Market-Based Management - Case Study Example

Market-based management Market-Based Management was devised by Charles Koch and is the power behind Koch companies. It has been in existence for the past 50 years and is a holistic technique to management that puts together theory as well as practice, in addition to preparing firms to successfully tackle challenges of change and growth.MBM facilitates companies to thrive in the long term by application of principles that permit free societies to succeed. Under Koch’s leadership as well as through the holistic and rigorous implementation of MBM, Koch has become one of the most flourishing companies around the world (Koch, 2007).The main essence of MBM is the creation of sustainable, real value for communities, consumers as well as Koch industries.MBM, therefore, promotes innovations that build value by transforming people’s lives and making them better, in addition to the general contribution to the prosperity of the society. Creation of value entails the provision of services and products that consumers’ value extremely highly while using fewer resources; leaving additional resources available so as to fulfill other requirements of the society (Koch, 2007). Market –Based management in Boeing Boeing continues leading in the provision of innovative products to its consumers that make use of innovative technology as well as reducing operating costs and emissions. Boeing also employs some of the most imaginative and talented engineers responsible for the development of revolutionary products in the industry. Boeing’s focus on combining management and experiential learning with engineering is developing a unique crop of employees needed for the 21st century. To better improve its management, Boeing can employ Market-Based Management so as not only to remain relevant but also a market leader. Boeing thus has to adopt the law of change so as to achieve change in its business (Penner, 1999).This change can be brought about by adopting Market-Based Management concepts such as integrity, compliance, value creation, principled entrepreneurship, customer focus, change, knowledge, respect, humility, and fulfillment. This paper aims at analyzing how Boeing can employ the concept of value creation to not only ensure its survival but also its success. Value creation Boeing can make sure that it contributes to the well being of the society by advancing the concepts, policies, practices as well as values of free societies. Being a privately owned company, Boeing can better understand, expand as well as apply MBM so as to accomplish better results by 1) eliminating waste, 2) making better decisions, 3) innovating as well as 4) optimising (Koch, 2007). These values are as discussed below in detail. 1. Eliminating waste Boeing can seek to eliminate waste by streamlining processes while at the same time improving quality, empowering employees, responding fast to customer demand, and increasing profits. Boeing can thus embrace lean, which is an idea that advocates, designing, manufacturing, delivering and supporting products more effectively and at costs that are lower-while methodically identifying as well as eliminating waste-throughout the life cycle of the product. Lean utilizes just-in-time system which provides external and internal customers with what they need, when they need it, and at the best possible low price. MBM will thus equip Boeing with an overall framework (paradigm) for understanding the firm’s problems. It will also assist Boeing in examining and evaluating the tools of total quality management, just-in-time inventory as well as other concepts for improving its performance. For Boeing to remain relevant and carry on as an aerospace pacesetter, win new businesses in addition to creating and maintaining jobs, it continuously must look for ways to make its planes cost-competitive (Best, 2013). 2. Making better decisions Boeing can integrate MBM with Value Driven Management (VDM) so as to arrive at better decision making in the company at all levels.VDM, for instance, acknowledges that top-down command in addition to control structures may not function properly, particularly in big multibusiness corporation such as Boeing. VDM, therefore, calls upon managers to utilise value-based performance metrics so as to make better decisions. This involves managing the income statement and the balance sheet, as well as balancing short-and –long-term perspectives. Additionally, VDM is an integrative theoretical structure within which decisions are made and actions taken. Instead of being unidimensional like the way several approaches have been, VDM considers drivers of action of all important groups and how this influences an organization’s value. Boeing is an aerospace leader and makes very critical decisions regarding its fleet on a daily basis; decisions that will sustain its business for decades to come. Thus Boeing’s decisions are usually at high stakes and may cover big dollars as well as long periods. It is critical that the company has a keen, well informed VDM so as to make effective decisions (Best, 2013). 3. Innovating Boeing has been at the forefront of innovation as far as aviation is concerned. This has been an ongoing process since the company’s formation up to date. For this to be sustained, Boeing has to adopt a methodology of finding out its comparative advantage, measuring success and organizing activities. Boeing should ,therefore, restate its mission statement and tailor it in such a way that innovation is part and parcel of the company’s core strategies in addition to being entrenched in the company’s culture as a continuing process in which the workers methodically advance the company’s competencies and markets, define objectives, plan for accomplishing such objectives as well as monitor progress(Best, 2013).The new mission statement should clearly spell out what Boeing does and intends to do best. Such a mission statement should not only be used for strategic planning but also for employee inspiration. When employees understand this, they will have a better individual value creation, automatically, paving way for innovation to take root and thrive. 4. Optimizing Boeing by use of MBM and VDM can grow maintenance programs that satisfy operators’ needs; a very important aspect of customer support for the company. This is because maintenance programs are a fundamental aspect of any airline’s effective operation. Such programs ensure safe, cost-effective and reliable airplane performance. Cost of operations reduction is a key concern to several airlines and through effective application of MBM, Boeing can understand its customers’ business by deciding on what is practically achievable given the markets’ nature, the competition, and resources of the company as well as its abilities. Boeing can therefore deduce what activities create value for its customers as well as what criteria informs their customers’ buying decisions. Thus Boeing, operating together with various airlines can acquire invaluable insights into economics of its customers’ maintenance operations (Wallace, 2008). In conclusion, therefore, the core systems of firms are usually extremely interdependent and thus the key aspects of MBM require to be implemented as a consistent system so as to accomplish their potential in full. Boeing needs to embrace MBM as part of its core processes. References Read More