Management

Management

Business and Managerial Theories

Business, commerce, administration and management studies are a popular cluster of majors across the world. Admission to the best known associated professional degree, the MBA or Master of Business Administration, usually requires both an academic and working experience-based background. The situation is similar with the many professional accreditations common in the field (accounting: CPA – Certified Public Accountant, CA – Chartered Accountant, CMA – Certified Management Accountant, CGA – Certified General Accountant; finance: CFA – Chartered Financial Analyst).

The definition is less clear-cut when it comes to managers, although theoretical constructs, such as the newcomer advantage, are abundant. Among other strategies, the newcomer advantage has been defined as a factor in attaining commercial success (making profits being the assumed goal of most businesses). Further, managerial theories often examine the growth and development of an organization through time, such as with leadership crises and related stages. Organizational behavior is a close sub-discipline bordering on industrial psychology.

While the business world is one where the environment is rapidly changing and competition is fierce, theorists advance managerial postulates, designed to minimize risk and maximize profit. By definition, a business ought to strive to remain profitable, and one aspect of survival may be to protect the firm from economic attack. As published in the notorious Harvard Business Review (HBR), utilizing useful strategies may help in this undertaking. Porter (2008) outlines the five competitive forces and proposes strategic solutions. The author first published a legendary article in the HBR about strategy in 1979. For example, businesses in some industries, like airlines, are pulled in all directions by rivals, suppliers and employees, in addition to customers. One suggested solution is effective audience targeting, a marketing concept. The anecdotal evidence in question came from luxury trucks, reminding one of the correlation between a good’s elasticity and its luxury item status.

Interestingly enough, soon after the first decade of the new millennium, few marketing Professors would omit mentioning Apple’s success in their lectures. Along these lines, the computer and software organization made a great move seizing the opportunity and introducing iTunes, linked to iPod and other Mac products, into the digital era, while many music labels remained static and collapsed.

The diamond industry, encompassing diverse processes from mining and extraction to sales in jewelry stores, is often used in academic, economic examples. Image: Copyright © Megan Jorgensen (Elena)

The Harvard Business Review (HBR) is notorious for publishing articles outlining theories that become classics. For example, Porter (2008) establishes five strategic forces that impede profitability in business: overly savvy customers, powerful suppliers, market entrants, alternatives and strong rivals. The author proceeds to enumerating possible strategies to overcome these obstacles, reviewing which in more detail lies outside the scope of the present very short paper.

In conclusion, human resource management is an important process in a firm’s functioning, and Dunn & Short (2008) looked at when entrepreneurs feel they need to get external resources in the personnel management department. Functions were defined as hiring, termination, training, motivation, performance evaluation, compensation and other employment related actions. Successfully managing human resources may even bestow a competitive advantage. Interestingly, organizations of all sizes must engage in HRM (human resource management) but smaller firms tend to be more informal. In their study, the authors found that smaller businesses with less than 11 employees tend to see HRM as less of a priority than larger small businesses (those with 11 employees or more but fewer than a 100 employees).

References:

Dunn, P., Short, L. E. & Liang, K. (2008). Human resource management importance in small business. Small Business Institute Journal, 2: 1-22.

Porter, M. E. (2008). Five competitive forces that shape strategy. Harvard Business Review, January: 1-19.

Porter, M.E. (1979). How Competitive Forces Shape Strategy. Harvard Business Review,March/April: 137-45.