Monday, 28 October 2013

20th October 2013 -  27th October 2013, Porter's 5 Forces.







This week consisted of understanding the Harvard's professors invention of five forces and the importance of it and how it can be applied to every business in this world. The diagram above shows what those Porter's five forces are, and how it acts as a simple and powerful tool for understanding where the power lies within a business.When you understand where the power lies in the business, you can take advantage of your strengths and can work on your weaknesses. In these classes, we learnt on how to use these five forces to determine competitive power in a business.

Bargaining Power of the suppliers: This is nothing but the dependency of your business to a supplier, that is, if you have lesser suppliers, the more you are dependent on them, making them more powerful, the more suppliers you have, the bargaining power of the suppliers weakens as he know that you have a variety and you can switch if he doesn't give you a good offer. Also their uniqueness and control over you, if they can make a product which other suppliers can't, they are in power and they can take the benefit by charging higher.

Bargaining Power of Customers: Here you ask yourself, how easy it is, for a buyer to bargain with you, Again, this is driven by the numbers of buyers, each being equally important to you and the cost of them, switching to a different product from yours.

Industrial Competitiveness: You're in control, if the competition is low or you're a monopolist, you can control the customers, while if there is high competition, you know that if you don't come up with a good and unique deal, which differentiates your product in a unique way, from those who are your competitors, your customers will switch to your competitor's product as they have a lot of available choices for a particular product. So, you need to bring a deal, which others can't offer to stay in a competitive market.

Threats of New Entrant: If you're in industry where the barriers to entry is high,and entering that particular industry is not easy, you have a benefit, you know that your competition level will stay stable at some level and you can benefit from this while if there are lesser barriers and entering this industry is easy, more people can invest and enter this industry making in more and more competitive which might make you weak towards your suppliers and customers.

Threat from Substitute Products: If your customers or people find a substitute way of the services or product you are offering, which are more cheaper and easy to get, they will surely turn to that , destroying your industry. So in other words, if substitute product or service is easy and viable, this weakens your power.


This was not it, no doubt the entire week was about this, but we also learned  by looking at some examples and realising the importance of it. We were shown example of three companies which were a blast in their time, but neglecting these 5 points, made them vanish from their industries. one of the example was KODAK, which neglected the rivalry increase and technological increase, the use of digital cameras, they were confident with their printed photos and neglected the upcoming competition. What is Kodak today? i can just say it was a huge company and one of the biggest for cameras and now it doesn't even exist. Same with black berry, they came up with their unique messenger but didn't follow up nicely, the competitors took over their market and now black berry messenger is available on all the phones.

Also, these 5 forces benefits people for evaluating and forecasting on, before investing into a business, that is, if i want to start a business, i can use these 5 forces and research with these to get myself an idea on whether it is worth investing, whether i can make my market share, for instance, if there is high competition, it is difficult for me to enter into a market, with my competitors having the benefit of supplier and customer bargain, they are already leading me and i can get an idea of how the market is, and if i want to enter, what would i have to do, how would i make myself unique to prove myself better from others, what would be my strengths and weaknesses.

Porter's five forces are really important, but using it only gives you a partial picture of what it looks like. Also, with the advancement in technology, their is an increase in the converging industries, which makes you realise that this is not enough, you have to take your competitors seriously and you have to think broadly, you have to predict future advancements and be the starter of innovative products in your industry, not your competitors.

Here is the video, which was shown us in class, in this, porter himself explains his five forces.

Sunday, 27 October 2013

13th October 2013 -  20th October 2013, Management Theories.



Just after enriching ourselves with the knowledge of  different organizational structures in the business, we moved forward to the management. As always, the Monday's lecture was the first class, it started with the question, what is management? It is nothing but performing things according to the plan with the aid of people and other resources. The functions of management are to set goals and deciding strategies by which these goals could be achieved, by deciding on how things would be done and dividing those into tasks and responsibilities, by controlling the path of the organization on which it moves, to ensure that things are been done the right way and effectively by the right communication and co-ordination between people, finding weaknesses and resolving them, motivating workers and making the best possible decisions.
The main focus was on the management theories throughout the week, most of them are old and as they were made by people itself, so they were actually a POV of how they thought would bring better results for businesses. Some of the theories we learnt about this week goes as follow:



The above picture is of Frederick Taylor, his theory was known as Scientific Management. He believed in efficiency and productivity, he introduced the idea of picking the best way of performing a task by observing different people doing a particular task, which takes the least time and gives the most output and by making everyone follow it, which would increase efficiency by reducing waste, time and money. He believed that workers are only motivated by money and they are only concerned with their job. The negative side of his theory was simple, he never thought about the people who wouldn't cope up with the new style of doing a task and regarded workers as machine and not humans.


The name is already mentioned in the picture, Fayol emphasised on administration. After searching for him on Google, to understand his theories in depth, he was actually an engineer at a mining company, later promoted to director. He thought alot about the management of the organization and developed the 14 principals of management and 6 functions of management, which were summarized in our class and we were given a background about what mindset he had.

This is Max Weber, his theories are strictly about rules and regulation and an organization being bureaucratic in order to be successful. He thought that an organization needs to be organized, and it can be only done if rules are followed. His theories are only suitable for some businesses and it is not very flexible. It also has minimal employee discretion and too many rules may be discouraging for employees. His theory is very old fashioned and some rules must be there in his rules based theory to country bureaucracy itself. Although, his theories can be used in today's organization too, where there is little need of flexible, but organization like google and apple which are extremely flexible cant apply his theories.


He observed theories of others like Taylor and Webber and integrated them with his thoughts. He believed that the span of control of a company should be limited, in our lecture class, when we came to this point, we were revised the previous weeks lecture which included this, Span of control and were asked the possible limitations of span of control which Urwick supported. His theories are also applicable to some particular organizations which would match the criteria of his theories. Communication is easy as spans are limited and because the supervision level and control would be high, there would be less chances of delegation. Giving rights and delegating to labours may bring motivation and innovation in an organization.


He is Elton Mayo, he got famous because of his Hawthorne effect in which he shifted the place of people into an Hawthorne factory and changed their environment and equipments and the way they used to work daily, since people get bored of the way they perform a task with the same method. According to the research, the output did increase by the improved social relationships and human interaction which bought this change in the theoretical world of management and brought the thought of thinking about human relation and how it improving it could benefit an organization.


He might not be known to alot of people by face and also personally, but he was the owner of the famous Ford Motor Company, which is even famous till today. We were also showed a clip about his work and the way he mass produced cars and how he believed that mass production brings maximum efficiency in an organization. He believed to create car which would be accepted by everyone and created thousands and thousands of cars with a little or no diversification in it. It focuses on producing a same kind of product on mass, and doesn't give a choice and varierty for consumers, this theory would support businesses that benefits from monopoly.

Also we discussed about the thoughts of Eric Trist and his theory about the socio-technical system and how he believed change should be accepted by everyone. We were more over told to search about different theorists apart from the ones we discussed and were also given a paper quiz. In short, the week ended up by enhancing our brains with different styles and theories of management and how different kind of businesses can take advantage of these theories.

Monday, 7 October 2013

7th - 13th October 2013, Organizational structure.

This was the first week of my classes at the ISC (International study centre) at University of Sussex and this blog is about my first week of the Business Management classes.
Everything went pretty well, I like the idea of how the group working technique is used, with breaks in between long duration classes (classes of more then an hour) and a little crack of funny jokes in between, making the class and subject interesting, also, dividing one whole group into two, for better attention and interaction between students and their teacher. Moreover, I like the way how they have divided work, responsibilities, students into groups and the communication levels which are the signs of a good ORGANIZATIONAL STRUCTURE,  which was the main focus of the week.






So the week started with a lecture by Vishal Patel, it was a summary of what the whole week would be about,the organizational structure of a company. It was well explained using a chart, how work is divided within an organization, responsibilities are shared by giving roles to all the employees and how the communication levels are built so that everyone is aware of who to report for the work they have done for the smooth running of the organization. Also, theories for instance by Mintzberg, which explained his thought that how an organizational structure divides its labour to achieve co-ordination amongst them which indirectly is important for the performance of a company. Dividing work also creates the chances for specialization which increases the creativity level of a department or a worker itself, that is he becomes more expert in a work which he is doing everyday and gets better ideas with the time on how to do that work more effectively.

After viewing an organizational structure from a distant point of view, it was more over taken to a maximized point of view and discussed on how things work within.

 Chain of command is also one of the things which was discussed in one of the classes,it is the communication network  through which the command moves to the down hierarchy from the top and also formal authority and responsibility is set also and how delegation takes place, where the responsibility of work is given by the top to low level employee but not the final responsibility.

Lets come to span of control now, it is the number of sub-ordinates who are responsible to report directly to an appointed manager. There are two type of span of controls, narrow and wide.
If the span of control is narrow, there will be many management levels, that would result in a tall organizational structure where as if the span of control is wide, there would be more people working under one manager which would result in a flat organizational structure. 


One of the hot topics of the week was centralization and decentralization decision making. Centralized decision making requires more delegation and more communication is required where decentralized decision making is a strict technique and mostly used for non-motivated staff and non-professional or unskilled workers.

Apart from this, we discussed about mechanistic and organic structures. Mechanistic structures consist high degree of specialisation and works with centralised decision making and is found in tall structures while in organic structures  individuals work together to solve a problems, coordination and fewer rules are required and is found in flatter structures. Lastly, matrix structure was also defined, it is actually nothing but project management.  It works well within an functional structure. Teams are created for a specific project and will be led by a project manager.