Business Optimization: Value Chain, Work Organization & Management
The Value Chain
One of the objectives for increasing competitiveness is optimizing the value chain. This analysis breaks down business activities into different parts. There are three basic elements:
- Primary Activities: Those related to developing the good or service.
- Support Activities: Those that support primary activities, such as administration.
- Margin: The difference between the total value and the total costs incurred to create that value.
Work Organization
Work organization is a set of rules designed to coordinate company resources to achieve defined benefits. Early theorists of work organization include Taylor and Fayol, whose theories led to schools of thought studying human factors in companies.
Scientific Management (Taylorism)
Based on Taylor’s ideas, this school emphasizes:
- Job analysis and design
- Specialization of functions
- Decentralization of responsibility
- Work rationalization
- Wage incentives
Fayol’s Principles
Fayol emphasized hierarchical structure and these principles:
- Division of labor
- Defined hierarchy
- Unity of command and direction
- Fair remuneration
- Balance between authority and responsibility
Human Relations School
This school arose from criticisms of Taylorism. Elton Mayo demonstrated the importance of human relationships, concluding that:
- Incentives exist beyond material and social objectives.
- Company attention to workers is essential.
- Humans cannot be programmed like machines.
Key Business Functions
Planning
Planning involves setting objectives, defining strategies to achieve them, establishing company policies, and setting decision criteria.
Organization
Organization designs a structure defining tasks, responsibilities, and authority for each person in the company.
Management
Management ensures that employees perform the tasks needed to achieve objectives.
Control
Control ensures that everything proceeds as planned.
Motivation at Work
Unmet needs cause dissatisfaction. Companies must apply motivational management policies with incentives such as:
- Money: Meets basic consumption needs.
- Future Expectations: Opportunities for improvement and advancement.
- Work Recognition: Acknowledging individual contributions.
- Collaboration: Making subordinates feel useful and valued.
Maslow’s Hierarchy of Needs
Maslow classified needs into five levels, presented as a pyramid:
- Physiological Needs: Eating, drinking, etc.
- Safety Needs: Job security, insurance, etc.
- Social Needs: Love and belonging.
- Esteem Needs: Self-confidence, recognition, etc.
- Self-Actualization Needs: The desire to reach one’s full potential.
Formal and Informal Organization
Formal Organization
The intentional and defined structure of the company, placing each element in the most convenient position.
Organigram
A graphic representation of the business’s organizational structure.
Informal Organization
The set of personal and social relationships not predetermined by company management.