagram: Different forms of management styles

Management Styles

Organisational Culture

When we walk into an organisation and get a certain 'feel' for it, whether it is fast moving and responsive, or whether it feels old and backward looking, this 'feeling' is referred to 'organisational culture'. Culture is about how the organisation organises itself, it's rules, procedures and beliefs make up the culture of the company. In this section we are going to briefly look at six types of organisational cultures.

Power Culture

Within a power culture, control is the key element. Power cultures are usually found within a small or medium size organisation. Decisions in an organisation that display a power culture are centralised around one key individual. That person likes control and the power behind it. As group work is not evident in a power culture, the organisation can react quickly to dangers around it as no consultation is involved. However this culture has its problems, lack of consultation can lead to staff feeling undervalued and de-motivated, which can also lead to high staff turnover.

Role Culture

Common in most organisations today is a role culture. In a role culture, organisations are split into various functions and each individual within the function is assigned a particular role. The role culture has the benefit of specialisation. Employees focus on their particular role as assigned to them by their job description and this should increase productivity for the company. This culture is quite logical to organise in a large organisation.

Task Culture

A task culture refers to a team based approach to complete a particular task. They are popular in today's modern business society where the organisation will establish particular 'project teams' to complete a task to date. A task culture clearly offer some benefits. Staff feel motivated because they are empowered to make decisions within their team, they will also feel valued because they may have been selected within that team and given the responsibility to bring the task to a successful end. NASA organise part of their culture around this concept ie putting together teams to oversee a mission.

Person culture

Person cultures are commonly found in charities or non profit organisations. The focus of the organisation is the individual or a particular aim

Forward and backward looking cultures.

Organisations that have an entrepreneurial spirit, always embrace change and listen to staff and customers are said to be forward looking. Forward looking organisations are risk takers and do well because of it. We can argue that Dyson the vacuum cleaner manufacturer embraces this culture. A backward looking culture does not embrace change and is led by systems and procedures. They do not take risk and because of it are usually left with a business not doing so well UK store Marks and Spencers is said to be 'backward looking' ie slow to change.

Diagram: Forms of organisational culture.

Organisational Culture

Organisational Functions

Introduction

In order to produce and sell their product or service most organisations will need to undertake 6 key functions.

Design and Production
Finance
Human Resources
Sales and Marketing
Administration
Research and Development.

Each of the functions will need to work together so that the whole of the organisation has the same aims and objectives. To achieve this communication across the various functions is key activity. A starting point for this type of communication is the creation of a clear set of company objectives which each function is aware of. These objectives then need to be further broken down into specific objectives for each function. Regular reviews of firstly how each function is performing against it’s objectives and secondly how the company is performing against it’s overall objective should ensure that the whole company is pulling in the same direction.

Factors of Production

To generate a product or service an organisation will need to combine labour, capital, energy, materials and information.

Labour is the mental and or physical effort of employees and can take a variety of forms including filing, lifting, data processing, decision making, and line management. In fact labour is any effort/task an employee needs to undertake in order to produce the product or service.

Capital is the machines and tools needed to produce the product or service. This physical capital is purchased through financial capital such as loans, sale of shares in the organisation and use of profit generated by the organisation.

Energy is provided through the use of gas, electricity, solar power and steam. Energy is needed to heat/light up the premises, make the machinery work and to ensure that the organisation is a comfortable place for the employees to work in.

Materials in their raw form are needed to produce the product or service. For example a restaurant will need ingredients to make the food that they serve to their customers.

Information is the knowledge and expertise needed to produce the end product. For example a restaurant will need to know what ingredients are necessary for each dish, what quantity of ingredient to use, how to mix each ingredient and how long (if at all) to cook each dish.

NB Factors of production have also been classified into land, labour, capital and enterprise. In this type of classification natural resources such as water, coal and fam land are grouped together as land. Whilst enterprise, are all the factors which bring together land, labour and capital to produce the end product.

Finance Function

The financial section of the organisation will keep manual/electronic records of money received and paid out by the organisation. This information will then be used to produce various financial statements for tax purposes and to comply with legal requirements. The information will also be used to produce management accounts to enable senior managers to plan and review business strategy.

The finance department or unit may also be responsible for administering employee expenses and salaries. For payment of wages the finance department will need to take into account statutory deductions such as tax, and employee contributions such as pension or loan repayments.

Human Resources Function

Human resources or Personnel’s main responsibility is the recruitment, selection, training and development of staff. This will involve developing staff to maximise their potential in a manner that furthers the organisation’s objectives.

Human resources may also need to comply with legislation applicable to the country in which they are based. For example in the UK employers will need to maintain accurate personal records in a manner that is compliant with the UK Data Protection Act 1984.

Human resources often adopt a welfare role which includes looking after employees whilst they are at work. They may also create policies that balance organisational needs with those of the employee. They will also interpret employee welfare legislation and ensure that the organisation is complying with the applicable legislation.

Sales and Marketing Function

The marketing department will research customer needs to develop strategy and product to satisfy that customer need. In it’s research, the marketing department will investigate the market they are aiming at; the type of consumer making up the market (age, background sex etc) and the preferences of the consumer within that market. The marketing department will then need to marry consumer preferences with producing a product that is profitable. Once the product has been designed by the production department marketing will then need to package, advertise, and promote the product.

Sales are responsible for persuading the consumer to purchase the end product, manufactured through marketing’s research. The Sales Department’s selling strategy could involve mailshots, travelling sales representatives, telephone sales and devising the sales interview.

Administrative ( or Facilities Management) Function

This involves dealing with all administrative tasks including mail handling, dealing with enquiries/complaints, catering, and computer services. They will also produce documents (eg forms, stationary, and newsletters) for the organisation and maintain the organisation’s premises and equipment.

This function although not always recognised is vital, as it is the glue that holds the organisation together. Without an administrative department, customer complaints would not be resolved, customer orders may not be processed, and the workforce may not have the tools they need to complete their tasks.

Research and Development Function

The aim of research and development is to improve existing products, create new and better products, improve production methods, and create effective processes. This will enable the organisation to reduce costs, increase profitability and remain ahead of the competition. As not all research will lead to new/improved products/processes companies will need to allocate a specific portion of their budget to research and development activities.

Organisational Structures : Introduction

Introduction

Organisations are structured in a variety of ways, dependant on their objectives and culture. The structure of an organisation will determine the manner in which it operates and it’s performance. Structure allows the responsibilities for different functions and processes to be clearly allocated to different departments and employees.

The wrong organisation structure will hinder the success of the business. Organisational structures should aim to maximize the efficiency and success of the Organisation. An effective organisational structure will facilitate working relationships between various sections of the organisation. It will retain order and command whilst promoting flexibility and creativity.

Internal factors such as size, product and skills of the workforce influence the organizational structure. As a business expands the chain of command will lengthen and the spans of control will widen. The higher the level of skill each employee has the more the business will make use of the matrix structure to maximize these skills across the organization.

Span of Control

This term is used to describe the number of employees that each manager/supervisor is responsible for. The span of control is said to be wide if a superior is in charge of many employees and narrow if the superior is in charge of a few employees.

Different Structures

The most common organisation structures are:

· Tall

Advantages of tall Organisations

Disadvantages of tall Organisations

There is a narrow span of control ie each manager has a small number of employees under their control. This means that employees can be closely supervised.

The freedom and responsibility of employees (subordinates) is restricted.

There is a clear management structure.

Decision making could be slowed down as approval may be needed by each of the layers of authority.

The function of each layer will be clear and distinct. There will be clear lines of responsibility and control.

Communication has to take place through many layers of management.

Clear progression and promotion ladder.

High management costs because managers are generally paid more than subordinates. Each layer will tend to pay it’s managers more money than the layer below it.

· Flat

Advantages of flat Organisations

Disadvantages of flat Organisations

More/Greater communication between management and workers.

Workers may have more than one manager/boss.

Better team sprit.

May limit/hinder the growth of the organisation.

Less bureaucracy and easier decision making.

Structure limited to small organisations such as partnerships, co-operatives and some private limited companies.

Fewer levels of management which includes benefits such as lower costs as managers are generally paid more than worker.

Function of each department/person could be blurred and merge into the job roles of others.

· Hierarchical

Advantages of Hierarchical Organisations

Disadvantages of Hierarchical Organisations

Authority and responsibility and clearly defined
Clearly defined promotion path.

The organisation can be bureaucratic and respond slowly to changing customer needs and the market within which the organisation operates.

There are specialists managers and the hierarchical environment encourages the effective use of specialist managers.

Communication across various sections can be poor especially horizontal communication.

Employees very loyal to their department within the organisation.

Departments can make decisions which benefit them rather than the business as a whole especially if there is Inter-departmental rivalry.

· Centralised and decentralised

Advantages of Centralised Structure For Organisations

Advantages of Decentralised Structure For Organisations

Senior managers enjoy greater control over the organisation.

Senior managers have time to concentrate on the most important decisions (as the other decisions can be undertaken by other people down the organisation structure.

The use of standardised procedures can results in cost savings.

Decision making is a form of empowerment. Empowerment can increase motivation and therefore mean that staff output increases.

Decisions can be made to benefit the organisations as a whole. Whereas a decision made by a department manager may benefit their department, but disadvantage other departments.

People lower down the chain have a greater understanding of the environment they work in and the people (customers and colleagues) that they interact with. This knowledge skills and experience may enable them to make more effective decisions than senior managers.

The organisation can benefit from the decision making of experienced senior managers.

Empowerment will enable departments and their employees to respond faster to changes and new challenges. Whereas it may take senior managers longer to appreciate that business needs have changed.

In uncertain times the organisation will need strong leadership and pull in the same direction. It is believed that strong leadership is often best given from above.

Empowerment makes it easier for people to accept and make a success of more responsibility.

Matrix ( or project-based) organisations

A Matrix structure organisation contains teams of people created from various sections of the business. These teams will be created for the purposes of a specific project and will be led by a project manager. Often the team will only exist for the duration of the project and matrix structures are usually deployed to develop new products and services. The advantages of a matrix include

Individuals can be chosen according to the needs of the project.
The use of a project team which is dynamic and able to view problems in a different way as specialists have been brought together in a new environment.
Project managers are directly responsible for completing the project within a specific deadline and budget.

Whilst the disadvantages include

A conflict of loyalty between line managers and project managers over the allocation of resources.
If teams have a lot of independence can be difficult to monitor.
Costs can be increased if more managers (ie project managers) are created through the use of project teams.

COMMUNICATION THEORY - Page 1 of 2

Organisations can not operate without communication. Communication can take various forms but all forms involve the transfer of information from one party to the other. In order for the transfer of information to qualify as communication, the recipient must understand the meaning of the information transferred to them. If the recipient does not understand the meaning of the information conveyed to them, communication has not taken place.

Communication is the life source of organisations because organisations involve people. People cannot interact with each other without communication. In the absence of communication, everything would grind to a halt. For example;

The workers in an organisation would not know the organisation’s objectives so they would not strive to achieve the organisation’s objectives.

The workers in an organisation would not know what their roles and responsibilities were, so they would not be able to carry out their daily tasks and duties.
The managers would not be able to train their workers reports so the workers would not possess the skills they needed to carry out their jobs.
The managers would not be able to inform workers of changes
The organisation would not be aware of their competitors activities

And the list is endless……………..

On the whole people are able to communicate with each other as this is a basic human function. However successful organisations strive not only for communication but effective communication.

Interpersonal Communication

This is defined as communication between two or more people and involves the transfer of information (or message) from one person to the other(s). The person transferring the information is called the sender or transmitter. The people receiving the message are known as receivers. The transmitter will need to send the information in a format that the receiver(s) will understand. Converting the information into a format that the receivers will understand is known as Encoding.

Messages can be encoded into a variety of formats oral, written or visual. After encoding the message is transferred via a medium called a channel, for example a letter, fax, phone call, or e-mail. After transference the information will need to be interpreted by the receiver. This process of interpretation is known as decoding. Finally the receiver will send a message back to the transmitter confirming whether the information sent has been understood. This back check is known as feedback.

The communication process involves seven key elements as illustrated in the diagram below.

Barriers to effective Communication (leaky bucket)

At each stage in the process encoding, transference, and decoding there is the possibility of interference which may hinder the communication process. This interference is known as noise. Often a comparison is made between communication and a leaky bucket. If you use a leaky bucket to carry water, water will be lost at various points in your journey from the water tap to your destination. It is not possible to stop losing water because the bucket contains holes. The amount of water you will lose will be determined by the number of holes in the bucket, the size of the holes, the route you take to your final destination and length of time it takes you to get to your destination. There may also be other events that occur during your journey which increase the amount of water lost.Similarly when information is transferred from the transmitter to the receiver not all of the information may be received by the receiver because of holes called noise. Each of the noise may be affect the amount of information transferred. Just as in a leaky bucket, more holes decrease the amount of water, more noise decreases the amount of correct information received. Noise can take a variety of forms including

Language issues and Cultural Differences : the receiver(s) may not (fully) understand the language used by the transmitter. This may occur if the transmitter’s language is foreign to the receiver. There may also be language problems (that the communication process) if the message contains technical information and the receiver’s is not familiar with the technical terms used. Cultural differences created by an individual’s background and experience affect their perception of the world. Such cultural differences may affect the interpretation (decoding) of the message sent.

Environmental issues: If the environment that the transmitter or receiver are in, is noisy and full of sound, the sounds may prevent the message being fully understood. Background noise is often created by colleagues or machinery.

Channel issues: If the channel used to transfer the information is poor it may prevent all or some of the information being transferred. Examples include a faulty fax machine, a crackling phone, handwriting that cannot be read or in the case of oral messages incorrect facial gestures.

Receivers Attitude and behaviour: If the receiver(s) is not interested in the message (or unable to give their full attention to decoding) this may reduce the amount of information received or the accuracy of the information transmitted to them. Similarly the receiver(s) may misinterpret the message by "jumping to conclusions" or reading the message in a manner that suits their own interests/objectives and distort the true meaning of the message.

Transmission journey :i.e. steps in the message, If the message is complicated or there are lots of steps taken to transfer the message it may affect the accuracy or interpretation. Comparing with the leaky bucket if the leaky bucket has to carry water over a longer distance more water will probably lost than if the journey was shorter.

QUALITY

Quality is important to business organisations and their consumers. This is because quality products or services can and will secure consumer’s business. However do not equate quality with expensive, as price will not determine quality. Whether a product or service is of high or low quality, will be decided by how it made the consumer feel and whether consumer expectations were satisfied or exceeded.

Adding Value

Some writers such as Tom Peters (in his book “Thriving on Chaos”) believe that quality rather than price dictates demand for a product. Peters argues that customers will be prepared to pay for high quality. This means that value is added to a product by ensuring that products/services have the quality consumers require.

Quality Control

This is defined as the process of identifying which products/services do not meet the organisation’s standards. Once identified the products/services below standard will then be adapted (so that they meet the standards expected) or discontinued

Quality Assurance

The purpose of this is to ensure that products/services are not below standard when manufactured or used by the consumer. The aim of quality assurance is to make sure that all the goods produced or services offered have “zero defects”. Quality assurance should save costs as products below standard can not be sold. It should also protect the organisation’s reputation. Whilst quality control is about identification of low quality products, quality assurance is about prevention. In other words the aim of quality assurance is to ensure that products are not below standard.

Quality Circles

A quality circle is made up of a group of people at various levels within the organisation. These people will have meetings where they will discuss and attempt to solve problems within the organisation. Each of these problems will be real problems faced by the organisation and will require solutions that can be put into practice.

Training

To ensure that an organisation can offer the quality expected by their consumers, they will strive to continuously improve their product or service. This is because a constantly evolving market place, will change consumer demands, needs and expectations with it. Continuous improvement will only take place if staff possess the right skills and knowledge. Skills and knowledge are usually acquired by the staff through the organisation’s ongoing training and development programs.

TOTAL QUALITY MANAGEMENT (TQM) :

Introduction

From the 1980’s Total Quality Management was adopted by a number of organisations. TQM requires the whole of the organisation to adopt the culture of quality. In a TQM organisation quality will dictate the decisions, tasks and processes. A TQM organisation is committed at all levels within every department/function to continuously improve quality. In order to fulfil this commitment every single employee in the organisation will need to accept the challenge of continual quality improvement.

TQM Components

TQM has four basic components

1. Put customers first
2. Make Continuous Improvement
3. Aim for zero defects
4. Training and development

Put Customers First

A quality product or service satisfies customer’s needs and expectations. Whether a product or service is of high or low quality, will be decided by how it made the consumer feel and whether consumer expectations were satisfied or exceeded. See quality. If customers are not put first, then customer expectations will be difficult to satisfy and consequently quality will not be achieved. Customers can be put first through a variety of initiatives including

• Undertaking market research to discover consumer needs so that the organisation can develop products and services that exceed their consumer’s needs.
• Looking after all customers whether internal or external. Internal customers are employees of the organisation and are known as customers when they approach each other for a service. External customers are all non-employees (of the organisation) that approach the organisation in connection with a service or product.
• Effective customer care systems.
• Ensuring that all service standards are met.
• Listening to customer views and opinions. Responding to customer views including resolving customer complaints in a manner that satisfies their expectations. Once customer complaints are resolved they should be analysed to prevent future recurrence.

Make Continuous Improvement

The Japanese term “kaizen” has contributed to this component. Kaizen believes that there are no limits to continuous improvement. This means that a TQM organisation will continuously strive to improve their product/service and increase the quality standards. A TQM organisation will also view change positively whether the change involves a process change or a change in customer needs and expectations. This is because changes will enable the organisation to develop and explore quality.

Aim for Zero Defects

There are a number of reasons behind the aim to eradicate defects. Defects are expensive because they will lower the customer’s confidence in the product. Also it is more expensive to rectify defects than it is to prevent them occurring in the first place. Zero defects can be achieved through a combination of quality assurance and quality control ( visit the relevant sections by clicking on the links).

Training and Development

An organisation will need to train their employees to ensure that they understand the principles of TQM. A TQM organisation employee will need to understand how TQM is to be achieved or maintained and how they as an employee will ensure that the organisation emulates TQM. Unless each employee accepts and believes in TQM it will be difficult for the organisation to practice TQM.

Types of businesses

Private and Public Limited Company

Production

Introduction and Adding Value

Organisations will adopt a variety of techniques to produce their goods or services. The technique adopted will depend on a number of factors including;

The product or service
Size of the organisation
Legislation applicable to the organisation
Quality of product or service

The type of organisation
The organisation’s resources
Quantity of product or service.

The most common methods of production include Line Production, Continuous flow production, Batch Production and Just in Time Production. The aim of all is to add value. Adding value is the process of converting the input to an output so that it’s desirability to the customer increases. The input is the product or service at the start of the production process. The output is the product or service at the end of the production process.

Line Production

Just as the name suggests line production is producing goods along a line of production. The goods will be passed along a line containing different stages. At each stage in the line the goods will be altered. Often a person/group of people will be responsible for just one stage in the process. Car assembly or fast food “drive thrus”, often adopt Line production as identical products are produced each day. Nowadays some organisations will employ robots rather than people to undertake the stages in line production. Robots are believed to be more efficient and unlike humans will not get bored and cause errors.

Continuous Flow Production (CFP)

This is simply adopting line production 24 hours day/seven days a week, using automatic equipment. The automatic equipment will operate in the same manner day in day out. The ability to work in this manner is another advantage robots/machinery have over humans. CFP does not involve humans so it is not used in the service industry unlike line production.

Batch Production

This is the method employed when the organisation needs to produce a fixed amount of each of the type of goods it produces. In this instance production technique and resources will be adapted, to produce the product required and to produce just the amount required. A good example is a pizza factory. Let’s imagine the factory produces 150 pepperoni pizzas, 265 ham and pineapple pizzas and 75 cheese and tomato pizzas each day. Each batch (or variety) of pizza have its own ingredients, cooking times and production method. When the factory switches from the production of one type of pizza to another, it will need to change its production methods. Some of the tasks for one type of bread can be completed at the same time as producing the other types of bread such as making dough for the cheese and tomato pizza, whilst waiting for the pepperoni pizzas to cook. However the factory will have to be careful to ensure that they do not confuse the production of one type of pizza with the production of another.

Just In Time Production (JIT)

This method of production generates goods/services “just in time” for them to be sold rather than preparing them months or weeks in advance. To save storage costs, the parts needed to make the end product will arrive just before they are used to manufacture the product. This means that the production process is carefully planned and organised. Production must be efficient and speedy otherwise the goods will not be manufactured “in time” for the customer.

Conversely if there are no/few orders then production will slow down or stop altogether.

Mergers and Acquisitions

In addition to expanding a business through increased trading, mergers and acquisitions can be used to increase the size of an organisation and it’s profits.

Acquisition

An acquisition is the purchase or takeover of another business, so that the organisation becomes the legal owner and controller of the business they have acquired. This can be expensive as the acquiring company will be paying for the net assets, goodwill and brand name of the company they are buying. With an acquisition no consent is given.

Merger

A merger is where two or more businesses join forces to become one organisation. After the merger, each of the businesses and their shares will no longer exist. Instead a new legal entity has been formed. Decisions will need to be made regarding the future of the newly merged organizations including who will lead and manage the business and how cost efficiency will be achieved. With a merger consent is given, it is sometimes referred to a marriage between two companies.

Merger Types

Mergers can be defined according to the business similarities and differences, between the two companies that are merging. Often the type of merger will give us a clue when it comes to deducing, the reasons behind the merger. Below are some examples of the different types of merger;

Horizontal merger:
This occurs when two companies that are in direct competition with each other in the same product lines and markets decide to merge.

Vertical merger:
This occurs when a supplier company, mergers with a company that they supply goods or services to ie supply and customer decide to merge. An example of this is a pizza restaurant chain merging with the company that supplies them with pizza bases.

Market-extension merger:
As the name suggests, this is a merger between two companies that sell the same products in different markets.

Product-extension merger:
Whilst a product-extension merger is designed to increase the types/range of products a company sells in a particular market, so this will occur when two companies selling different but related products in the same market merge together.

Conglomeration:

If two companies that do not have a common business area merge together this is called a conglomeration.