How Can Contemporary Management Theories Help a Global Company - Research Proposal Example

How can contemporary management theories and tools help a global company in the achievement of a sustainable competitive advantage. Executive Summary The practice of management has been faced with the appearance of many fads and fashions without any scientific standpoint to validate their positions. There has been a wide array of speculation in management. Through the study of Barnard's and Taylor's views there can be a sound integration of two different schools of management thought. In the present research proposal most of the contemporary management theories and tools are analysed in the context of strategic management for the purpose of acquiring valuable knowledge that can lead to achieve a sustainable competitive advantage in a global business environment characterized by technological advances that transform at a fast pace the stability of management decisions not even for the short term, but for the long term as well. 1.0.- Introduction 1.1.- Problem Statement In the face of a fast-paced business environment due to continuous technological advances the practice of management has been changing according to those changes. The emergence of new fads or fashions in management requires a scientific approach to determine the features of a sound management viewpoint. All of this implies that it is necessary to study contemporary management theories and tools in order to determine the validity of management in a global business scenario. 1.2.- Research Objectives 1.- To study the different contemporary management theories and tools. 2.- To found out what are the real characteristics of a sound management practice. 3.- To study the integration of mission, goals, objectives, critical success factors and key performance indicators in the context of management. 4.- To study the importance of strategic management in order to acheve and sustain a competitive advantage. 5.- To apply the knowledge of management and the findings in the research study in the implementation of real solutions to face real global management challenges. 1.3.- Significance of Research The research project deals with the study of contemporary management theories and tools that can be helpful in the area of strategic management in order to achieve a sustainable competitive advantage for a global company that has to face a complex variety of challenges during the course of its everyday operation. The integration of the "naturalist" (Barnard) and the "rationalist" (Taylor) viewpoints can be very useful for approaching the integration of management with a new and valid insight. 2.0.- Literature Review 2.1.- Contemporary Management Theories and Tools. Management theories and tools come and go at a rapid rate. Most of them are fads, fashions or replications of forgotten ones without any scientific foundation of real and lasting value. This point is the source of a study by Chester Spell (2001). For instance, Spell argues that Management By Objectives (MBO) was described by Smitty in the 1950s according to Greenwood in one of his works published in 1981. Harvard Business Review also states that Drucker's MBO was studied by D. McGregor back in 1957. (Spell, 2001). In this research proposal it is aimed at studying management theories and tools that can pass the test of time. K. K. Naidoo studied the classical management writers to find Chester I. Barnard as an overlooked writer who integrates the "rationalist" and the "naturalist" schools of management thought. First, Naidoo enumerates the five principles of Frederick Winslow Taylor in his work from 1911 entitled "Scientific Management": "1.- Shift all responsibility for the organisation of work from the worker to the manager; managers should do all the thinking relating to the planning and design of work, leaving the workers with the task of implementation. 2.- Use scientific methods to determine the most efficient ways of doing work; design the worker's task accordingly, specifying the precise way in which the work is to be done. 3.- Select the best person to perform the job thus designed. 4.- Train the worker to do the work efficiently. 5.- Monitor the work performance to ensure that appropriate work procedures are followed and that appropriate results are achieved." (2004). Then Naidoo claims that there was a clear contribution by Barnard to the "rationalist school" headed by Taylor. Barnard's concept of the organisation "was that it was a deliberately constructed tool -a set of rationally designed and monitored tasks." (2004). Naidoo expands Barnard's ideas as follows: "However, Barnard also had a symbolic concept of the organisation -as a set of important values, beliefs and moral codes that motivated and guided people to co-operate in the pursuit of the organisation's well-being. These values, beliefs and moral codes represent variables not subject to complete control by the organisation and hence not contained within a closed system of logic. With this concept, Barnard also made contributions to the 'naturalist school'. This school has an open-system strategy and considers that the organisation is a 'non-rational' system of values, beliefs and moral codes that motivate people. Central to the natural-system approach is the concept of homeostasis, or self-stabilisation, which spontaneously, or naturally, governs the necessary relationships among parts and activities and thereby keeps the system viable in the face of disturbances stemming from the environment (Thompson, 1967)." (2004). Naidoo sees an integrating perspective in Barnard's approach to managing an organisation: "Barnard's combined approaches thus made valuable contributions to both the rational and natural schools of organisation theory. Although this dichotomy in approach is contradictory, Barnard's work served as a platform for serious and sustained elaboration of his work by the Simon-March-Cyert stream of study which produced a newer tradition evading the closed -versus- open system dilemma. This body of research viewed the organisation as a problem-facing and problem-solving phenomenon in an environment that is uncertain and does not fully disclose itself. Therefore, the organisation must make its decisions in bounded rationality, and decision-making now involves satisficing rather than maximising (Thompson, 1967)." (2004). On the other hand, W. E. Deming's 14 points in his system of Profound Knowledge reflect a sound position about the practical aspects of management (Deming, 1998). Later Deming stated the following about his system of Profound Knowledge: "The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people." (Deming, 1998). According to A. S. Grove (1996) any kind of business needs to face compelling challenges for achieving success in the competitive world of business: "Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people's attacks and to inculcate this guardian attitude in the people under his or her management." (1996). Vadin Kotelnikov (2006) claims to have found a new paradigm for addressing the management issue, which he calls Resource-Based Theory. Kotelnikov's standpoint is radical and finds the traditional strategy models to be inadequate, claiming that "traditional strategy models such as Michael Porter's five forces model focus on the company's external competitive environment. Most of them do not attempt to look inside the company. In contrast, the resource-based perspective highlights the need for a fit between the external market context in which a company operates and its internal capabilities." (2006). It is also interesting to consider Human Performance Technology (HPT) as an approach that can be useful in management (AFC/ISPI, 2006). On the other hand, there are a lot of management tools available. Business Resource Software (BRS) (1994-2006) lists 21 analytical and theoretical business tools. The Dashboard is also a valuable business tool. Business Week Online asserts that "the dashboard is the CEO's killer app, making the gritty details of a business that are often buried deep within a large organization accessible at a glance to senior executives. So powerful are the programs that they're beginning to change the nature of management, from an intuitive art into more of a science." (2006). Another useful business tool that can be implemented is the Balanced Scorecard. Paul Arveson (1998) explains its features and benefits at The Balanced Scorecard Institute. Arveson states the following about the Balanced Scorecard: "You can't improve what you can't measure. So metrics must be developed based on the priorities of the strategic plan, which provides the key business drivers and criteria for metrics that managers most desire to watch. Processes are then designed to collect information relevant to these metrics and reduce it to numerical form for storage, display, and analysis. Decision makers examine the outcomes of various measured processes and strategies and track the results to guide the company and provide feedback." (Arveson, 1998) Massachussetts Institute of Technology (MIT) (no date) recommends Business Process Improvement (BPI) as a meaningful solution for the challenges of integration and globalisation. On the other hand, Six Sigma has exerted a lot of influence in the business world lately. General Electric Company (2006) states the following about Six Sigma: "First, What is Six Sigma First, what it is not. It is not a secret society, a slogan or a cliche. Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services. () The central idea behind Six Sigma is that if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and get as close to "zero defects" as possible. To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million opportunities. An "opportunity" is defined as a chance for nonconformance, or not meeting the required specifications. This means we need to be nearly flawless in executing our key processes." (2006). Darrel K. Rigby, Director of Bain & Company, lists 25 useful management tools as a result of a research study among top managers. (2005). Strategyn (2005) is a company that focuses on Outcome-Driven Innovation and Innovation Tools from the point of view of the customers. It describes its perspective in the following way: "The methodology behind outcome-driven innovation is analogous to the Six Sigma initiatives that companies use to improve their internal business processes: For every process, there is a set of metrics that can be used to determine whether it has been successfully executed. With the right metrics in hand, managers can establish programs that, over time, will control process variability and ensure perfect execution." (2005). W. Chan Kim and Rene Mauborgne (2005) have written a very challenging book about the Blue Ocean Strategy (BOS). Their aim is to create uncontested market space and that way make the competition irrelevant. Their premise is the following: "Companies have long engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled for differentiation. Yet in today's overcrowded industries, competing head-on results in nothing but a bloody "red ocean" of rivals fighting over a shrinking profit pool." (2005). 2.2.- Mission, Goals, Objectives, Critical Success Factors and Key Performance Indicators. Mission, Goals, Objectives, Critical Success Factors (CSFs), and Key Performance Indicators (KPIs). Richard A. Caralli (2005) deals extensively with the concept of Critical Success Factors (CSFs). In the Abstract, Caralli makes the following remarks about the mission, goals (short term), objectives (long term) and Critical Success Factors in an organisation: "Every organization has a mission that describes why it exists (its purpose) and where it intends to go (its direction). The mission reflects the organization's unique values and vision. Achieving the mission takes the participation and skill of the entire organization. The goals and objectives of every staff member must be aimed toward the mission. However, achieving goals and objectives is not enough. The organization must perform well in key areas on a consistent basis to achieve the mission. These key areas-unique to the organization and the industry in which it competes-can be defined as the organization's critical success factors." (2005). Caralli stresses that CSFs must be known explicitly by managers in order to be successful: "Critical success factors (CSFs) define key areas of performance that are essential for the organization to accomplish its mission. Managers implicitly know and consider these key areas when they set goals and as they direct operational activities and tasks that are important to achieving goals. However, when these key areas of performance are made explicit, they provide a common point of reference for the entire organization." (2005). The advantages of a CSF-Based Approach are the following: "-CSFs can reduce organizational ambiguity. () -CSFs are more dependable than goals as a guiding force for the organization. () -CSFs are more likely to reflect the current operating environment of the organization. () -CSFs provide a key risk-management perspective for the organization to consider. () -CSFs can be valuable for course correction." (Caralli, 2005). On the other hand, Key Performance Indicators (KPIs) are closely related to Critical Success Factors (CSFs). Key Performance Indicators are very similar to the Dashboard managerial tool. Information builders (1996-2006) points out the following about KPIs: "Key performance indicators (KPIs) are high-level snapshots of a business or organization based on specific predefined measures. KPIs typically consist of any combination of reports, spreadsheets, or charts. They may include global or regional sales figures and trends over time, personnel stats and trends, real-time supply chain information, or anything else that is deemed critical to a corporation's success. A KPI application such as an executive portal can give a business executive a high-level, real-time view of the health of a company by visually displaying vital statistical information about that company." (Information Builders, 1996-2006). 2.3.- Strategic Management and Competitive Advantage. Zook and Allen (2001) published an essay that provides valuable insights into strategic management: "A key issue for senior executives wrestling with growth problems or frustrations is determining whether the company's strategy is wrong or whether the organization is not able to execute it. Sometimes these problems can coexist and are difficult to separate. A strategy built for an organization that cannot execute it is not a good strategy, by definition. Conversely, a superb organization can shape and adapt even a mediocre strategy into a winner." (2001). Strategic management is highly related to the development and sustainability of a competitive advantage. Mitchell and Coles (2003) study the issue of achieving a competitive advantage through model innovation arguing as follows: "A strategic competitive advantage means that your products and services can be provided in ways that deliver more sales, higher profitability and greater cash flow than would occur for any competitor if competitors supplied the same customer instead. Most companies have few strategic competitive advantages by this definition. () Business model improvements can make a big difference in creating strategic competitive advantages" (2003). Vadin Kotelnikov (2006) argues that according to the Resource-Based Theory "a company's competitive advantage derives from its ability to assemble and exploit an appropriate combination of resources. Sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions. (2006). Staffan Canback, on the other hand, states that "strategic planning reduces resource misallocation by channeling scarce resources into areas where the company has a competitive advantage." (Canback, 1998). For Gregg Goble (2005) a competitive advantage should be achieved through resilience, security and compliance. Richard W. Oliver (2000) deals with the issue of sustainable competitive advantage. For this author the correct expression should be "sustainable 'temporary' competitive advantage". Oliver (2000) argues that corporate learning is the only answer to this issue of sustainable temporary advantage. This author thinks that the learning process along the execution stage of new corporate initiatives is the only viable solution to the problem at hand. So innovation is extremely valuable for Oliver (2000). In his view everything comes down to the quality of people in the organisation. (2000). 2.4.- Global Management Challenges. Through the emergence of new technological advances (Internet) and consequently new ways of doing business (E-Commerce) management theories and tools have to be re-defined and adapted to the new competitive scenario. Heller (2006) remarks that "after 2000, companies will not survive long unless they join a threefold revolution - in management itself, information technology, and global markets. The three feed off each other." But Heller holds an optimistic standpoint when it comes to dealing with the new business environment based on the technological influence in the business world: "Technology is expediting the onrush of organisations into brilliant new modes of management: not only global, but interactive, innovative, collaborative, anti-hierarchical, user-friendly. But the technology and its suppliers are themselves changing at critical speed, which puts further intense pressure on managements. They cannot stand still: they have to ride the revolution." (2006). This revolution is transforming the traditional management theories and tools at a swift pace on different fronts: "The revolution is being driven by irresistible forces: fragmentation of markets, anarchic technologies, more demanding customers, intensified competition and general over-capacity have all helped to undermine the old principles of business economics." (2006). Heller provides valuable insight into this new business environment that it is changing the face of management: "The new corporate armoury includes integrated database systems, 'virtuality' (in which company, customer and supplier are wired together), mass customisation, and flexible organisational forms. These developments, along with many others, are changing the nature of management. A networked company is a different kind of company, but most managers do not yet appreciate the difference." (2006). On the other hand, Mercer (2007) asserts that the present global challenges faced by organisations are characterised as follows: "As companies become global enterprises, they face common challenges sparked by their growing aspirations and operations and the need to leverage resources and control costs across geographies. These shared experiences have led to a number of global business priorities that now dominate corporate agendas." Mercer conducted a study where it found out about those priorities as follows in order of importance: "Generating top-line revenue growth Globalizing business operations Responding to emerging skill shortages Continuously improving processes Controlling costs and managing risks Engaging employees Changing working demographics" (2007). Morrissey and McQuaid sum up the global business challenges in the following terms: "Business is still in the early stages of experiencing the full impact of the e-business phenomenon. The Internet not only provides a valuable e-commerce retail venue, it provides a dynamic and economical platform to virtually integrate a firm's value chain. The management task is to leverage these opportunities quickly to sustain or enhance competitive advantage." (2008). 3.0.- Research Design 3.1.- Data Source. Even though the concept of Content Analysis has been used discretionally in this research proposal, the idea behind this data gathering and collection technique has been influenced by the general guidelines set by Kimberly A. Neuendorf (2006) in "The Content Analysis Guidebook". The paper entitled "Introduction to Case Study" by W. Tellis (1997) has been considered as a general guide along the way in the event that case studies are necessary when undertaking the actual research study. The sources used on this research project were gathered according the criteria of credibility, authority, relevancy, trustworthiness, and reliability. These methodological criteria were followed in order to achieve an adequate degree of validity. Every effort was made to find accurate and valid sources taking into account the academic nature of this research proposal. 3.2.- Research Methodology. The data collected in this research study are analyzed following the principles of the deductive method of thinking, going from the general to the particular. In some cases the inductive method of thinking, going from the particular to the general, will also be implented as required by the nature of the data. A scientific methodology is essential for the succesful completion of a research proposal. The tutorials published by Trochim (1996-2004) and the guidelines given by ESRC (2007a) and Cronje (2005) in the Internet are a valuable sources of knowledge about research methods. The qualitative method was used according to the explanations of ESRC (2007b). 4.0.- Expected Results Throgh the findings of the actual research study it is possible to acquire new insights into the application of contemporary management theories and tools that are valid to be implemented in an integrated form. The knowledge acquired from those contemporary management theories and tools can have a relevant impact in the practice of strategic management that can be of help in achieving a sustainable competitive advantage for any global enterprese after doing all of the necessary adaptations at the corporate level. Bibliography AFC/ISPI, 2006, May 15, Human Performance Technology (HPT) Primer, (online), Armed Forces Chapter/International Society of Performance Improvement, available from http://www.afc-ispi.org/hptprimer.htm (accessed April 5, 2008). 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