Five forces analysis

This week we studied the topic about internal environment and micro environment.

Internal environment relates to people, structure, objectives, and culture etcetera in a company. Refer to the competitive environment, Porter's 5 forces should be treat as a key point and I want to use automotive industry to analyze them.

The treat of new entrants refer to how easily new entrants can go into one certain industry. For new entrants, they need to compete on cost, high capital investment. They also need to overcome the barrier of lack distribution channels, subsides, customer trust. For example, this threat of automotive industry is quite low, since the barriers of entry are significant. To run a company of automobile would require a big amount of startup capital. Moreover, the manufacturing facility of automobile is specialized and they need much money to repair. In the newer, undeveloped markets of Asia, Africa, and South America, the barriers to entry similarly exist.

The bargaining power of buyers is the power of customer to force down the price. When customers buy a large amount of goods or the alternative choices are significant, the power will be high. In automotive industry, the power of buyer is quite high, due to the standardized nature of automotive commodity and the switching cost is low for buyers.

The bargaining power of supplier is the opposite of those applying to customers. When the suppliers are limited, the product is distinctive or the cost of switching cost is high, supplier's power will be high. For some famous brand of automobile such as BMW and BENZ, the supplier's bargaining power is quite high, since these kinds of company must ensure the quality of the components and the they ask for specialized manufacturing skills to fulfill the tasks.

 

The threat of substitute refers to how easily the product will replace by other goods. For example, using cans instead of bottle. In automotive industry, this threat is fairly low. Although there are many transportation substituting cars such as train, subway and bike, none of those can provide the utility, convenience, independence and value offered by automobiles. Furthermore, for some areas such as Utah, upstate NY, car is the only transportation other than walking.

Strong competitive rivalry lowers benefit, and it occurs when there are many firms in an industry; fixed costs are high, exit cost are high or products are similar. In automobile industry, there is a large amount of brands and the expense of both fixed cost and exit cost are high. Therefore, the intensity of rivalry among competitors is significant high.

Hawthorne Effect

Hawthorne Effect

Last week, we learned several management theories. Among them, Hawthorne effects interested me a lot. After learning from seminar and searching in book, I have the following gains.

effects commonly refer to as observer effect, which points that when people realize that they are being observed they will improve or modify an aspect of their behavior. This also pointed the importance of human relation in an organization.

After four stages of experiments, researchers got some conclusions.

First, they proved that we should focus on human relation and psychology to motivate employees but not only money. Second, the experiments proved that the key point of working efficiency is enthusiasm and human relations in family and society. Third, they conclude that money is just a small part of factor of motivation; people need more sense of belonging, sense of security and harmony. So modern manager should have the abilities to improve the satisfaction of employees, be good at listen to employee’s opinions. In addition, they pointed that there are small informal organizations into a company. These kinds of informal organizations aim to protect mutual benefits of members, which avoid from individual mistakes to affect organization’s benefits.

We also can reflect this effect into our life that we need to praise others more, because it will make them feel good in psychology and be a motivation for them. In my experience, when we realize that we are being concerned we will be motivated to performed better, thereby be more efficient. Therefore, we should behave ourselves and then get more praises, which will make us confident and study better.

Thanks Rob.

Organization structure

This week, we studied the chapter of organizational structure.

Organization structure is the key of a company. According to Mintzberg, he define organizational structure as the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them. And there are four general principals we need to consider when designing a structure, which are The division of work, Centralization and decentralization, Span of control and chain of command, Matrix structures.

Here I want to use the case of coca cola to explain these four principals. Centralization and decentralization refer to the power of control are retained by the core part of an organization or is delegated to the edges of company. The Coca Cola Company is a decentralized structure, since Coca Cola is an international business, it has chosen the region to decentralize in their decision-making. The decision-making determined by the managers located nearby to the company who can easily identify the products are the customer wants and needs.

In coca-cola company, they divide their company by region and then divide work by function. For example, some workers make bottles and cans, some worker made coca-cola.

In terms of span of control, in high level of management, they have a very wide span of control which gives sufficient autonomy and responsibilities to subordinates to be creative. In the middle and low level of management, they have a narrower span of control which means managers have a closed contact with subordinates and supervise them better.

In addition, coca-cola operate a matrix structure that means each product has a product manager who retains overall responsibility for the product but that manager can then draw upon resources form the different functions. For example, a marketing manager may also be in charge with production line. This practice making people from different departments to meet up and work together will bring about exchange of ideas, the task would be looked from people coming from different professions and hence different perceptions would be brought forward. As a result the goals of the business or organization will be achieved both efficiently and effectively.

The knowledge above makes me understand structure clearer, I’ll keep going research them and apply them in the future.

Thanks Rob and Vish.

Organization and Management

Organization and Management

This week, we studied the topic of Organization and Management which I think is useful for us.

In my opinion, organization is a structural system with numbers of people who are managed to accomplish objectives. There are 4 points which are people, objectives, structure and management.

People in organization usually play different roles and have different tasks and responsibility. For instance, in a school, some people may be lecturers. They need to teach student knowledge and motivate them to make them keep being progress. And some people may be accountants. Their responsibility is count the money flows in school and ensure school to run well. But it does not mean they just work individually; they need to interact and communicate to finish the same objective.

In most organization, profit is the key objective, but there are also another objective like growth, market share, reputation. For example, Coca cola company used to do some charity works in China is not for profit but the reputation. However, they improve reputation for making people believe and like them and then make more profit.

In organization, structure and management are also vital. A clear and proper structure can make organization achieve goals efficiently and effectively. It reflects management hierarchies and responsibilities just as the picture below. It shows who report to who to make the management system efficient. In terms of management, a good manager is the key to lead team to success. According to Henry Mintzberg, there are three kinds of manager which are informational, interpersonal and decisional. I think a good manager can change management style flexibly according to different situation and different people.

On Thursday, we played a team game in APT class and I applied the knowledge I learned in group. The games’ name called ‘how high can you built’. We were required to use only ten pieces of A4 paper to establish a building, and who build the tallest one who would win. Although there were just 6 people in our group, we are still a small organization. Because we have the same objective and we divide the tasks into everyone. At the beginning, I was the first to came up with an idea and everyone agreed with me.(planning) And then I allocated the tasks to everyone; two people fold the paper, two people build the construction and two people observe  what need to improve and help others.(organizing) After 5 minutes, our construction collapsed. Everyone seemed sad, another group mate said:’ do not worry’ and keep going thinking.(motivation). At last 5 minutes, we enhanced the old method and build it again. And then we won at the last minute.(coordinating and monitoring)

Although we won, we still have some weaknesses. Before the first built, if we think it carefully in the planning part, we would not make it collapse. Moreover, in the last 5 minutes, everyone is nervous and build that with shivering hands. I should be supposed to motivate them more and let them calm down. Next time, I’ll do it better with more manager skills.

Thanks Rob and Vish