Formal & Informal Aspects of Business Management and Leadership
Formal & Informal Aspects of Business Management
The Formal Structure
The analysis of the structure with the vertical and horizontal division of work and its representation on the chart represents a formal point of view. We can identify formal aspects that are visible and susceptible to being represented and modeled.
The Informal Structure
Informality is not written or represented in formal models. Examples include personal relationships and communication.
Corporate Culture
Corporate culture is the dominant model of thinking, believing, and acting within a company. Culture is determined by beliefs, norms, habits, and customs.
Leadership and Management
The Role of the General Manager
The Strategic Entrepreneur
The general manager directs and has a global vision of the company and its relationship within the context in which it operates. They are the executive leading the company at the top level.
Key Functions
The manager has two key functions:
- Strategist: Changes the company’s relationship with its environment, anticipates threats, and identifies and exploits opportunities.
- Organizer: Organizes available resources and plans their use for the fulfillment of objectives.
Process Planning
Planning involves three key elements:
- Objectives: The results a manager hopes to accomplish.
- Courses of Action: Planned strategies and tactics to achieve the objectives.
- Resources: Restrict the courses of action to choose from, especially when resources are scarce.
Planning Levels
- Top-Level Managers: Conduct strategic general planning.
- Middle-Level Managers: Plan for their specific area (tactical planning).
- Lower-Level Managers: Conduct operational planning, focused on more routine decisions.
From Plan to Action: Management and Control
Management transforms planned actions into reality. Through management practices, planned decisions are implemented.
Control involves comparing actual performance with the predictions made during planning. This is done for each planned activity to ensure actual results match expectations. Corrective action can then be taken if necessary, leading to re-planning with new goals and better resource utilization.
Communication
Communication is the process of transmitting a message through a proper channel using common codes, allowing the sender and receiver to understand what is being transmitted.
Key Components
- Channel: The medium chosen to transmit the message.
- Code: The symbols used to transmit the message.
- Feedback: Allows the sender to assess if the message is understood.
- Noise: Barriers that hinder communication.
Strategic Tool
Communication can be used as a strategic tool to facilitate the achievement of objectives.
Business Leadership
A leader influences individuals’ behavior and helps them understand how their personal objectives align with the company’s goals. The challenge is to balance individual needs with the achievement of objectives.
Leadership Styles
- Demagogue: Prioritizes the satisfaction of the people.
- Carefree: Avoids making decisions.
- Democratic: Listens to others’ views and involves people in decision-making.
- Authoritarian: Focuses solely on meeting objectives, potentially damaging staff motivation.
Power
Power is the control one person has and may exercise over another. The central aspect of power lies in the instrument used to exercise it.
Instruments of Power
- Coercive: Based on submission due to fear of negative consequences.
- Compensation: Based on rewards for obedience.
- Regulatory: Based on following established rules and orders.
- Persuasive: Based on symbolic rewards (e.g., higher status).
- Knowledge-Based: Based on access to information needed for decision-making.
- Hierarchical: Based on position within a company.
Marketing
Marketing is a way of conceiving and executing the terms of trade to benefit all parties involved, including society. This is achieved through the development, valuation, distribution, and promotion of goods, services, or ideas.
Terms of Trade and Value
Terms of trade involve communicating with another party to obtain something valuable and useful in exchange for something equally valuable and useful.
Value is a measure of satisfaction gained by receiving something valuable in exchange. Utility is subjective and based on individual experience.
Types of Utility
- Form Utility: Created through the design and development of goods, services, and ideas.
- Place Utility: Products located within reach of the consumer have greater utility.
- Time Utility: Products have greater value when available when the customer wants them.
- Possession Utility: Products are only useful if consumers can buy, possess, and use them.
- Information Utility: The usefulness of a product increases when consumers know about it and where to obtain it.
Conditions of Exchange
For an exchange to occur, several conditions must be met:
- At least two parties are involved.
- Each party has something of value to the other.
- Each party can communicate and deliver what they offer.
- Each party is free to accept or reject the offer.
- Each party believes it is appropriate to deal with the other party.
Relationship Marketing
The importance of relationships between seller and buyer has led to the concept of relationship marketing.
Key Aspects of Marketing
Marketing analyzes four key aspects of the terms of trade:
- Buyer behaviors directed at consummating exchanges.
- Seller behaviors directed at consummating exchanges.
- The institutional framework (e.g., market environment) that facilitates exchanges.
- The social consequences of buyer and seller behaviors and institutional structures.