Managing Complexity in Business - Coursework Example

Managing complexity in Business Introduction In business and organizations, management refers to the coordination of resources for the benefit of the business or the organization, in order that the business or organization can operate effectively and efficiently. In business and especially for-profit businesses, management is geared towards making sure that there is maximization of profits within the reasonable pricing range of their products. At the same time, management for businesses is also a process of strategy development both at the business level and at the corporate level in order to enable the business to compete with its competitors and also deal with the other four factors of competitiveness as outlined by Michael Porter, which include threat of new entrants, threat of substitute products, threat of bargaining power of suppliers and the threat of bargaining power of customers. In management, the threat of bargaining power of the employees is also a relevant factor that any business executives must be able to strategically manage in order to secure the future of the business. Business management is therefore any process that is geared towards safeguarding the interests of the business (Stacey, 2000). This indicates that business management is a complex process and cannot be defined in one sentence. The processes of business management are many and varied and in most cases require a team of experts in various fields in order for it to be complete. However, the core functions of management are as follows; Forecasting Like has been identified, management is a process that involves the present as well as the future. In this regard, forecasting becomes a very important part of business management. It is only by knowing or forecasting the future that the business managers can prepare for it. Any business that fails to forecast, or provides misinformed forecasts will have a troubled future and any problems in the future are likely to affect the organization in an adverse way thus making it hard for the business to be resilient against poor market conditions. This kind of scenario was seen in the previous global economic recessions, especially America where even big multinationals had to either close their doors of business or had to file for bankruptcy. Good business managers must take this function with seriousness in order for them to be able to navigate the business across all kinds of economic weather (Center for Complex Adaptive Agent Systems, 2007). They must carry out due diligence with regard to the future and anticipate any problems that may arise in the future in order to prepare in a way that will help it survive such negative issues arising in the future. Additionally, the managers must be able to anticipate future opportunities and be prepared to take advantage of these future opportunities. Failing to be able to prepare for such opportunities will mean that the business will not be able to exploit these market opportunities and the competitors may take the opportunities and therefore have strategic advantage over the business. Planning The other important function for any management team in a business is planning. Like the old adage goes, failing to plan is planning to fail. In this regard, businesses always seek to plan for the use of their resources. Even as they forecast the future, the managers are then burdened with the burden of planning for the use of the resources according to the available forecasts. The complexity of management arises in this function of management because even as the managers plan to use their resources, they are only depending on forecasts which cannot be a hundred percent complete. This function of management requires that the management be very careful because if they act on wrong forecasts, the business is going to have problem. In this function, it is necessary for the managers to be able to know that poor planning is just as dangerous as or even worse than no planning at all. They must therefore create plans that are flexible as to allow for a change of course if it arises, but also that are as rigid as to allow the plan to be implemented with stability. Creating this balance can be a big issue for the managers, even the experienced ones. Organizing The other important role of management is organizing. While this may be similar to planning, organizing is more concerned with the planning of the resources to decide which resources are needed where and why, in line with the overall strategy of the business. Organizing also bring in a new set of complexities to management (Griffin, 2005). The first issue that arises is the issue of inadequate resources. While an ideal situation where the business has enough resources may be assumed, the reality is the fact that the business always has inadequate resources and so the challenge for managers is to make sure that they plan these resources by way of prioritizing (Stacey, 2000). Managers must make a judgment call with regard to which priorities are more urgent and more useful to the business. They must learn how to prioritize in order to make sure that there is a good way to enhance the business processes. Unfortunately, in theory this assumes that the managers have all the information. However, information asymmetry affects this process because the managers do not have all the information about the factors that will affect the business both in the foreseeable future ands the far future. In this regard, the process of organizing is more of a balancing act where the business managers have to balance between what resources should be invested in and what should be able to wait. A good example is a situation where the business managers find that they need to hire more human resources that at the same time need to invest in new IT systems yet there are only enough financial resources to invest in one at a time. The managers have to decide which of the two is going to be more important to the firm with regard to the growth trajectory of the firm. The managers can decide that investing in the IT system is better because it will lead to more productivity which will then allow the business to be financially able to invest in more human resources. However, it is not certain that this will happen as planned. The IT system may be bought but only end up failing, thus not delivering the expected benefits. In such a case, the business managers will have done the wrong calculation that is going to cost the firm not only financially, but also in terms of other opportunities that the business could have pursued using the financial resources invested in the IT systems. Commanding In the context of business management, commanding refers to the critical decision of what must be done with regard to various situations that may arise in the course of doing business. This function plays a very good role in the process of business management. The complexity of management in this case comes in because the commanding has to come from a central power and this brings in issues because no one individual can have all the information that is necessary in order for the firm to be able to perform well (Griffin, 2005). In this regard, the chance that the individual will sometimes make bad decision is inevitable. Having a way to make sure that the correct coordination of intellectual resources has been used in order for the commanding function to benefit from a wider range of knowledge is a matter that is not easy to deal with. Coordinating An organization is more like a tree with many branches. And just like a tree, the bigger the firm, the more the complexity within the firm. In this regard, these branches in the organizational tree need to be coordinated in order to ensure that they can operate collaboratively as a team to achieve the overall goals of the organization. Yet, even as these different departments in an organization seek to achieve common goals for the sake of the organization, they all have goals of their won which are a subset of the organizational goals. Sometimes these goals may be conflicting (Gunz, 2005). For instance, the finance department may have the goal of reducing the wage bill in order to manage costs and this may conflict with the goals of the human resource department whose goal is to recruit enough human resources and also to compensate them as best as possible. Bringing these two departments to agree on the same solution can be a big problem for the management function. The management function needs to be able to coordinate these different aspects of the business in order for the business to benefit the most. Controlling Controlling is another important part of business management. It relates to the process of guiding the business as it follows the strategy that has been laid for operation. Control is the management function that makes sure that the business will not digress from the course that has been set up by the strategy. This brings in some complexity issues because while it is importat to ensure that the business takes the predetermined course, it is also necessary to note that the business also needs to be flexible to be able to overcome challenges that were not expected. The above management functions are geared to manage a complex business machine that has the following elements; Product Product management is an issue that many businesses have to deal with. Most businesses have more than one product so that they can be able to serve a wider market. The decision with regard to how many products the business should be delivering to the market can be a difficult one. With regard to product management, the firm has to also make sure it considers how it is going to offer customers support (Davenport, 2007). Some products need more customer support than others while others are required by law to have customer support. Market segments There is also another issue of market segmentations. While in theory it looks like it is easy to segment a market in do distinct niches, in practice, business managers have a difficulty in this area because there are no clear demarcations that separate one market segment from the others (Davenport, 2007). Yet, the managers are supposed to come up with the market segments because this is what informs the decisions with regard to what kinds of products the business will supply, how many products the business will produce and how the strategy will be developed. Materials Materials make a very important part of the production, especially for manufacturing businesses. However, while in theory it appears that it is just a matter of buying raw materials and then processing them to produce finished products, it becomes way harder than this in the practice side of things. Managers have to be careful with choosing what type of materials to use, how many materials to use in a single unit of product and more so, the legal implications of using certain types f materials. In theory, it looks like an easy decision of just picking the best materials and developing the product. However, in practice, how the management mixes these aspects of material procurement determines how the business will be competitive in the market. Customers Customer management is also another issue that business managers must be able to consider in the attempt to sustain the business in its business strategy. Businesses that make the customer happy are the ones that will succeed in the market. However, it is not just making the customers happy, but meeting the needs of individual customers. Not all customers are the same and in this case, the managers must be able to know how to make the customers happy. This is easier in saying htan in doing because any business will have numerous customers and meeting the needs of each customer is not feasible (Griffin, 2005). There is also the concept of “the customer is always right”. But this does not mean that the customer is really always right. For instance, sometimes the customer will be wrong and the customer will insist that he or she is right. Managing such a situation is a critical issue for managers because for once, they do not deal with the customers directly and so they have to place the right people at the right places in order to make sure that these people are able to deal with the situations as they arise. IT systems IT has become the way to do business these days. Any business needs IT systems in order to realize its business strategy. However, although IT gives a business a strategic advantage, it is not automatic that if a firm purchases the best IT system it gets strategic edge. As Davenport says, (2007) says, whether or not a firm will gain strategic edged from any investment in the IT will be determined by so many factors, including the strategy the firm will use in the procurement and the eventual implementation of the IT systems. In fact, two similar firms can invest in the same IT systems and one may gain strategic edge from the systems while the second one may end up losing everything. Choosing to invest in any IT systems is a decision that managers must consider carefully and know for sure that it is not guaranteed that the system will give them any strategic edge. Organizational structure Different organizations use different organizational structures. Organizational structure refers to the way the business is designed with regard to its functions. Some organizations can choose to use an open structure while another can choose a hierarchical structure. Choosing an organizational structure that will work for an organization is not an easy thing at all (GUPTA, 2007). In fact, two similar firms selling to the same market, producing in the same environment, in the same economy, can use the exact same organizational structure, yet the organizational structure will fail one organization and work for the other. In choosing the right organizational structure for a business, managers and owners have to go through a rigorous process, which involves changing the structure often in until the firm gets the right structure for it. This is not an easy task. Additionally, while some generic organizational structures are said to achieve some elements of business strategy, it does not necessarily mean that if any firm implements them they will gain the strategic advantage. A good example is the Apple organizational structure that has helped the firm to achieve innovativeness to the point of making the firm to be an innovation leader. The same structure has worked for other firms such as Google and Intel. However, it does not necessarily mean that if any other firm, even those in the same industry as these above named three firms, use the open structure like that of Apple, Google and Intel, it will be able to achieve innovativeness. In this regard, choosing an organizational structure is not a direct task for business managers. They have to work much harder than just pointing at a generic organizational structure and choosing to use it. Referemce list: Center for Complex Adaptive Agent Systems. (2007). Modern Business Envirtonment, Understading Busiens Complexity. New York, NY: Center for Complex Adaptive Agent Systems. DavenPort, H. (2007). The Globa Business Environment . New York, NY: pearson Books. Griffin. (2005). New Busines Managemnt Aproach: looking int Modern Multinationals. New York, NY: Pearson Education Books. Gunz, Y. (2005). Complrxity in Modern Organisaitons . New York, NY: Pearson Books. GUPTA, P. (2007). Organizations and Strategi Management: Managing Complext Issues. New York, NY: Pearson Books. Stacey, D. (2000). Managign Complexity in Modern Busiess Managemnt. New Jersey, NJ: John Wiley & Sons. Read More