Efficient Management Principles and Practices - Case Study Example

Management Principles Table of Contents Table of Contents 2 Introduction 3 Task 3 Manager, Management and organization 3 Managers are critical to organizational success 4 Task 2 5 Significance of organizational structure 5 Organizational structure and decision levels 7 Task 3 8 SWOT analysis of Burberry 9 Impact of organizational culture 10 Conclusion 11 References 12 Introduction Effective management principles lead to success of organizations across the world. The management of an organization comprise managers across various functional domains that are responsible for planning, organizing, directing, staffing, and co-ordinating and reporting. Management decisions taken by the managers lead to organizational success or failure. Thus, it is highly imperative for managers to strictly consider the implications of their decisions. Task 1 Manager, Management and organization Managers are individuals who ensure the business sustainability. They are critical to the functioning of a business. A business is a congregation of people and process employed to sell goods or services in lieu of profit. But organization on the other hand may operate on the basis of profit or without profit i.e. non profit seeking organization like Greenpeace. Managers aim to take decisions at various levels of an organization that are directed towards controlling the various resources that determine organizational sustainability. They are the strategy developers and look after the business processes so that they are directed towards organizational goal. Management is cumulative of the various managers of an organization who jointly decide on various functional activities. Management comprises of directors and managers. The directors develop the vision and mission of a business organization. Managers implement the decisions of the directors by formulating strategies so that it conforms to the organizational goals and objectives. It is considered to be one of the critical factors along with other factors of production like land, labour, technology and money. Organization is a summation of all the factors of business that work in cohesion to achieve the predetermined goals. It comprises directors, employees, physical factors, money, customers and all other stakeholders. It aims to meet the needs of its customers by collaborating with its internal and external stakeholders, physical and non physical resources. It has a vision that is achieved by implementing successful management practices (Lussier, 2008). Managers are critical to organizational success Organizational success is a measure of sound management decisions and practices. As discussed earlier management is a collective name of directors and managers. Directors are responsible for framing organizational policies, but mangers ensure that these goals are achieved through proper strategy implementation and adherence to policies and guidelines. They are keys to efficient resource utilization. They ensure that the organizational goals are achieved through minimum resource utilization. When companies face crisis situations, managers come to the surface to deal with the problems and take effective measures to re-establish stakeholder confidence. They are not only pro-active but are also reactive to externalities that are detrimental to organizational growth (Lussier, 2008). Examples: Toyota in the year 2010, recalled approximately 8 million vehicles for safety issues that led to deaths. Managers at Toyota faced intense challenge as its brand value started to deteriorate. Customers started to build negative perceptions about the brand following its fiasco. Executives at Toyota responded to the situation by increasing its peer activities and developed new ads where it spoke about the problems, car safety and what they were doing to improve the quality of their product. This measure saw brand revitalization of Toyota that witnessed 11% growth in its brand equity. Taco Bell in 2011 witnessed a drop in its sales, when allegations of meat percentage were made against its parent company. Managers at Taco Bell responded to these allegations by creating ads in which it declared about its meat composition and their secret recipe. It named the ad campaign as ‘not –so- secret’ recipe that resulted in overwhelming response. Task 2 Significance of organizational structure Organizational structure refers to the alignment of various functional activities of a business that ensures achievement of goals. It shows how the flow of communication intra company. The authority and responsibility is determined through the organizational structure. The flow of command and strategy implementation is incumbent on the organizational structure. In case of Burberry which operates in the retail industry has a functional organizational structure. Though there are other types of organizational structure namely divisional and matrix structure, functional structure best fit retail organizations like Burberry. Functional structure is where departments are grouped according to the functional activities i.e. marketing, sales, finance, public relations, production, purchases, customer service, etc. Burberry follows three tier organizational structures where the top level comprises the board of directors, followed by functional heads and delivery groups. There are certain limitations to the functional organization structure, owing to its dispersed nature. Lack of inter functional cohesion often leads to failed implementation of strategies. Organizational success is incumbent not only on the effective management practices but also on the organizational structure. Burberry’s organizational structure is significant of factors like improved employee performance, better flow of communication, resource optimization and functional specialization. All the above factors are critical to organizational success. Functional specialization refers to division of work that leads to work specialization. The organizational function is broken down into numerous small divisions that are directed towards the achievement targets. Burberry’s organizational structure helps it to reduce resource wastage. Resources are limited and dispersed structure helps to accurately measure the resource requirements at every organizational level, functional level and sub functional level. This leads to effective resource allocation and utilization, which contributes to the growth of the organization. It also ensures that the top management is not overburdened with responsibilities. Division of work increases the efficiency of individual employees and managers which leads to the overall success of the organization. A clear authority responsibility of Burberry’s organizational structure helps to manage and measure its human capital. Each and every employee is allotted his/her piece of work which is quantified based on the level of achievement. This helps the organization to create remuneration and rewards program that leads to employee satisfaction. Satisfied employees are expected to increased level of performance that will add to the organizational success (Baligh, 2006). Organizational structure and decision levels Figure 1: Organizational structure of fashion retail (Burberry) The above figure represents the organizational structure of Burberry. It shows how the entire organization is divided into three levels i.e. top, middle and line level. The organizational structure shows how these three levels are further divided into various functional areas. The top management comprises the board of directors, the director or the chairman executive officer, legal and financial head. The top level mainly decides on the areas of business developments and shareholders interest. It ensures business sustainability and safeguards shareholders interest. It frames guidelines, policies and qualitative goals. The legal and the financial heads aid the board with external regulations and fund allocation. These two heads along with the chairman or the director strategise long term qualitative objectives. The middle level management comprises the various functional groups like production, research and development, marketing, IT, sales, customer service and human resource. The functional managers work in co-ordination with the chairman and the line level to devise short term quantitative targets. The decisions mainly include functional plans that range from 1 year to 5 years. They decide on purchase order, supplier discounts, payment period, marketing activities, PR activities, sales target, market research, offers and discounts, recruitment and talent management, etc. The line level in co-ordination with the middle level managers break the short term 5 year plan into yearly, semi annually, quarterly and monthly achievable targets. The line level managers ensure that the targets set by the middle level managers are achieved within the specified time. At Burberry the line level comprises the store employees, logistics staff, customer service executives, etc. Thus organizational structure at Burberry shows a three way process of communication and strategy implementation i.e. upward, downward and lateral. It shows how the top level’s qualitative goals climb down the organizational ladder across the middle level and line level to short term quantitative targets. Such organizational structures ensure better co-ordination, reporting and control of business operations at all levels i.e. vertical and horizontal (Baligh, 2006). Task 3 Vision, mission and corporate strategy are three levels of decision that involve all the three levels of organizational structure i.e. top, middle and line level. Vision is a long term qualitative statement that defines the existence of the organisation. Burberry’s vision is to be one brand one company. It wants to achieve increased consumer resonance through co-ordinated efforts of its employees and brand assets. Mission translates the vision into short term achievable target. Burberry wants to leverage the online platform to increase its beauty product growth by 25% in FY 2015. Its main focus is on the fragrance pillar. Corporate strategy includes the detail plan of the mission. It states the areas of growth of an organization. Burberry’s corporate strategy includes leveraging the online platform to its business interest; it wants to grow its accessory sales along with men’s product, leather goods and shoes. It wants to access newer markets like Japan and China. It also wants to enjoy its extended presence in Los Angeles and San Francisco. Its final core strategy is to build greater operational efficiency through its recent investments (Burberry, 2015). SWOT analysis of Burberry SWOT analysis outlines the key factors in making strategies for an organization. The factors include strength, weakness, opportunity and threat of an organization. In case of Burberry it will help identify its strengths to leverage the opportunities and work on its weakness that will result in reducing its risk exposure, resulting in reduced threats. To implement strategic management it is imperative for an organization to evaluate its competencies. SWOT analysis would give Burberry a low cost tool that will help it to identify its competencies and leverage it to capitalize on the market opportunities. Strength Strategic alliance with Google Strong presence in UK More than 400 stores around the world. Strong brand presence Weakness High cost structure High leverage Low response in Asian countries Opportunity Newer market access Acquisition and more digital partnership Growing e commerce industry Marketing efforts to stimulate the Asian market Threat Confined customer segment Changing tastes and preferences Externalities affecting customer choice Market competition Impact of organizational culture Organizational culture is the congregation of vision, values, behaviour, language that is critical to the work environment. It shows the relationship of the organization with its employees, customers and other stakeholders. Good organizational culture is imperative for business sustainability. An organization is defined by its culture. An organization with poor work culture will lead to bad employee behaviour that will affect their efficiency leading to organizational failure. Poor organizational culture will result in customer dissatisfaction that will reduce its earnings. At Burberry it believes in a cross cultural innovation that will drive its vision which is inspired by its core values of protect, explore and inspire. Burberry’s newly appointed CEO Christopher Bailey was the chief designer at Burberry since 2001 and has helped the organization to double its revenue. It shows how Burberry inspires its employees to take new challenges. Earlier Burberry witnessed a drop in its stock price by 7.6% when its CEO Angela Arhendts announced to leave Burberry and join Apple Inc. It believes in a connected culture. It has a platform called Burberry chat which the CEO, Chief executives and 11200 employees interact to share ideas and knowledge. In a recent interview Christopher Bailey spoke to the media about how he uses Burberry chat to invite fresh ideas and thoughts before ad campaigns. He also added that Burberry follows the practice of taking new and fresh talent to their ad campaigns to build their level of confidence and make them feel associated with the organization (Burberry, 2015). It shows how changing organizational culture will help build organizational synergy that can be leveraged to increase the employee satisfaction level, resulting in improved productivity. Conclusion Effective and efficient management practices thus show how it can lead to organizational success. Though success is not a measure of increased level of earnings it also includes creating new and better relationships with its employees, customers and other stakeholders. Organizations at all time should try to adopt new culture or foster cross cultural activity that will contribute to new ideas, thoughts and values leading to continuous innovation. References Baligh, H.H., 2006. Organization Structures: Theory and Design, Analysis and Prescription. USA: Springer Science & Business Media. Burberry, 2015. Burberry – Our Strategy. [online]. Available at: < http://www.burberryplc.com/about_burberry/our_strategy/leverage-the-franchise > [Accessed on: 09.04.2015]. Lussier, R., 2008. Management Fundamentals: Concepts, Applications, Skill Development. Ohio: Cengage Learning. Read More