Why Some Businesses Are More Successful Than Others - Coursework Example

Business Management: Why Some Businesses Are More Successful Than Others Introduction The mysterious dream of a successful business draws the attention of all business owners around the world. It is every business owners dream to have a successful business, marked by flowing profits, thrilled customers, industry respect and a balanced life. Business experts have identified numerous aspects that contribute to attaining business success, for instance, good working strategies, effective short and long-term goals, innovative and smart ideas, and plain luck among many other factors. It is also certain that some businesses turn out successful over night while others take some time to grow and mature. However, business management and leadership skills are also major determinants of business success today. No individual has the right formula that could be applied by all businesses to attain success, but there are existing principles, theories and strategies suggested by business experts that could be applied to attain business success. The correct application of these ideas will drive the business towards success. This essay seeks to analyze the key theories and principles of business management and leadership to provide reasons as to why some businesses are more successful than others are. It also provides the strategies that could be applied to attain business success. Measures/indicators of success Success in a business can be gauged using various factors, which include, profitability levels, a rising customer base, customer and employee satisfaction, owner satisfaction, professional recognition, among others (Ivancevich et al, 2007). A business that meets all these factors can term itself achievable as these factors are linked with goals and objectives of every business. Reasons for success It is apparent that, some businesses are more successful than others are. This is attributed by many factors portraying both the internal and external environment of a business including organizational structure and culture, strategy and business ethos. In evaluating the fact behind their success, we will consider some key theories and principles of business management and leadership. Leadership and management principles and theories Leadership is a process through which a person influences the others, with an aim of attaining some set objectives. From this definition, we can learn that leadership is a social process, which cannot take place without the followers. Regardless of its precise nature, and the relationship it holds with certain variables such as commitment, performance and subordinate satisfaction, leadership remains as unexplainable concept (Lutherans, 2005). However, it is important to note that leadership is based on influence, the leader’s ability to influence his followers. A review of the existing leadership theories regarding the characteristics of an effective business leader reveals that the ancient theories placed more emphasis on the behaviours and characteristics of successful leaders while the contemporary theories consider the contextual character of leadership and the role of the followers (Steers et al. 1996). Management, on the other hand is defined as is defined as a set of practices involved in planning, leading, organizing and coordinating activities. However, the contemporary view of management considers the assertion that leadership is different from management. It is believed that managers do things right while leaders do the right thing. A manager only posses the formal authority by virtue of the office he holds and may not in essence be an effective leader. Some of the principles of management include: Division of labour- this refers to the workforce specialization in accordance with their skills and experiences, and creating specific professional and personal development within the taskforce, which will lead to increased productivity and labour efficiency. Authority and responsibility-the manager should be able to command and be responsible for the consequences of his commands. Discipline-this refers to obedience and proper conduct when relating to others. Decision-making-a good manager is the one who consults before implementing. The manager should be able to involve all concerned parties in the decision making process to ensure the idea is acceptable. Trait Theory This theory examines the social, physical and mental characteristics of individuals, and explores the relationship between the measures of effective leadership and individual traits. Mental traits like intelligence, physical traits like height and the social traits like personality attributes were all studied and it was established that there are no universal attributes or traits hat can separate a leader from other people. Leader behaviour theory This theory holds that the behaviours displayed by the leaders are more significant than their emotional, mental and physical traits. The theory however establishes that there exist two different leadership aspects, which define how leaders perform their functions. The first aspect is the initiating structure, and involves organizing, coordinating and planning the tasks performed by the subordinates. The second aspect, which is consideration, involves having concern for the followers, providing for the welfare of the followers, recognizing the accomplishments of the subordinates and being supportive. The theory further suggests that leaders having an employee orientation have genuine concern for interpersonal relations. However, this has to be combined with the concern for production such that the leader focuses on both organizational production and interpersonal relations within the organization. This theory does not provide the formal characteristics that could be applied to define an effective leader. Contingency or situational theory This theory suggests that whatever an individual does as a leader depends on the characteristics of the situation in which he operates. The theory identified three different leadership styles that could be applied to different situations. The authoritarian leadership style can be applied in periods of crisis though it fails to win the minds and hearts of the subordinates in the contemporary management. The democratic leadership style is applicable in situations requiring consensus building, while the laissez faire leadership style offers freedom for the subordinates, though it is likely to fail in solving thorny organizational issues. To attain effectiveness, the theory suggests that leadership style should go in line with the appropriate level of subordinate development and therefore, leadership behaviour is not only defined by the characters of the leader but of the subordinates as well (House and Ram, 1997). Systems theory This theory states that all organizations function as a system and therefore each part of the system has a significant role to play. It is the manager’s work to ensure all parts of the organization are motivated in order to attain effectiveness. This theory looks at the organization from a broader perspective and gives significance to the interrelations between the different parts of the organizations. A successful business therefore considers the importance of every part of the organization and the interconnectedness between the different parts of the organization. The managers have to give equal importance to these parts in order to ensure the goals set are attained. Key qualities of successful business leaders and managers Research findings document that successful business leaders today possess four key skills, which include the ability to hire, lead and build teams; ability to institute strong relationships; adapt to varying demands; and produce results (House and Ram, 1997). A good manager should be able to assert authority, command respect and work with all types of people (Yukl, 1994). This does not only depend on providing commands, but on listening to others, encouraging the subordinates to speak up their issues and ideas. A manager possessing good interpersonal skills has an effort to solicit feedback form his followers from regular meetings with them. This encourages them to open up and share ideas. A good leader or manager should also be able to display empathy. Being a leader requires that you show some respect to others and taking their perspectives and feelings into perspective. Successful business leaders and managers also collaborate. This means sharing information in a more openly manner. Each team member should be able to access the information required more easily. Effectiveness in leadership involves attaining a consensus, dealing with tough decisions and knowing the right time to act. Successful leaders believe the skills they require to manage the organization involve exerting influence and not excising control and command. Good leadership also requires the ability to motivate the followers (Steers et al. 1996). Each person has his own definition of motivation and it is not always necessary to use money to motivate as other can be motivated by working under minimal supervision. It is therefore important to consider each employees definition of motivation. The transformational theories for instance, highlight that a successful leader should be able to inspire and motivate by helping the followers see the importance of the task. Such leaders are more focused on the performance of the followers. They often possess high moral and ethical standards. Successful managers also empower and delegate. A manager’s responsibility is to establish team members and developing careers. It is important to challenge employees to take new perspectives and reward their achievements. Successful business leaders also set missions and business goals that should be attained after a set period. They therefore work with the employees to attain the set targets. Organizational structure and culture Organizational structure and culture are significant in the success of any business. Organization structure comprises of activities such as coordination and supervision, task allocation, which are aimed towards the attainment of goals and objectives. Most organizations encompass hierarchical structures which determine the modes of their performance and operations. Organizational culture on the other hand entails people ways of thinking feeling, believing and acting. It includes belief, knowledge, morals, and customs that define how a business is conducted (Robbins & Judge, 2007). Why is structure and culture so significant in the success of a business? Most leadership theorists have found that, futile leadership habitually tends to be a major cause of a business weakening and diminishing. To be successful for the long term, a business should have strong organization culture and leadership. Great leadership is required for a business to have a stronger culture although the reverse is also factual. It is true that, if a business culture begins to erode, it is merely a matter of time before the bigger structure collapses. Leaders should have a profound understanding of the existence and repercussions of the organization culture to ensure an understanding of the kind of adjustment and management required within the business (Robbins & Judge, 2007). We can therefore conclude that, organizations that mostly succeed in their businesses have excellent organizational structures with excellent employees who have a purpose of achieving similar objectives rather than outstanding but conflicted employees who result to the failure and collapse of a business. Business strategy In any business, managers have the responsibility of developing and executing business strategies. A business strategy is a tool that describes how a certain business plans to succeed in its preferred market place against it rivals. Thus, it is seen as the perfect attempt that can be made by the management in order to define and secure the future of a business (Ivancevich et al, 2007). A business strategy should offer comprehensible answers to certain questions such as: What is the business scope covered by the strategy? What are the existing and future needs of clients and potential clients of the business? What are the distinct competencies that will give the business competitive advantage in meeting these requirements? What entirely requires to be done to secure a business future? These questions can be addressed by business strategies existing in a business. In any business, strategies exist at various levels varying from the general business all through to employees working in it. For instance: Corporate strategy: this is concerned with the general function and scope of any business to meet the expectations of the stakeholders. It is a very vital level as it acts to direct strategic decision making through the business. In many cases, businesses having weak corporate strategy fail to meet their goals and objectives whilst those having strong corporate strategies at many times realize their objectives. Business unit strategy: this is concerned with how a business competes effectively in a certain market. It is concerned with a business strategic decisions relating to product choices, meeting client requirements, gaining a competitive advantage, and developing and creating new prospects. This is very vital in businesses and how well managers develop business unit strategy determines the success of such a business. Operational strategy: this strategy focuses on various issues including business processes, people, and resources. These, if well organized contributes to effective business unit and corporate strategic direction (Lamb and McKee, 2004). This is achieved through good organization of all business levels, which includes human resources, marketing, and finance, among others. It is certain that, success of a business will depend on whether the managers have made good or indifference strategies. We can therefore conclude that, in many cases, businesses which prevail in the market place have strategies which are correctly scoped, suitably documented, addresses real consumer requirements, leads to competitive advantage, and provide a basis for implementation, whereas, lack of the above leads to the failure and collapse of a business. Employee motivation Individuals have diverse reasons for working. However, in many circumstances, it is apparent that, we all work as we get something that we require from work that affects our motivation, morale, and quality of life. In order for managers to create a positive personnel motivation, employees should be treated as if they matter as they really matter. They are the ones who determine the success or failure of a business. Employee motivation is one of the main factors that are associated with the success of a business (Northouse, 2007). The role of managers in any business is to ensure things are done correctly through personnel. To achieve this, the manager ought to motivate his/her employees adequately. This can be done by offering good remuneration, good interaction and communication between the employees and their seniors, good leadership, employee retention, promotions by merit, providing training opportunities, and communication to employees on any business information that may affect their work. Research has proved that, without the assistant of committed employees, not one of the large businesses that currently exist could have been what they are today. Without proper motivation, staffs will only habitually go through their daily tasks assigned to them without trying to ‘think outside the box’ which will assist the company to improve and grow. Therefore, it is essential for the senior managers to know precisely what makes their employees motivated. By clearly knowing what leads to the ticking of the businesses financial wizard and motivating them to produce, a greater output at work contributes greatly to the financial growth of any business. Businesses, which believe in proper employee motivation benefits from improved and increased staff, output at work, enhanced team spirit, and a better working environment (Northouse, 2007). Some businesses have a tendency of treating their employees as if they do not matter. In such businesses also, there exist superior employee- employer interaction, poor motivations in terms of remunerations, poor working environment, all of which result to habitual performance of allocated duties whereby individuals just work for money which leads to the downfall of a business. Business ethos Values are believed to be the cornerstone of business ethos. Both professional and personal business ethos should assist a business in building and preserving its integrity while attaining its success. Many organizations that succeed in the market place usually practice good behavior in terms of producing quality products that are very competitive in the market, good promotions and distribution channels, and affordable product prices (Northouse, 2007). On the other hand, many businesses produce poor quality products in order to reduce production costs. Though these products are offered at low prices, customers tend to go for the expensive quality ones. What results from this is the collapse of such organizations due to reduced or no demand of their products. Conclusion It is clear that, every business is established with an aim of thriving in the market place. This success is measured in terms of profitability, rising customer base, customer and employee satisfaction, owner satisfaction, and professional recognition. However, some businesses are seen to be more successful than others in terms of the above. What contributes to this was the focus of this paper. As discussed, internal and external factors of a business, and the key theories and principles of management and leadership are the major influences towards this. Businesses have different operational behaviours, and this variation leads to differences in their achievement. For instance, as argued above, such principles as organizational structure and culture, business ethos, business strategies, employee motivation, and various leadership and management theories are behind this variation. Thus, to ensure a business success, senior management should strive to meet the above, which ranks their business at an equal level with other successful businesses. References House, J, and Ram N. (1997). "The Social Scientific Study of Leadership: Quo Vadis?" Journal of Management 23, 409–473 Ivancevich, J., Konopaske, R., and Matteson, M. (2007). Organizational Behavior and Management. New York: McGraw-Hill Irwin. Lamb, L. F., McKee, K. B. (2004). 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