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DISPENSE MANAGEMENT 30060 PRIMO PARZIALE
We define MANAGEMENT A range of decisions associated with the acquisition, allocation, and integration of resources (human, physical, financial, etc.) required to perform a certain economic activity We define ECONOMIC ACTIVITY Actions that involve the production, distribution and consumption of goods and services at all levels within a society. What does economic activity involve? Technical transformation, transaction, complementary activities. The circular flow model Money moves through society in 2 ways: flowing from producers to workers as wages, and back to producers as payment for products GOODS PEOPLE’s GOALS what they aim to achieve PEOPLE’s VALUES what is important to their life Maslow’s hierarchy, which ranks from tangible needs to intangible. Types of good : essential vs non essentials, complementary vs substitute, differentiable vs commodities, consumer good vs industrial good, disposable vs durable, goods for individual vs collective consumption. Public Good: 1)The goods that are both non excludable and non rivalrous in consumption.
- the goods that are produced by the state or its branches (rather than a firm or a famiy) Management Acquiring, developing, and using resources and using resources effectively and efficiently Marketing Focus on the 4P’s (product, price, place, promotion) Involves planning and developing products that satisfy customers’ needs, making decisions about how much to charge for their products and when and where to make them available Finance Refers to all activities concerned with obtaining and effectively using money for business operation
Who is an entrepreneur An entrepreneur is an individual who risks his wealth, time and effort to develop a new product for profit Business Business is any organization that is engaged in making a product providing a service for profit. Goal of a business: to earn profit Role of the government 1 preserves competition and protect customers and employees with lays and regulation 2 minimize effect of economic fluctuation and reduces unemployment 3 spurs growth so consumer spends more money and business hire more employee Stakeholder Persons and groups that affect, or are affected by, an organization’s decisions, policies, and operations Shareholders/Stockholders are individuals or organizations that own shares of a company’s stock. They are the company most relevant stakeholders. Shareholders can be individual or institutional. The Core Arguments of the Stakeholder Theory of the Firm Descriptive: Managers direct their energies toward all stakeholders, not just owners Instrumental: Good relationships are a source of value for the firm Normative: Any individual, who makes a contribution, or takes a risk, has a moral right to some claim on the corporation’s rewards Stakeholder Analysis and Interests Stakeholder analysis consists in the identification of relevant stakeholders and to understand both their interests and the power they may have to assert their interests. Stakeholder interests are the nature of each group’s stake. The 4 Key Questions of Stakeholder Analysis Who are the relevant stakeholders, how are coalitions likely to form, what are the interests of each stakeholder what is the power of each stakeholder. Stakeholder Power Voting power(shareholders), economic power(suppliers), legal power( government), informational power(access to valuable data). Most companies have many departments specifically charged with interacting with stakeholders
Shareholders Shareholders goal is to make money through rise and fall of stock price. They can be repaid with capital gain or by receiving a share of the company (dividends) Stock price can be affected both by the company's performance and the overall movement of the stock market 2 types of shareholders: some seek long-term appreciation and some seek short-term returns Shareholders legal rights to vote on members of the B.O.D, Major mergers and acquisition To receive annual reports on the company’s financial condition To sell their own shares of stock to others Protection of shareholder interests Financial Disclosure in a company's annual reports is mandatory. Insider trading occurring when access to confidential information is used to buy and sell stocks it is illegal. ………………………………………………………………………………………………………………………………………………………….. CORPORATE GOVERNANCE Process by which a company is controlled or governed through systems of internal governance that determine overall strategic direction and balance sometimes divergent interests Shareholders>elect B.O.D which choose> top management (CEO) Board of directors — Board of directors are primarily responsible for managing the company Establish corporate objective, develop strategy and broad policies, review management’s performance, protect stakeholder interests Composition and structure
typically from 9 to 11 members Majority of the members are not from the company. Average tenure is 8-10 years Share of outside directors or female representation on boards are mandated by varied quotas and regulations We distinguish two different B.O.D One tier system most common in the USA which has only one board, the executive board. The executive directors and the supervisor are combined in one body. Two tier system Common in some EU countries, have two separate boards An executive board, made up by the CEO and other insiders A supervisory board, made up of outsider Boards functions Compensation Commitment- approves salaries and other benefits of top managers Nominating commitment- recommends candidates for officer and directors Audit commitment- reviews financial reports Key features of effective boards — Select outside directors to fill most positions — Hold open elections for members of the board — Hold elections for all directors annually — Appoint an independent lead director (i.e. splitting roles between CEO and board chairperson) — Diversify board membership (i.e. skills, gender, experience, age, ..) Agency Problem —Modern corporations have separated ownership and control Owners/shareholders do not manage day -to -day company operations which is left to managers/hired professionals
Definition of management Management is a process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment. Managers Managers make decisions about the use of the organization’s resources and are concerned with planning, organizing, directing and controlling the organization’s activities to reach its objectives. Planning : What should be done, by whom, when, how. Organizing : Structuring of resources and activities to accomplish objectives in an efficient and effective manner Directing: Motivating and leading employees to achieve organizational objectives Controlling : Evaluating and correcting the activities to keep the organization on course such as Measuring performance, Comparing present performance with objectives ,Identifying deviations and Taking corrective action when necessary Managers skills Technical expertise: specialized knowledge and training required to perform jobs. Conceptual Skills: the ability to think in abstract term and creatively Analytical Skills: the ability to identify relevant issues Human relation skills: the ability to deal with people
ORGANIZATIONAL CULTURE
A Firm’s shared values, beliefs, traditions, philosophies, rules, and role models for behaviour, expressed in: — Mission statements — Codes of ethics — Memos — Manuals — Ceremonies. Informally: dress codes, work habits, extracurricular activities, and story. Functional areas are sets or processes characterized by: - A common function (e.g. purchasing, manufacturing, marketing, …) - A specialized set of skills (i.e. buying, producing, selling) Examples: R and D (researcher), Marketing (Seller)
Core operations
Set of activities by which the firm actually carries out economic production Example: R and D, Procurement, Manufacturing, sales and marketing, logistics. R and D : Establish product features and production methods — Fundamental research — Technology/Competition watch — Evaluation of customer needs — New product development — Problem Solving with existing products and upgrades — Quality check Procurement Buying long-term use equipment/ facilities, raw materials, services — Recognition of needs — Supplier Identification/Evaluation/Selection — Analyzing quotations and bids — Placing orders — Spend Analysis — Contract Management and Supplier Relationship Management Manufacturing Processing and assembling raw materials — Planning — Quality control — Maintenance — Sales & Marketing Selling the firm’s product while optimizing economic profitability — Understand customers, competitor’s offering — Define sales policies (4P) — Advertising and Communication Campaign — Sale and Marketing skills + technical skills Logistics Transport, store and move raw materials, semi -finished and finished products.
Functional area
Debt and Equity Management / Finance Set of activities undertaken by firms to collect money to cover their financial needs Financial needs come from payments the firm has to afford (paying wages, materials, buildings, etc.) Human Resources Management The implementation of organizational systems pertaining to personnel — Recruiting of personnel — Employee relations (Unions, Job compensation and benefits — Analyzing tasks, workloads, skills, performance — Promotion — Training and development Other operations and functional areas Tax management (computing and pay taxes) — Non-core investments (investing available financial resources in excess of requirements for other operations) to create investment revenues — Insurance management (to cover for damages from negative events) Organizations also have to design the organizational structure and to organize how to gather, process and disseminate data and information to internal decision makers and external stakeholders
We define DEPARTMENTALIZATION The grouping of jobs into working units usually called departments, units, groups or divisions. Departments are usually organized by: Function, Product, Geographic region , Customer.
- Functional departmentalization: a president above and then: Product department, marketing department, finance department, distribution department, R and D The grouping of jobs that perform similar functional activities, such as finance, manufacturing, marketing, and human resources
- Product departmentalization: a president above and then: Stereo Equipment division, TV division, Computer Division… The organization of jobs in relation to the products of the firm
- Geographic region departmentalization: a president above and then: European division, Asian division, South American Division
- Customer departmentalization: Consumer food vs Industrial food The grouping of jobs around the needs of various types of customers
Wide span of management : a manager directly supervises a very large number of employees Narrow span of management: a manager directly supervises only a few subordinates
CENTRALIZATION
Delegation of authority — Giving tasks and empowering employees — Delegation gives:
- Responsibility to employees: to carry out assigned tasks satisfactorily and holds them accountable for the proper execution
- Accountability: employees are answerable(tenuti a rispondere) to a superior for the outcome Degree of Centralization — The degree to which authority is delegated throughout an organization
FORMALIZATION
— Standardizing behaviour through rules, procedures, training, etc Increases as firms get older, larger, regulated. Main Problems : Less organizational flexibility • Discourages organizational learning/creativity • Increases job dissatisfaction and work stress • Rules/procedures become focus of attention …………………………………………………………………………………………………………………………………………………………
ADVANTAGES
— Delegation of decision making authority, allowing divisional and department managers to specialize — Better decisions are made faster, and tend to be more innovative — By focusing each division on a common region, product, or customer, each is more likely to provide products that meet the needs of its particular customers DISADVANTAGES It creates work duplication, which makes it more difficult to realize economies of scale that result from grouping functions together Isolation among organizational areas.
ADVANTAGES
- It provides flexibility, enhanced cooperation, creativity - Draws on very specific expertise - Develop general managers and reduces the burden of CEOs - It enables the company to react quicky to changes in the environment by giving special attention to specific projects/problems DISATVANTAGES Matrix are generally expensive - Matrix are quite complex - Employees may be confused as to whose authority has priority: the project manager’s or the immediate supervisor’s?
Balance Sheet A snapshot of the assets used by the company and the funds that are related to these assets at an instant in time In the balance sheet we have Assets: List of items of value owned by the business MISCELLANEOUS in CURRENT ASSETS: Other readily payable credits Application: pre-paid taxes Liabilities : Amounts due to third parties, including the owners LIABILITIES OWNER’S FUNDS Issued common stocks Shares of ownership of the firm held by the investors (Stockholders) NOMINAL VALUE BOOK VALUE MARKET VALUE CAPITAL RESERVES LIABILITIES: Amounts retained in the company which have been generated from sources other than normal trading (But cannot be easily distributed as dividends to shareholders). Application: Surplus deriving from the reevaluation of one asset (e.g. Building) REVENUE RESERVES Amounts retained in the company which have been generated by trading (trading profits), often used to finance firm growth.
We define MISCELLANEOUS in CURRENT LIABILITIES Other debts that shall be paid within 1 year Application: Current taxes and Due-dividends …………………………………………………………………………………………………………………………………………………………… Total assets= fixed assets + current assets Capital employed= owners’ funds + long-term loans Working capital = current assets - current liabilities We define WORKING CAPITAL Amount of day-to-day operating liquidity available to a business. Very low (negative) working capital may pose the firm at risk of running out of money. Excessive working capital means funds which earn no profit cannot earn the required rate of return on investment Owners’ funds = fixed assets + current assets - current liabilities - long-term loans We define PROFIT AND LOSS (income statement) Gains or losses from both normal and abnormal company operations over a period of time Revenues They mainly refer to the value of a company's sales of goods and services to its customers — Even though a company's "bottom line" (its net income) gets most of the attention from investors, the "top line" is where the revenue or income process begins
