MANAGEMENT

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MANAGEMENT
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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• 1. The organization
• Definition is a system which operates through
  human activity.
• Determinative elements of the society, eg.
• cash income, entertainment, producing products,
  services, etc.
• Theory organizations are very complex social
  formations, their links cant be described with
  only one theory.

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• Particular theories different viewpoints,
  different characteristics
• 3 levels
• Macro cooperation among different
  organizations
• Mezzo structures of the organizations,
  and influencing factors
• Micro behaviour of the members of the
  organizations,motivation, conflicts

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• 2. The management
• Definition management is about planning,
  organizing, leading, and controlling the
  financial-, physical-, informational-, and human
  resources.
• Management functions
• 4 areas
• Planning is the process of setting objectives
  and then determining the steps needed to
  attain them.

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• The planning process itself consists of five
  steps (1) awarness of the opportunity, (2)
  establishment of the objectives, (3)
  determination and choice of alternative courses
  of action, (4) formulation of derivative plans,
  and (5) budgeting of the plan.
• Organizing is the process of assigning duties
  to personnel and coordinating employee efforts in
  order to ensure maximum efficiency.
• The manager must consider both structure and
  people !

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• Controlling every organization needs to control
  both operations and people. The controlling
  process consists of three steps (1)
  establishment of standards, (2) comparison of
  results against standards, and (3) correction of
  deviations.
• Leadership is the process of influencing people
  to direct their efforts toward the achievement of
  some particular goal. Managers must be
  knowledgeable about human behavior, the concept
  of leadership, and communication.

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• 3. The Roles of Managers ( Mintzberg )
• Interpersonal roles to keep the organization
  running smoothly. As a Figurehead (1) manager
  meets important people, takes customers to lunch,
  and simply lets people know that he or she is the
  key person As a Leader (2) the manager is
  responsible for hiring, training, counseling, and
  directing subordinates As a Liaison (3) the
  manager interacts with people at the same level
  of the hierarchy as well as with others outside
  the organization .

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• Informational roles enable the manager to
  gather and pass on information. As a Monitor (1)
  the manager talks to subordinates and gathers
  information that is useful in running the
  department. As a Disseminator (2) he or she
  passes information along to subordinates. As a
  Spokesman (3) the manager provides information
  to people outside the department.

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WHAT IS MANAGEMENT ALL ABOUT ? 1.

• Decisional roles are the ones through which the
  manager makes things happen. As an Entrepreneur
  (1) who seeks to improve the unit and adapt it
  to changing conditions. As a Disturbance Handler
  (2) trying to resolve problems before they
  become serious. As a Resource Allocator (3) the
  manager decides who will get resources and how
  much they will receive. As a Negotiator (4) a
  role that varies with the level of the
  organization.

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Basic characteristics of the organizational
  structures
• Division of labor dividing work into small
  components so that the workers become specialists
  in their tasks. ( functional, product, geographic
  one dimension functional-line structure/multi
  dimensions divisional, matrix organizations )
• Authority the right to command.( one line line
  structure/ multi lines functional, matrix )

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Coordination the synchronization of the human
  efforts of individuals and groups for the purpose
  of attaining organizational efficiency.
  Coordination tools Technocratic planning
  system, budgeting Structural report system,
  teams, projects Employee oriented
  individual/group motivations

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2. Organizational Structures
• 2.1. Line Structure
• Advantage simple, well arranged, only one boss,
  reports and orders following the official way,
  if the quantity of tasks has changed this
  structure can be easily modified.
• Disadvantage the activity of top management is
  very complex, not flexible, distorbed information

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Application at small organizations, in critical
  situations
• Division of labor according to the accomplishing
  tasks, according to the managers decision
• Authority through the official way, centralized
  decisions
• Coordination vertically through the official
  way, with the tools of power

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2.2. Staff Structure
• Complete the line structure, the goal is to help
  the managers in their complex tasks includes
  experts on different fields ( eg. sales,
  accounting, etc.) without authority.

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2.3. Functional-Line Structure
• Advantage division of labor among top managers
  -according to professions-high efficiency, clear
  regulations, complicated tasks could be
  accomplished
• Disadvantage red tape, slow decision making
  process, decisions are concentrated on the top of
  the hierarchy, decrease the ability of
  accommodation, can not use wide range of products

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Application stabil environments, a narrow range
  of products
• Division of labor according to functions, task
  regulations according to job descriptions
• Authority decision making according to
  functions centralized, highly regulated decisions
• Coordination vertically through the official
  way, horizontally on the same level of hierarchy,
  strong regulations, technocratic tools

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2.4. Divisional Structure
• 2 faces of Janus big organization - small
  organization
• Advantage division of labor according to
  functions, big independency, motivation is
  important, strategic and operational tasks are
  seperated
• Disadvantage paralell existing functional
  organizations, increased number of
  staff-decentralization, divisions became
  selfish-independency

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Application dynamic environments, a wide range
  of products
• Division of labor according to products,
  customers or regions strategic leading comes
  mainly from the center, but one part of them
  comes from the divisions.
• Authority decentralized decisions between the
  central unit and the divisions, centralized
  within the divisions

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Coordination horizontally hardly among the
  divisions, technocratic tools
• 2.5. The Matrix Structure
• Advantage horizontally functional groups,
  vertically groups of products or projects,
  dynamic and flexible structure, good studying
  process at problem handlings, mixed structure,
  accommodate to the challenges

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Disadvantage two way leading- conflicts are
  always there, competition among the managers,
  nobody dares to take the responsibility for the
  decisions
• Application dynamic environments, conflict
  management skills within the organization, at
  complex innovation claims
• Division of labor horizontally functional
  (technical, sales, etc. ) vertically products or
  projects, well done conflict management are
  highly suggested between the two divisions

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Authority functional and project leaders making
  the decisions together,
  decentralized decisions, decisions are not
• highly regulated
• Coordination horizontally and vertically
  because of the structure, employee oriented tools

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2.6. The Mechanical Structure
• Accommodates to the stabil environment
• Division of labor exact tasks, experts
• Hierarchy coordination on top levels only,
  Official way, regulation
• Loyalty, Obedience ( eg. manufacturing )
• Concentrated authority

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2.7. The Organical Structure
• Accommodates to the dynamic environment
• No specialization, no experts
• Flexible
• Communication and interaction is in the whole
  organization
• Decentralized authority
• Functions based on commitment( eg. Research
  Development )

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 2.8. Patological Structure
• Organizations which are not able to became
  organical, because of the regulations of the
  mechanical structure.
• ( New type of tasks )
• 2.9. Mintzberg
• Mechanical Bureaucracy simple tasks, stabil
  environment, centralized controlling, being
  efficient in productivity is the most important

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Professional Bureaucracy decrease
  centralization, stabil environment, complicated
  tasks, experts needed, independence is required
  eg. hospitals, universities
• Enterpreneur Structure simple, flexible,
  centralized, experts behind the enterpreneur
• Adhocracy are founded for certain projects (
  problems ), eg. marketing, RD

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 3. Environment, technology and strategy
• 3.1. The organization the environment
• An organization exists in a certain environment
  that can be described as follows
• In a broad sense by the economical procedures,
  legal regulations, government, technological
  development, politics, international relations
• In a narrow sense by customers, suppliers,
  competitors, newcomers, substitute product
  producers

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• According to Mr. Thompson Mr. Duncan the most
  important environmental dimensions are
• The Simpleness (few elements only weak
  influence) Complexity (many elements strong
  influence) how the number of the environmental
  elements influence the organization
• Static ( not too many changes) Dynamic (several
  changes) environment
• Uncertainty we dont have enough information
  about the environment

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Organizations respond to the environmental
  changes
• Adopt the changes follower attitude
• Initiative attitude
• Organizations can also influence the environment
  by
• Good connections with the elements of the
  environment, eg. organizational alliances
• New employees - consultants

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• 3.2. Technology Strategy
• Connections between technology and organizational
  structure. Woodward ( 3 groups)
• Unique production Organical org. structure
  (decentralized)
• Mass production- Mechanical org. structure
  (bureaucracy)
• Standardized production - Organical org.
  Structure (decentralized)

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STRUCTURAL CHARACTERISTICS OF THE ORGANIZATIONS
2.

• Connections between strategy and organizational
  structure.
• Chandler
• Strategy determines the structure and the
  structure has weak influence on strategy.

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• Organizational Cultures
• Definition the system of accepted values and
  beliefs by the members of the organization.

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• 2. Components
• Decisions of the founder members vision, values,
  norms in terms of employee selection, profile,
  etc.
• Mission Principles determine the future of the
  organization, eg. environmental relations
• Structure of the society determine the quality
  of interaction between people

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• Norms Values expected behavior of the
  employees activities
• Preserved stories symbols stories from the
  past eg. ceremonies, rituals which belong to
  the cultural values of the organization
• Institutional operation organizational policies,
  motivation system, authority, communication,

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• 3. Tipologies
• 3.1.Handy
• Power culture the pater, who founded the
  organization, is in the central he makes all the
  decisions, useful at small organizations, eg.
  financial crisis
• Role culture stabil environment, rules
  regulations are the most important, bureaucratic
  organizations, eg. mass production
• Task culture the goal is to solve the tasks,
  regulations are not too important, matrix
  organizations, eg. RD

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• Personality culture special organizations eg.
  attorney offices
• 3.2. Quinn
• Margin
• 2 dimensions Margin of movements ( level of
  flexibility / controlling ), Orientation (
  whether the organizations focus on inside or
  outside of the company )

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• Supportive focus on human relations, inside
• Regulation oriented focus on regulations and
  stability,
• Goal oriented focus on goals, strong
  regulations, outside
• Innovation oriented accommodate to the
  environment, creativity, development

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• 3.3. Schein organizational cultures according
  to professions
• Operators basic activities
• Engineers experts in technical processes
• Executives managers
• Conflicts operators-engineers

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CULTURAL CHARACTERISTICS OF THE ORGANIZATIONS
3.

• 3.4. Hofstede cultural differences
• Power distance dimension boss - subordinates
• Uncertainity-Avoidance dimension how strong are
  the regulations eg. risk or security, hard work,
  etc.
• Individualism-Collectivism dimension I-We
• Masculinity dimension Feminine equality
  -Masculine man dominates ( US-Japan )

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MOTIVATION 4.

• What is motivation?
• How to manage subordinates to reach the companys
  goals and be satisfied at the same time
• Motivation is concerned with the why of human
  behavior. Why do people do things?
• The person directs his/her behavior toward
  important goals ( wishes, desires, etc.).
• Unsatisfied needs Goal directed behavior
  Need satisfaction

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MOTIVATION 4.

• An unsatisfied need is a starting point in the
  process of motivation. This cause tension within
  the individual, leading the individual to engage
  in some kind of behavior to satisfy the need, and
  thereby reduce the tension.
• If the need couldnt be satisfied, cause
  frustration, and aggressive behavior, such as
• 1. Rational behavior always blame it on others
• 2. Regration always give up trying

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MOTIVATION 4.

• 3. Complex always behave the same way, and
  never reach anything
• 4. Resignation always escape from reality,
  looses faith in life

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MOTIVATION 4.

• 2. The content theories of motivation
• 2.1. Maslows need theory holds that an
  individual strives for need satisfaction at a
  particular level. When needs at one level
  basically satisfied, they no longer serve as
  motivators, and the individual moves on to the
  next level of hierarchy.

2
5
4
3
1
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MOTIVATION 4.

• The Five Levels
• Physiological needs primary needs, eg. food,
  clothing, etc.
• Safety needs individuals need for security or
  protection
• Social needs individuals need for love,
  sense of belongingness
• Esteem needs the individual needs to feel
  important, and power and status provide a basis
  for this feeling
• Self Actualization needs to fulfill ones
  desire

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MOTIVATION 4.

• 2.2. Alderfers need theory
• E- Existence needs -1 are related to survival
  and safety
• R- Relatedness needs 2 stress interpersonal
  and social relationships
• G- Growth needs 3 are related to the
  individuals desire for personal development
• 2.3. Herzbergs two-factor theory
• When do people feel exceptionally good or bad
  about their job. What kind of factors link to
  satisfaction or dissatisfaction ?

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MOTIVATION 4.

• Motivators some job conditions build high
  levels of motivation and job satisfaction, such
  as
• Achievement,
• Recognition,
• Advancement,
• The work itself,
• The possibility of personal growth,
• Responsibility

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MOTIVATION 4.

• Maintenance factors dont build strong
  motivation, but dissatisfy employees when they
  are not present.
• Salary,
• Supervision,
• Working conditions,
• Interpersonal relations,
• Company policies, and administrations

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MOTIVATION 4.
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MOTIVATION 4.

• 2.4. McClelland achievement motivation theory
  based on learned needs
• 1. Affiliation Need friendship, love,
  cooperation
• 2. Achievement Need success, new challenge
• 3. Need of Power prestige, the desire to
  influence people

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MOTIVATION 4.

• 3. The process theories of motivation
• 3.1. Skinner Reinforcement theory
• considers the use of positive or negative
  reinforces to motivate or create an environment
  of motivation.
• Positive rewarding someone for certain
  achievements
• Negative stops those consequences which the
  subordinates dont like ( disciplines ).

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MOTIVATION 4.

• 3.2. Theory of Objectives-Management by
  Objectives ( MbO )
• What are the goals and thoughts of the
  subordinates ?
• This method typically involves the establishment
  of objectives to be accomplished by the
  subordinate.

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MOTIVATION 4.

• 3.3. Vrooms Expectancy Theory
• Individuals will exert work effort to achieve
  performance which will result in preferred
  rewards. The management FOCUS that follows is
  about rewarding workers in such a way that
  increased effort occurs.
• Individual effort to perform (tools, resources,
  skills) results in Level of performance (this
  effort will lead to reward) results in
  Outcomes (Instrinsic reward eg. recognition,
  or Extrinsic reward eg. job security )

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Why is a led company marketable? - 5.

• The leader the manager
• The leader conductor of an orchestra, creates
  global concepts and hands them out to the
  managers to transform into well-structured tasks
• The leader analyzes the logical relations (
  if-then rules ), and the manager deals with
  arithmetical relations
• The leader what to do?
• The manager how to do?

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Why is a led company marketable? - 5.

• The charismatic leader
• What makes a charismatic leader is the coherence
  between his/her acts and thinking. He supplies a
  certain power. His/her position is justified by
  his/her aptitude rather than mere appointment
• The charismatic leader moves throughout the
  network to be on time on the right place to make
  the needed decision

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Why is a led company marketable? - 5.

• At the modern organizations the leader goes after
  the decisions, not the decisions go after the
  leader
• Possessing knowledge is essential to efficiently
  interact with the network. To be able to make
  decisions at all levels of the network the
  decision maker has to be familiar with every
  field at a certain level. And to be able to
  influence he/she has to have the attributes of
  the charismatic leader

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Why is a led company marketable? - 5.
Knowledge of human character changes (NEW)

WHAT ?
Knowledge of process
HOW?
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Why is a led company marketable? - 5.

• 2. How does an e-leader make influence?
• The leader needs followers ( the managers)
• Leadership A influences B to do things that
  serve Bs interest anyway
• Managing A motivates B to fulfill the
  expectations throughout which they both can
  satisfy their own needs

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Why is a led company marketable? - 5.

• 3. How does the e-leader create symbols
  metaphores
• The changes of the environment are so accelerated
  that even the weak signals (homályos jelek ) are
  received too late for the traditional responses.
• We could prepare ourselves for the surprises by
  learning, and keeping in shape our ability to
  respond ( reagáló képesség) .

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Why is a led company marketable? - 5.

• Strong negative signs ( eg. Toothache ) override
  the positive ( eg. being in love with someone )
  ones. Strong or familiar signs call more our
  attention. We can only focus on one thing at the
  same time.
• The leader doesnt define the signs in advance
  he/she looks for.
• He/she creates symbols from the signs

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Why is a led company marketable? - 5.

• The leader use the language of the Metaphores
  tailored to the actual need . (new concepts
  cannot be described with old metaphores). Eg. An
  elephant-blind people
• The leader is able to see the whole picture, and
  use the rules of logic- he/she thinks in
  metaphores

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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• 1. Implicit knowledge

1
2
3
What is the knowledge all about?
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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• I. Intuition is needed when a new dilemma is
  there, and looking for the solution. It suddenly
  happens. Intuitionpicture ( eg. the first kiss
  )
• Clue The leadership is based on a clue, which
  cant be put in words, but can be experienced.
• Explanation The leader explains how he/she got
  this solution. Rules are not valid for a new
  dilemma

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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• II. Facts
• Event Something happens, which cant be put in
  words, but can be experienced. ( eg. an
  explosion)
• Measurement what is the truth?
  Truthmeasurable? ( eg. the radiation of the
  explosion, do I have 10.000 Ft in the pocket, are
  you in love?). True/false- Compromised measure.
  If the truth is not measurable there are no
  facts. The more the knowledge is improved, the
  more uncertain it is

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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• Leadership is not always based on the improvable
  facts. The leader is looking for the connections
  behind the facts, where the personal knowledge is
  needed. The leader uses the facts to support
  his/her beliefs-decisions. The leader is
  inseparable from his/her decision. Rules are not
  valid for a new dilemma.

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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• III. Skills
• The rules of profession how well we know our
  profession, how well we are able to imitate the
  master. ( eg. reading, speaking a language ) It
  can be put in words, and learned
• Action It cant be put in words, but can be
  experienced. ( eg. reading, speaking a language)
  The more you practice the better you be!
• The leaders use their skills for communication to
  have their decisions accepted

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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• 2. Explicit /Implicit knowledge in the decisions
• Reflex, routine, original decisions

rutin
eredeti
routine
original
reflex
reflex
Leader
manager
manager
Executor-feladatelvégzo
Symbols, pictures-szimbólumok és képek
megtanult szabályok
megtanult szabályok- learned rules
Instinctive action-ösztönös cselekvés
hallgatólagos tudás
hallgatólagos tudás
Implicit knowledge hallgatólagos tudás
Implicit knowledge hallgatólagos tudás
explicit tudás
Explicit knowledge explicit tudás
WC, cigarettes
Flower,
WC, c,
Flower, car
divorce,
Stock-készlet, payement
Customer, product
SD-KF, human-humán
Implicit knowledge it can not be put in words.
If.then rules Explicit knowledge It can be
put in words
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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• The leader faces different kind of dilemmas,
  where he/she has to decide which-, and what level
  of his/her knowledge (explicit, implicit) will be
  applied
• There are 3 types of dilemma
• Reflex decision we do not think about it, we
  just do it.- Instinctive actions. Eg. WC, Paying
  out the wages you will be paid out for your
  monthly work, buying cigarettes, etc.

67
Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• 2. Routine decision explicit knowledge- learned
  rules. Eg. buying flower for someones birthday,
  writing a contract, buying a car which satisfies
  our criterias, production according to the
  technological description
• 3. Original decision new situation - the leader
  has to find the new solution- implicit knowledge
  symbols and pictures. Eg. RD, divorce

68
Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• 3. Routine decisions
• Original decision leader (he is the
  coordinator )
• Routine decision manager (he is the expert)
• Reflex decision executor

The leader delegates the routine decisions to the
manager
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Why are routine decisions delegated to the
subordinates by the e-leader? - 6.

• Problems
• - Making a routine decision, as an original one
• - Focus on simple solutions without understanding
  the rules of routine
• Treat a new dilemma like another type of an old
  dilemma
• The organization is slow, if each dilemma is
  handled as unique, and the organization can not
  react in time if each dilemma is handled from
  routine

70
Why cant creative communities be effectively
led by orders? 7.

• 2.-3. How will be the novum accepted?
• Novum to create new expectations, new
  connections

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Why cant creative communities be effectively
led by orders? 7.

• The layman believes that the quality of the
  output is enough for securing acceptance of the
  novum--- unfortunately this is not enough
• The solution of the output is a new knowledge ( a
  dynamical value ), which is known by the leaders,
  but not known by the followers
• Mistake If the leader wants to convince the
  follower with professional arguments

72
Why cant creative communities be effectively
led by orders? 7.

• 1. The EQ leadership
• The output is already given, and it has to be a
  good quality output
• If the leader wants to convince the follower with
  IQ ( professional arguments), can cause
  inferiority complex, that is why
• The leader has to influence the follower with EQ
  instead of IQ

73
Why cant creative communities be effectively
led by orders? 7.

• The leader use the EQ ( 3 types authentic,
  attractive, threat ) to influence the follower
• Eg. if the leader describes only the profit of
  the output, the follower refuses its acceptance.
  If the leader threatens the follower we are
  not able to keep step with the competition the
  follower will subserve
• If the follower likes the leaders performance
  he/ she is able to identify oneself with the
  output

74
Why cant creative communities be effectively
led by orders? 7.

• When the leader is able to change the followers
  order of value-the follower interorisate the
  output
• The leader with EQ knows exactly that he/she has
  to influence the emotions of the follower to be
  able to sell the product
• (The followers are very sensitive for the soft
  signs)

75
Why is there a need for extraordinary creators?
-8.

• Along which way does the creator think?
• The weird idea
• During the problem solving process we are not
  paying attention to the explanation
• If the weird idea is there (result of the
  intuition) our sense starts to act as an
  inspector, and tries to refute it.
• We compare the weird idea with our explicit
  expectations.

76
Why is there a need for extraordinary creators?
-8.

• Although we know that our explicit expectations
  are not satisfied with it, we do feel that this
  is the right solution, because we have satisfied
  our implicit expectations
• Explanations help to reduce the contradictions
  between our knowledge and our actions
• There are two possibilities to reduce the
  contradictions Either we dont act against our
  knowledge, or we change our knowledge

77
Why is there a need for extraordinary creators?
-8.

• The knowledge of the novums users are based on
  learned and experienced patterns Their
  knowledge is opposite to the weird idea The new
  solution does not fit in their world That is why
  logical explanations are needed!
• We have to convince the novumusers

78
Why is there a need for extraordinary creators?
-8.

• 2. What defines the quality of novum?
• There are a lot of so called high quality
  products ( eg. Barbie doll, Tamagocchi, Atomic
  bomb)- But are these good things?-NO!
• High quality should come with the concept of
  right-we have to make good things in high quality
• There may be 2 different approaches to quality

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Why is there a need for extraordinary creators?
-8.

• Doing things well-target oriented,Producing
  good things- value oriented
• Neither the quality nor the human knowledge can
  be comprehended by its elements ( eg.
  Grandmothers cake, Mc Donalds hamburger)
• Quality cannot be unpersonal, universal, and
  objective. Quality always come together with the
  experience of the real world
• We are only able to experience the value, and
  through the value we perceive the quality

80
Why is there a need for extraordinary creators?
-8.

• The value of the product is defined purpose
  rather than its elements
• The value of the output
• - we want something valuable,
• - dynamic value discovering new materials,
  working out new methods
• - static value interpretation of the

81
Why is there a need for extraordinary creators?
-8.

• Static value ( standardization)
• Sometimes you have to accept standards, but that
  doesnt mean that standards can be applied in
  every situation
• The executors have to accept the expectations of
  the manager, problem solvers are not bound by
  them

82
Why is there a need for extraordinary creators?
-8.

• The static value (process) defines the structure
• At the planning process precision is very
  important
• Strict deadlines, budget
• The process is sensitive to changes and
  interruptions

83
Why is there a need for extraordinary creators?
-8.

• Standardized expectations you dont have to make
  a decision makes your life very comfortable
  standardized needs ( eg. Ads on TV certain
  products youll like, certain products you wont
  like ) You loose your freedom, BUT that makes
  your life easier !
• Human relations should work by default and not by
  standards
• The problem solver should not smile only because
  he was trained to, but because he/she has
  something to offer

84
Why is there a need for extraordinary creators?
-8.

• Dynamic quality
• There is always something good in everything,
  which emerging suddenly without you being able to
  forecast or repeat it
• The leader often has to go beyond the static
  quality to be able to create something new

85
Why is there a need for extraordinary creators?
-8.

• 3. How can be a genios sponsored / supported?
• Foundations
• Tenders
• Companies
• Attila József Baumgartner Foundation, Mozart
  Maecenas individuals were supported, not the
  achievement!
• Problems - Lack of Maecenas,
• - Results wanted in advance what
  about the genius?

86
Why is there a need for extraordinary creators?
-8.

• Moral philosophy if a company supports a
  creative community the company wants to
  influence the creators, and use the sponsorship
  in their own interest. Eg. MATÁV Mindentudás
  Egyeteme

87
Why is the web age trigger a culture change? 9.

• The e- communication
• Accelerated world where nothing is secure
• ( eg. workplace, technology, etc.)
• when someone leaves the company the knowledge
  goes with him/her.
• We are looking for virtual connections no time
  space barriers! web interactivity
  knowledge producer

88
Why is the web age trigger a culture change? 9.

• we want more and more information, so
• rapidity,
• briefness,
• signs (- )-
• illustrations, pictures needed!
• Errors of spelling are not too important!
• BUT!!! CONFIDENCE

89
Why is the web age trigger a culture change? 9.

• 2. The share in customers
• How can we support the share in customers?
• The share in customers replaces the share in
  market, as we created a basis for trust for our
  current customers.
• Our customers know what they can expect from us (
  quality, quantity) similarly to our
  competitors, who also have their own regular
  customers

90
Why is the web age trigger a culture change? 9.

• Consequence we do not have to look out for new
  customers, BUT! We have to learn how to sell
  other products to our regular customers as it is
  the simplest and cheapest solution to survive.
• We have to influence the customers Marketing
  4P! Eg. Tesco, Cora

91
Why is the web age trigger a culture change? 9.

• 3. What is the problem with out-of-date notions?
• If we want to satisfy the expectations clients,
  we have to learn how to change the culture
• Changing a culture is not easy, we have to mix
  the existing culture with the new e-culture
• If we want to sell a novelty then, we have to
  show the customers its essence, BUT!
• A novelty cannot be described by the old,
  out-of-date notions SO!

92
Why is the web age trigger a culture change? 9.

• We have to create new metaphores and pictures,
  otherwise our company is not able to survive.

93
Why cant the knowledge user company become a
knowledge creator ? 10.

• Provincial Civilized companies
• I. Profit-oriented company accepts static
  values- (provincial) successful companies
• Fiscal reasoning dominates positive financial
  balance
• The target of development, and expected results
  are clearly outlined
• The company wants to satisfy the customers
  explicit needs
• Well structured, centralized task division

94
Why cant the knowledge user company become a
knowledge creator ? 10.

• The static value (process) defines the structure
• At the planning process precision is very
  important
• Strict deadlines, budget
• The process is sensitive to changes and
  interruptions

95
Why cant the knowledge user company become a
knowledge creator ? 10.

• II. Value - oriented company accepts dynamic
  values civilized companies
• Owners reasoning the value of the knowledge is
  not defined by a positive balance, but the market
  price of a company
• The problem is circumscribable, but the solution
  is not
• The stress is on creating new solutions, that
  increase the value of the company

96
Why cant the knowledge user company become a
knowledge creator ? 10.

• Dynamic value (the response) determines the
  structure
• New solutions quickly turn into static value,
  which brings a fast change in organizational
  structure, and production organization
• Individual concepts are supported
• There are a number of ad hoc teams working on the
  same issue.

97
Why cant the knowledge user company become a
knowledge creator ? 10.

• 2. How should a genius be used and how not?
• Normally you would think in a convergent way
  there is only one logical solution
• Lateral thinking is different
• Lateral thinking - we change our reference system
  to be able to understand the weird idea
• The new reference system shows things from
  different aspects Eg. jokes-punchlines shows
  the order

98
Why cant the knowledge user company become a
knowledge creator ? 10.

• The genious
• Able to create extraordinary ideas, solutions
• At the age of 2-3 creative games
• At the age of 5 looking for coherence behind
  things which are incoherent
• They are rigid to change
• Lots of friends around them sometimes they lead
  a loose life
• They are not good at IQ tests, and well
  structured tasks

99
Why cant the knowledge user company become a
knowledge creator ? 10.

• 3. Decision making or Creativity?
• a.) Decision making process play a bigger role
• at the profit oriented (provincial) companies,
  where
• they have mostly well structured tasks ( only 1
  solution!), and the goals are
• to use the knowledge as effectively as possible.

100
Why cant the knowledge user company become a
knowledge creator ? 10.

• b.) Creativity plays a bigger role
• at the value oriented (civilized) companies,
  where
• they have mostly bad structured tasks ( more
  than 1 solution!), and the goals are
• to create new values, novums

101
Strategic analysis methods 11.

• The BCG portfolio used to evaluate the SBUs
• The first step in this approach is to identify
  the various divisions, product lines, and so
  forth that can be considered a business. When
  identified, these are referred to as strategic
  business units (SBUs) and have the following
  characteristics They have a distinct mission,
  their own competitors, they are a single business
  or collection of related businesses, they can be
  planned independently from the other businesses
  of the organization

102
Strategic analysis methods 11.

• The BCG Matrix helps the organization to allocate
  resources among the various SBUs
• The BCG matrix illustrates 2 business indicators
  of great strategic importance
• The vertical indicator is the market growth rate
  refers to the annual rate of growth of the market
  in which the product, division, or product is
  located
• The horizontal indicator relative market share
  illustrates an SBUs market share compared to that
  of the most successful of the competition

103
Strategic analysis methods 11.

• Star Question mark

High
Market growth share
Cash cow Cash traps Relative market share
Low
High
Low
104
Strategic analysis methods 11.

• Stars an SBU with high share of a high growth
  market is considered a star. Eg. building
  investing. Stars need a great deal of financial
  resources, because of their rapid growth. When
  growth slows down, they become cash cows.
• Cash cows an SBU that has a high share of a
  low-growth market is labeled a cash cow. Eg.
  banks. They produce a great amount of cash for
  the organization, and do not require a great
  amount of financial resources for growth and
  expansion

105
Strategic analysis methods 11.

• Question marks when an SBU has a low share of a
  high-growth market, the organization must decide
  whether to spend more financial resources to
  build it into a star or to phase it or eliminate
  it all together
• Cash traps when an SBU has a low share of a
  low-growth market, it may generate enough cash to
  maintain itself or may drain money from the other
  SBUs.

106
Strategic analysis methods 11.

• 2. MCKinsey portfolio (GE matrix)
• The GE matrix illustrates 2 business indicators
  of great strategic importance
• The vertical indicator competitiveness shows
  the organization position on the market, eg.
  market share, customer loyality, innovation, new
  products, the size of the company, etc.
• The horizontal indicator industrial sector
  attraction, eg. market size, technology,
  competition, labour-market supply, etc.

107
Strategic analysis methods 11.
High
Selectivity Selective Investment
expansion and expansion
Competitiveness
Selectivity Selective
expansion
Harvest elimination
Harvest Harvest Selectivity elimination elimin
ation
Low
High
Industrial sector attraction
108
Strategic analysis methods 11.

• Investment a strong strategic position the
  most perspective group of products. A good
  strategy is to develop them
• Selectivity an average strategic position the
  strategy has to be selective, eg. selective
  expansion
• Harvest, elimination a weak strategic position
  the strategic goal is the elimination

109
Strategic analysis methods 11.

• 3. SWOT Analysis
• A complex analysis about the external and
  internal environment
• S - Strengths,
• W Weaknesses,
• O Opportunities,
• T - Threats

110
Strategic analysis methods 11.
Internal factors External factors Can be
influenced Cannot be influenced

• Strengths Opportunities

New group of customer, cooperations, fusions,
widening the range of products
Basic skills, experience, Know how
Positive Negative
Weaknesses Threats
The appearance of a new competitor, stronger
customer and supplier positions , replaceable
products
Old technology, weak market image, low profit,
weak innovation
111
Strategic analysis methods 11.

• Relations
• Strengths - Opportunities embrace the
  opportunity
• Strengths - Threats avoid threats
• Weaknesses - Opportunities development, or
  elimination
• Weaknesses - Threats withdrawal

112
Strategy types and levels 12.

• The levels of strategic plannings
• Organizational
• Main task to create complex strategy for the
  divisions
• - reconciliation of the long-, and short term
  profit options
• - recommend more than one direction ( if its
  necessary)
• - try to reduce the economic and political risks
  ( make them acceptable)

113
Strategy types and levels 12.

• - main part of its activities can be realized
  out of the organization
• Main function good resource allocation among
  the divisions
• II. Divisional (portfolios, missions, targets,
  actions within the SBUs)
• Shows the future of the SBUs ( Strategic
  Business Units)
• - independent decision making process focuses on
  the following areas RD ( Research
  Development), production and sales

114
Strategy types and levels 12.

• - market competitors can be well defined
• its performance can be well measured
• III. Functional inside the divisions
• Marketing, technology, production, finance,
  investment, logistic and human strategy

115
Strategy types and levels 12.

• 2. Ansoff Product Market Matrix

Products
Present Products
New Products
Markets
Product development
Market penetration
Present customers
New customers
Market development
Diversification
116
Strategy types and levels 12.

• It indicates that an organization can grow in a
  variety of ways by concentrating on present or
  new products, and on present or new customers
• Market Penetration Strategies these
  organizational strategies focus on improving the
  position of the organizations present products
  with its present customers. Eg. A charity seeks
  ways to increase contributions from present
  contributors

117
Strategy types and levels 12.

• Market Development Strategies following this
  strategy, an organization would seek to find new
  customers for its present products. Eg. A
  manufacturer of industrial products may decide to
  develop products for entrance into the consumer
  market
• Product Development Strategies the organization
  in effect seeks new things to do. With this
  particular strategy the new products developed
  would be directed to present customers.Eg. A
  college may develop graduate programs for
  minority students

118
Strategy types and levels 12.

• Diversification an organization diversifies when
  it seeks new products for customers it is not
  serving at present. Eg. A cigarette manufacturer
  diversifies into real estate development

119
Strategy types and levels 12.

• 3. Porter corporate strategies

Customer preferences
Efficiency
Cost leadership
Differentiation
Industrial sector Particular segment
Focus
120
Strategy types and levels 12.

• Cost leadership implies that the firm will
  outstrip its competition by being the low-cost
  producer. The firm will build efficient-scale
  facilities, pursue cost-control policies, avoid
  marginal customers, and generally be cost
  conscious in all areas of the business the firm
  will emphasize efficiency and productivity.

121
Strategy types and levels 12.

• Differentiation involves the firm creating
  products that are perceived to be unique. The
  perception of differentiation can be based upon a
  variety of factors, such as brand image, product
  features, customer service or dealer network .
  the firm will emphasize flexible response to
  changing customer preferences and perceptions.

122
Strategy types and levels 12.

• Focus involves achieving either cost leadership
  or differentiation, or both, in a particular
  segment of the market. Rather than competing
  throughout the market, the firm focuses on one
  segment. Eg. Porter Paint attempts to serve the
  needs of professional painter rather than
  do-it-yourself customer. Thus, the focus strategy
  implies a tradeoff between market share and
  profitability.

123
Models of the environment 13.

• 1. The PEST matrix gives an overall picture of
  the environment

Political Elements Social Elements
Demographical processes, Income
distribution, Social mobility, Lifestyle
Stability of the government, Laws,
regulations, Taxation policy, European Integrity
Economical Elements Technological Elements
Globalization, Unemployment, Inflation, Financial
Statement of the country
Governmental Research Programmes, Celerity of
technical changes
124
Models of the environment 13

• 2. Porter The Five Forces Model Competitive
  Analysis
• The rationale behind this model is that industry
  profitability is not determined by what the
  product looks like, nor whether it embodies high
  or low technology it s determined by the
  structure of the industry
• Firms can influence the five forces through the
  strategies they persue

125
Models of the environment 13
Firms in other industries offering Substitute
products
Rivalry among competing sellers
Suppliers of the inputs
Buyers
Potential new entrants
126
Models of the environment 13

• Competitive rivalry this is the most obvious
  form of competition Head to head rivalry between
  firms making similar products and selling them in
  the same market.
• Competitive forces arising from rivals
  jockeying for a better market position and a
  competitive advantage
• The following conditions can cause rivalry
• When demand for the product is growing slowly

127
Models of the environment 13

• As the number of competitors increases and as
  they become more equal in size and capability
• When competitors are tempted by industry
  conditions to use price cuts or other competitive
  weapons to boost unit volume
• When it costs more to get out of the business
  than to stay in and compete
• When competitors products and services are so
  similar that customers incur low costs in
  switching from one brand to another

128
Models of the environment 13

• 2. Threat of entry competitive forces coming
  from the threat of entry of new rivals
• The most common barriers to entry are
• The existence of considerable cost benefits to be
  gained from experience
• Brand preferences, and customer loyalty
• Capital requirements
• Access to distribution channels
• Government actions and policies

129
Models of the environment 13

• 3. Threat of substitutes competitive forces
  coming from the market attempts of outsiders to
  win buyers over to their products
• A substitute is something that meets the same
  needs as the product produced in the industry. If
  the substitute becomes more attractive in terms
  of price, performance, or both customers move
  away from the firms in the industry.

130
Models of the environment 13

• 4. Power of buyers competitive forces arising
  from buyers exercise of bargaining. Buyers are
  powerful in the following situations
• When customers are few in number and they
  purchase in large quantities
• When the item being bought is not an important
  input
• When it is economically feasible for customers to
  purchase the input from several suppliers rather
  than one

131
Models of the environment 13

• 5. Power of suppliers competitive forces arising
  from suppliers exercise of bargaining. Buyers
  are powerful where
• The input is, in one way or another, important to
  the buyer
• The supplier industry is dominated by a few large
  producers
• Suppliers respective products are unique

132
Models of the environment 13

• 3. How the Internet Influences Industry Structure
  - Porter The Five Forces Model
• The Internet is an extremely important new
  technology, which changes everything, rendering
  all the old rules about companies and competition
  obsolete
• The Internet has created also some new industries
  such as on-line auctions and digital market
  places

133
Models of the environment 13

• Whether an industry is new or old, its structural
  attractiveness is determined by five underlying
  forces of competition
• Competitive rivalry
• 2. Threat of entry
• 3. Threat of substitutes
• 4. Power of buyers
• 5. Power of suppliers

134
Models of the environment 13

• Competitive rivalry
• (-) Reduces differences among competitors as
  offerings are difficult to keep proprietary
• (-) Migrates competition to price
• (-) Widens the geographic market, increasing the
  number of competitors
• (-) Lowers variable cost relative to fixed cost,
  increasing pressures for price discounting

135
Models of the environment 13

• 2. Threat of entry
• (-) Reduces barriers to entry such as the need
  for a sales force, access to channels, and
  physical assets- anything that Internet
  technology eliminates or makes easier to do
  reduces barriers to entry
• (-) Internet applications are difficult to keep
  proprietary from new entrants
• (-) A flood of new entrants has come into many
  industries

136
Models of the environment 13

• 3. Threat of substitutes
• () By making the overall industry more
  efficient, the Internet can expand the size of
  the market
• (-) The proliferation of Internet approaches
  creates new substitution threats

137
Models of the environment 13

• 4. Power of buyers
• () Eliminates powerful channels or improves
  bargaining power over traditional channels
• (-) Shifts bargaining power to end consumers
• (-) Reduces switching costs

138
Models of the environment 13

• 5. Power of suppliers
• (/-) Procurement using the Internet tends to
  raise bargaining power over suppliers, though it
  can also give suppliers access to more customers
• (-) The Internet provides a channel for suppliers
  to reach the end users, reducing the leverage of
  intervening companies

139
Models of the environment 13

• (-) Internet procurement and digital markets tend
  to give all companies equal access to suppliers,
  and gravitate procurement to standardized
  products that reduce differentiation
• (-) Reduces barriers to entry and the
  proliferation of competitors downstream shifts
  power to suppliers

140
Models of the environment 13

• Cost and price advantages can be achieved in two
  ways
• Operational Effectiveness doing the same things
  your competitors do, but doing better. Eg.
  better technologies, better trained people
  Best Practice. Once a company establishes new
  best practice, its rivals tend to copy it
  quickly. Best practice competition eventually
  leads to competitive convergence, with many
  companies doing the same things in the same ways

141
Models of the environment 13

• 2. Strategic Positioning as it becomes harder to
  sustain operational advantages, strategic
  positioning becomes all the more important . The
  only way to generate higher levels of economic
  value is to offer unique value. Eg. a new
  logistical method

142
Models of the environment 13

• Consequences
• Just applying the Internet technology doesnt
  mean advantage in the competition
• We have to examine how the Internet technology
  can complete our company strategy
• The industrial sector of Internet should
  integrate with the traditional industrial
  sectors. Outsourcing methods are not
  recommended

143
The Balanced Scorecard 14.

• The BSC model
• A new approach to strategic management was
  developed in the early 1990's by Drs. Robert
  Kaplan (Harvard Business School) and David
  Norton. They named this system the 'balanced
  scorecard'.  Recognizing some of the weaknesses
  and vagueness of previous management approaches,
  the balanced scorecard approach provides a clear
  prescription as to what companies should measure
  in order to 'balance' the financial perspective.

144
The Balanced Scorecard 14.

• The balanced scorecard is a management system
  (not only a measurement system) that enables
  organizations to clarify their vision and
  strategy and translate them into action. It
  provides feedback around both the internal
  business processes and external outcomes in order
  to continuously improve strategic performance and
  results. When fully deployed, the balanced
  scorecard transforms strategic planning from an
  academic exercise into the nerve center of an
  enterprise.

145
The Balanced Scorecard 14.

• The balanced scorecard suggests that we view the
  organization from four perspectives, and to
  develop metrics, collect data and analyze it
  relative to each of these perspectives
• The Learning and Growth Perspective
• The Business Process Perspective
• The Customer Perspective
• The Financial Perspective

146
The Balanced Scorecard 14.
147
The Balanced Scorecard 14.

• The Learning and Growth Perspective
• This perspective includes employee training and
  corporate cultural attitudes related to both
  individual and corporate self-improvement. In a
  knowledge-worker organization, people -- the only
  repository of knowledge -- are the main resource.
  In the current climate of rapid technological
  change, it is becoming necessary fo