OBS 124
Fundamentals in Business Management
Contents
Unit 1: Chapter 11: The manager as a planner and strategist .................................... 3
1. Planning And strategy ............................................................................................. 3
2. The Nature of the Planning process ....................................................................... 3
3. Determining the organisation’s mission and goals ............................................... 5
4. formulating strategy ................................................................................................ 5
5. formulating business-level strategies ...................................................................... 6
6. formulating corporate-level strategies .................................................................. 6
7. Planning and implementing strategy..................................................................... 9
Unit 2: Chapter 7: Managing organisational structure and culture .......................... 10
1. Designing organisational structure and culture .................................................. 10
2. Grouping tasks into jobs: Job design ................................................................... 12
3. Grouping jobs into functions and divisions: designing organisational structure13
4. Coordinating functions and divisions ................................................................... 16
5. Organisational culture ........................................................................................... 18
Unit 3: Chapter 13: Organisational control and change ........................................... 20
1. What is organisational control? ............................................................................ 20
2. Output control ....................................................................................................... 21
3. Behaviour control .................................................................................................. 23
4. Clan control ........................................................................................................... 24
5. Organisational change ......................................................................................... 24
Unit 4: Chapter 14: Promoting effective communication.......................................... 26
1. Communication and management .................................................................... 26
2. Information richness and communication media .............................................. 28
3. Communication networks..................................................................................... 29
4. Information technology and communication .................................................... 30
5. Communication skills for managers ..................................................................... 31
1. The role of information technology ...................................................................... 33
2. Types of information .............................................................................................. 34
3. The heart of knowledge management: The Internet ......................................... 35
4. Virtual networking and cloud computing ........................................................... 37
5. Effects of Information technology on management ......................................... 37
6. Information and the Manager’s job .................................................................... 38
1
, 7. Types of Management Information systems........................................................ 39
8. The impact and limitations of IT ............................................................................ 40
Unit 6: Chapter 12: Modern Project Management .................................................... 41
1. Importance of project management .................................................................. 41
2. What is a project .................................................................................................... 41
3. Current Drivers of project management ............................................................. 43
4. Project Governance.............................................................................................. 43
5. Socio-technical approach ................................................................................... 44
Unit 7: Management in the African Context .............................................................. 46
1. The Vision for AU Agenda 2063 ............................................................................ 46
2. Critical Success factors ......................................................................................... 48
3. Key transformation outcomes .............................................................................. 49
4. Flagship projects .................................................................................................... 51
5. Doing business 2020 Sub-Saharan Africa ............................................................. 53
6. Headwinds in many African Economies in World Bank’s ease of doing business
.................................................................................................................................... 55
2
,Unit 1: Chapter 11: The manager as a planner and strategist
1. PLANNING AND STRATEGY
Planning Identifying/ selecting appropriate goals
Three-step activity:
Determining the
Formulating Implementing
organisations
strategy strategy
mission and goals
Strategy A cluster of decisions about:
what goals to pursue
what actions to take
how to use resources to achieve goals
Mission Broad declaration of organisation’s purpose
Statement Identifies organisation’s products and customers
Distinguishes organisation from its competitors
2. THE NATURE OF THE PLANNING PROCESS
Why 1. Necessary to give organisation a sense of direction/ purpose
planning is Plans state a company’s goals
important without it, managers may interpret tasks/ jobs that suit
themselves
result: multiple/ conflicting goals
plans ensure managers use resources effectively/ efficiently
2. Useful way of getting managers to participate in decision making
about appropriate goals/ strategies for organisation
top managers request input from lower-level managers to
determine goals/ strategies
3. Helps coordinate managers of different functions to ensure work to
achieve desired future state
Manufacturing should make equal amounts that sales can sell
4. Device for controlling managers within organisation
Plans specify who bears responsibility for putting strategies into
action
Four qualities of effective plans:
1. Unity: Only one central plan is put into operation
2 Continuity: Managers should continually modify plans at all levels
3. Accuracy: Managers should collect/ use all available information
4. Flexibility: So that plans can be altered if situation changes
Levels of 1. Corporate level:
planning Consists of the CEO, Top management team and corporate
support staff
Responsible for planning/ strategy making for organisation as
whole
3
, 2. Business level:
Consists of a business’s different divisions/ business units
Each division has a manager that controls planning/ strategy
for their division
3. Functional level:
Consists of each department’s own set of functions/
departments
E.g. Manufacturing, marketing, HR, R&D
Levels and Corporate-level plan
types of Top management’s decisions pertaining to the organisations:
planning o mission
o overall strategy
o structure
Corporate- level strategy
Plan that indicates in which industries/ national markets an
organisation intends to compete
Business-level plan
Managers’ decisions pertaining to divisions’:
o long-term goals that will allow it to meet organisational
goals
o overall strategy and structure necessary to achieve
goals
Business-level strategy
Plan that indicates how a division intends to compete against
its rivals
Functional-level plan
Managers’ decisions pertaining to goals they propose to
pursue to help division attain as business-level goals
Functional-level strategy
Plan of action to improve ability of each of an organisation’s
functions
to perform its task-specific activities that add value to the
goods and services
Time The intended duration of a plan
horizons of o long-term plans: 5+ years
plans o intermediate-term plans: 1 – 5 years
o short-term plans: 1- year
Business/ Corporate level goals: long/intermediate
Functional level goals: short-term
Standing Standing plans:
plans and Used in situations where programmed decision making is
single-use appropriate
plans When same situations occur, policies, rules and standard
operating procedures are developed:
o policy: general guide to action
o rule: formal, written guide to action
4
, o SOP: written instruction describing exact series of action
to be followed in a specific situation
Single-use plans:
Developed to handle non-programmed decisions
In unusual/ one-of-a-kind situations
E.g.
o programs: which are integrated sets of plans for
achieving certain goals
o projects: which are specific action plans created to
complete various aspects of a program
Scenario Generation of multiple forecasts of future conditions
planning Followed by an analysis of how to respond effectively to each
of those conditions
3. DETERMINING THE ORGANISATION’S MISSION AND
GOALS
Defining Managers must ask 3 questions about a company’s products
the 1. Who are our customers?
business 2. What customer needs are being satisfied?
3. How are we satisfying customer needs?
Establishing Strategic leadership:
major The ability of the CEO and top managers to convey a
goals compelling vision of what they want the organisation to achieve
to their subordinates
If subordinates buy into the vision, they develop a willingness to
undertake the work necessary for creative, risk taking strategy
making
Although goals should be challenging, they should be realistic
The time period in which a goal is expected to be achieved
should be stated
4. FORMULATING STRATEGY
Strategy The development of a set of strategies that allow an organisation to
formulation accomplish its mission and achieve its goals
SWOT A planning exercise in which managers identify organisational
Analysis strengths, weaknesses, environmental opportunities and threats
Strengths Weaknesses Opportunities Threats
Well- Poor materials Expand core Attacks on
developed management business core
strategy businesses
Strong product Loss of Exploit new Increase in
lines customer market competition
goodwill segments
Broad market Inadequate Widen product Change in
coverage human range consumer
resources taste
5
, Manufacturing Loss of brand Extend cost/ Fall in barriers
competence name differentiation to entry
advantage
Good Growth Diversify into Rise in new/
marketing skills without new growth substitute
direction businesses products
The five 1. The level of rivalry among organisations in an industry
forces 2. The potential for entry into an industry
model 3. The power of large suppliers
4. The power of large customers
5. The threat of substitute products
Hyper-competition:
Permanent, ongoing, intense competition brought about in an
industry by advancing technology or changing customer tastes
5. FORMULATING BUSINESS-LEVEL STRATEGIES
Low-cost Driving the organisation’s costs down below the costs of its
strategy rival
Companies pursuing a low-cost strategy can sell a product
for less than their rivals and still make a good profit
Differentiation Distinguishing an organisation’s products from the products
strategy of competitors on dimension such as:
o product design
o quality
o after-sales service
Often an expensive process
Makes industry entry difficult
Focused low Serving only one segment of the overall market and trying to be
cost and the lowest cost/ differentiated organisation serving that segment
differentiation
strategies
6. FORMULATING CORPORATE-LEVEL STRATEGIES
Concentration Reinvesting a company’s profits
on a single to strengthen its competitive position in its current industry
industry
Vertical Definition:
integration Expanding a company’s operations either
backward into an industry that produces inputs for the
product or
forward into an industry that uses/ distributes/ sells its
products
Backward Forward
6
, Intermediate
Raw
manufact- Assembly Distribution
materials
uring
Vertical integration enables managers to:
add value to products
lower costs of making/ selling products
make products special/unique
Vertical integration can:
strengthen competitive advantage
increase performance
reduce flexibility to respond to a changing environment
create threats
Diversification Definition:
Expanding a company’s business operations into a new
industry
in order to produce new kinds of valuable goods/ services
Related diversification:
Entering a new business/ industry to create a competitive
advantage in one/ more of an organisation’s existing
divisions/ businesses
Existing skills/ resources are used
Synergy:
o performance gains that result when individuals/
departments coordinate their actions
Unrelated diversification:
Entering a new industry/ buying a company in a new
industry that is not related to an organisation’s current
businesses/ industries
let’s managers engage in portfolio strategy:
o apportioning financial resources among divisions to
o increase financial returns or
o spread risks among different businesses
it becomes increasingly difficult to be knowledgeable of all
the organisation’s businesses, so the performance of the
entire company often falls
too much diversification can cause managers to lose
control of the core business
International Global strategy:
expansion selling the same standardized product and using the same
marketing approach in each national market
cost saving associated with not having to customise
managers make themselves vulnerable to local
competition that differentiate their products
Multidomestic strategy:
Customising products and marketing strategies to specific
national conditions
7
, higher prices can be charged for products
customisation raises production costs and puts the
company at a price disadvantage
Choosing a way to expand internationally
1. Importing and exporting
Importing:
selling products at home that are made abroad
Exporting:
making products at home and selling them abroad
few risks associated
company does not have to invest in developing
manufacturing facilities abroad
2. Licensing and franchising
Licensing:
Licenser allowing a foreign organisation (licensee) to take
charge of manufacturing/ distributing a product in its
country/ world region
in return for a negotiated fee
licensee bears development costs
licenser risks losing control of secrets
Franchising:
Franchiser sells to a foreign organisation (franchisee) the
rights to use a brand name and operating know-how
in return for a lump-sum payment and a share of the profits
franchiser does not bear development costs and
avoids problems associated with setting up foreign
operations
franchiser may lose control over how the franchise
operates and
product quality may fall
3. Strategic alliances
Strategic alliance:
An agreement in which managers pool/ share their
organisation’s resources/ know-how with a foreign
company
And the organisations share the rewards/ risks of starting a
new venture
take advantage of high-quality skills of foreign
manufacturers
Joint venture:
A strategic alliance among two/ more companies that
agree to jointly establish/ share ownership of new business
Level of involvement abroad increases
Risk is reduced
8
Fundamentals in Business Management
Contents
Unit 1: Chapter 11: The manager as a planner and strategist .................................... 3
1. Planning And strategy ............................................................................................. 3
2. The Nature of the Planning process ....................................................................... 3
3. Determining the organisation’s mission and goals ............................................... 5
4. formulating strategy ................................................................................................ 5
5. formulating business-level strategies ...................................................................... 6
6. formulating corporate-level strategies .................................................................. 6
7. Planning and implementing strategy..................................................................... 9
Unit 2: Chapter 7: Managing organisational structure and culture .......................... 10
1. Designing organisational structure and culture .................................................. 10
2. Grouping tasks into jobs: Job design ................................................................... 12
3. Grouping jobs into functions and divisions: designing organisational structure13
4. Coordinating functions and divisions ................................................................... 16
5. Organisational culture ........................................................................................... 18
Unit 3: Chapter 13: Organisational control and change ........................................... 20
1. What is organisational control? ............................................................................ 20
2. Output control ....................................................................................................... 21
3. Behaviour control .................................................................................................. 23
4. Clan control ........................................................................................................... 24
5. Organisational change ......................................................................................... 24
Unit 4: Chapter 14: Promoting effective communication.......................................... 26
1. Communication and management .................................................................... 26
2. Information richness and communication media .............................................. 28
3. Communication networks..................................................................................... 29
4. Information technology and communication .................................................... 30
5. Communication skills for managers ..................................................................... 31
1. The role of information technology ...................................................................... 33
2. Types of information .............................................................................................. 34
3. The heart of knowledge management: The Internet ......................................... 35
4. Virtual networking and cloud computing ........................................................... 37
5. Effects of Information technology on management ......................................... 37
6. Information and the Manager’s job .................................................................... 38
1
, 7. Types of Management Information systems........................................................ 39
8. The impact and limitations of IT ............................................................................ 40
Unit 6: Chapter 12: Modern Project Management .................................................... 41
1. Importance of project management .................................................................. 41
2. What is a project .................................................................................................... 41
3. Current Drivers of project management ............................................................. 43
4. Project Governance.............................................................................................. 43
5. Socio-technical approach ................................................................................... 44
Unit 7: Management in the African Context .............................................................. 46
1. The Vision for AU Agenda 2063 ............................................................................ 46
2. Critical Success factors ......................................................................................... 48
3. Key transformation outcomes .............................................................................. 49
4. Flagship projects .................................................................................................... 51
5. Doing business 2020 Sub-Saharan Africa ............................................................. 53
6. Headwinds in many African Economies in World Bank’s ease of doing business
.................................................................................................................................... 55
2
,Unit 1: Chapter 11: The manager as a planner and strategist
1. PLANNING AND STRATEGY
Planning Identifying/ selecting appropriate goals
Three-step activity:
Determining the
Formulating Implementing
organisations
strategy strategy
mission and goals
Strategy A cluster of decisions about:
what goals to pursue
what actions to take
how to use resources to achieve goals
Mission Broad declaration of organisation’s purpose
Statement Identifies organisation’s products and customers
Distinguishes organisation from its competitors
2. THE NATURE OF THE PLANNING PROCESS
Why 1. Necessary to give organisation a sense of direction/ purpose
planning is Plans state a company’s goals
important without it, managers may interpret tasks/ jobs that suit
themselves
result: multiple/ conflicting goals
plans ensure managers use resources effectively/ efficiently
2. Useful way of getting managers to participate in decision making
about appropriate goals/ strategies for organisation
top managers request input from lower-level managers to
determine goals/ strategies
3. Helps coordinate managers of different functions to ensure work to
achieve desired future state
Manufacturing should make equal amounts that sales can sell
4. Device for controlling managers within organisation
Plans specify who bears responsibility for putting strategies into
action
Four qualities of effective plans:
1. Unity: Only one central plan is put into operation
2 Continuity: Managers should continually modify plans at all levels
3. Accuracy: Managers should collect/ use all available information
4. Flexibility: So that plans can be altered if situation changes
Levels of 1. Corporate level:
planning Consists of the CEO, Top management team and corporate
support staff
Responsible for planning/ strategy making for organisation as
whole
3
, 2. Business level:
Consists of a business’s different divisions/ business units
Each division has a manager that controls planning/ strategy
for their division
3. Functional level:
Consists of each department’s own set of functions/
departments
E.g. Manufacturing, marketing, HR, R&D
Levels and Corporate-level plan
types of Top management’s decisions pertaining to the organisations:
planning o mission
o overall strategy
o structure
Corporate- level strategy
Plan that indicates in which industries/ national markets an
organisation intends to compete
Business-level plan
Managers’ decisions pertaining to divisions’:
o long-term goals that will allow it to meet organisational
goals
o overall strategy and structure necessary to achieve
goals
Business-level strategy
Plan that indicates how a division intends to compete against
its rivals
Functional-level plan
Managers’ decisions pertaining to goals they propose to
pursue to help division attain as business-level goals
Functional-level strategy
Plan of action to improve ability of each of an organisation’s
functions
to perform its task-specific activities that add value to the
goods and services
Time The intended duration of a plan
horizons of o long-term plans: 5+ years
plans o intermediate-term plans: 1 – 5 years
o short-term plans: 1- year
Business/ Corporate level goals: long/intermediate
Functional level goals: short-term
Standing Standing plans:
plans and Used in situations where programmed decision making is
single-use appropriate
plans When same situations occur, policies, rules and standard
operating procedures are developed:
o policy: general guide to action
o rule: formal, written guide to action
4
, o SOP: written instruction describing exact series of action
to be followed in a specific situation
Single-use plans:
Developed to handle non-programmed decisions
In unusual/ one-of-a-kind situations
E.g.
o programs: which are integrated sets of plans for
achieving certain goals
o projects: which are specific action plans created to
complete various aspects of a program
Scenario Generation of multiple forecasts of future conditions
planning Followed by an analysis of how to respond effectively to each
of those conditions
3. DETERMINING THE ORGANISATION’S MISSION AND
GOALS
Defining Managers must ask 3 questions about a company’s products
the 1. Who are our customers?
business 2. What customer needs are being satisfied?
3. How are we satisfying customer needs?
Establishing Strategic leadership:
major The ability of the CEO and top managers to convey a
goals compelling vision of what they want the organisation to achieve
to their subordinates
If subordinates buy into the vision, they develop a willingness to
undertake the work necessary for creative, risk taking strategy
making
Although goals should be challenging, they should be realistic
The time period in which a goal is expected to be achieved
should be stated
4. FORMULATING STRATEGY
Strategy The development of a set of strategies that allow an organisation to
formulation accomplish its mission and achieve its goals
SWOT A planning exercise in which managers identify organisational
Analysis strengths, weaknesses, environmental opportunities and threats
Strengths Weaknesses Opportunities Threats
Well- Poor materials Expand core Attacks on
developed management business core
strategy businesses
Strong product Loss of Exploit new Increase in
lines customer market competition
goodwill segments
Broad market Inadequate Widen product Change in
coverage human range consumer
resources taste
5
, Manufacturing Loss of brand Extend cost/ Fall in barriers
competence name differentiation to entry
advantage
Good Growth Diversify into Rise in new/
marketing skills without new growth substitute
direction businesses products
The five 1. The level of rivalry among organisations in an industry
forces 2. The potential for entry into an industry
model 3. The power of large suppliers
4. The power of large customers
5. The threat of substitute products
Hyper-competition:
Permanent, ongoing, intense competition brought about in an
industry by advancing technology or changing customer tastes
5. FORMULATING BUSINESS-LEVEL STRATEGIES
Low-cost Driving the organisation’s costs down below the costs of its
strategy rival
Companies pursuing a low-cost strategy can sell a product
for less than their rivals and still make a good profit
Differentiation Distinguishing an organisation’s products from the products
strategy of competitors on dimension such as:
o product design
o quality
o after-sales service
Often an expensive process
Makes industry entry difficult
Focused low Serving only one segment of the overall market and trying to be
cost and the lowest cost/ differentiated organisation serving that segment
differentiation
strategies
6. FORMULATING CORPORATE-LEVEL STRATEGIES
Concentration Reinvesting a company’s profits
on a single to strengthen its competitive position in its current industry
industry
Vertical Definition:
integration Expanding a company’s operations either
backward into an industry that produces inputs for the
product or
forward into an industry that uses/ distributes/ sells its
products
Backward Forward
6
, Intermediate
Raw
manufact- Assembly Distribution
materials
uring
Vertical integration enables managers to:
add value to products
lower costs of making/ selling products
make products special/unique
Vertical integration can:
strengthen competitive advantage
increase performance
reduce flexibility to respond to a changing environment
create threats
Diversification Definition:
Expanding a company’s business operations into a new
industry
in order to produce new kinds of valuable goods/ services
Related diversification:
Entering a new business/ industry to create a competitive
advantage in one/ more of an organisation’s existing
divisions/ businesses
Existing skills/ resources are used
Synergy:
o performance gains that result when individuals/
departments coordinate their actions
Unrelated diversification:
Entering a new industry/ buying a company in a new
industry that is not related to an organisation’s current
businesses/ industries
let’s managers engage in portfolio strategy:
o apportioning financial resources among divisions to
o increase financial returns or
o spread risks among different businesses
it becomes increasingly difficult to be knowledgeable of all
the organisation’s businesses, so the performance of the
entire company often falls
too much diversification can cause managers to lose
control of the core business
International Global strategy:
expansion selling the same standardized product and using the same
marketing approach in each national market
cost saving associated with not having to customise
managers make themselves vulnerable to local
competition that differentiate their products
Multidomestic strategy:
Customising products and marketing strategies to specific
national conditions
7
, higher prices can be charged for products
customisation raises production costs and puts the
company at a price disadvantage
Choosing a way to expand internationally
1. Importing and exporting
Importing:
selling products at home that are made abroad
Exporting:
making products at home and selling them abroad
few risks associated
company does not have to invest in developing
manufacturing facilities abroad
2. Licensing and franchising
Licensing:
Licenser allowing a foreign organisation (licensee) to take
charge of manufacturing/ distributing a product in its
country/ world region
in return for a negotiated fee
licensee bears development costs
licenser risks losing control of secrets
Franchising:
Franchiser sells to a foreign organisation (franchisee) the
rights to use a brand name and operating know-how
in return for a lump-sum payment and a share of the profits
franchiser does not bear development costs and
avoids problems associated with setting up foreign
operations
franchiser may lose control over how the franchise
operates and
product quality may fall
3. Strategic alliances
Strategic alliance:
An agreement in which managers pool/ share their
organisation’s resources/ know-how with a foreign
company
And the organisations share the rewards/ risks of starting a
new venture
take advantage of high-quality skills of foreign
manufacturers
Joint venture:
A strategic alliance among two/ more companies that
agree to jointly establish/ share ownership of new business
Level of involvement abroad increases
Risk is reduced
8
