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I. Managerial Systems:
A. Management by Objectives - the most complex and widespread management system; can be
used either independently or in combination with other managerial systems;
Management by Objectives is defined as a managerial tool focused on rigorous determination
and derivation of objectives up to the job level and the correlation of rewards/sanctions with the
degree of achievement of these objectives. The defining elements:
• the existence of objectives at all organizational levels, with full process-based
organization involvement
• direct participation of the staff in setting up and achieve the objectives,
• staff motivation is performed according to the fulfillment of objectives and the degree of
involvement.
Components:
1. The system of objectives, which includes strategic objectives, 1st and 2nd degree
objectives, specific objectives and individual objectives.
2. Action programs outlining the main decisions and actions to be taken and initiated to
achieve the objectives.
3. Timetables, specifying intermediate and final milestones.
4. Budgets, developed for the company and its components, approached as management
centers.
5. Managerial methods and techniques, available and suitable to be used along
Management by Objectives, namely: diagnosis, delegation, managerial meeting,
dashboard, budget management etc.
6. Instructions, general or specific, materialized in methodological instructions on how to
achieve the objectives.
Methodology:
1. Setting up the strategic objectives – whose achievement determines both the present and
especially its future.
2. Setting up the other categories of objectives - The degree of breakdown of strategic objectives
determines to two version of Management by Objectives:
• team-based MbO, characterized by a breakdown of the target system to the specific level
• individual-based MbO, where objectives are set up to the job level, respectively individual
targets.
3. Development of other components of Management by Objectives - This is the case for action
programs, timetables, instructions, and especially budgets.
An important issue is delimitation and sizing the management centers. The management center
is a process-based component (activity, group of activities) or structure based (functional or
operational compartments), with large decisional and actional autonomy, with its own budget.
There are two important criteria of setting up management centers:
• the process-based criterion, according to whom management centers are created around
the most important activities or a group of activities (e.g. production, supply, sales,
treasury, personnel).
• the structure-based criterion, which allows the establishment of management centers
around specific organizational subdivisions (sections and workshops, functional
compartments, auxiliary compartments).
There are, therefore, three categories of management centers:
1. production related management centers;
2. auxiliary management centers
3. management centers specific to functional activities (administrative)
4. Decisional, informational, organizational and HR systems optimization according to the
requirements – in order to achieve the objectives.
5. Implementation, co-ordination and tracking of objectives achievement
6. Outcomes assessment and rewarding the employees
1. Subordinating the design and functionality of the informational system to the requirements of
the company's management
2. Linking the informational system with the decisional system and organizational structure
3. Achieving the methodological integration of information processing
4. Focus on essential deviations: information is required whenever possible, not globally but
selectively, only those that reflect significant deviations from objectives, criteria and means
5. Ensuring an adequate response time for management system and its components
6. Getting the most from the primary information: primary information, usually limited, is used
directly to track and control organizational process, as well as to make operative decisions by
the junior managers. The most important decisions and actions of the management are based
on final information.
7. Achieving informational flexibility - implies the continuous adaptation to its endogenous and
exogenous conditions, which are constantly changing
8. Ensuring informational and organizational effectiveness and efficiency
7. Business strategy
The strategy designates the organizational long-term major objectives, the main ways to fulfill
them, along with the resources allocated, to achieve the competitive advantage according to the
organizational mission.
Features:
• Includes the achievement of well-defined goals, as defined in the organizational mission
and strategic objectives.
o Objectives are the motivational and action-based foundation of the strategy, their
quality being decisive for the future performance of the company.
• Targets future periods (3-5 years) taking into consideration the risks and uncertainty
• Seeks to achieve competitive advantage, the ultimate goal, in strategic terms, for a
company.
• Aims at achieving the most effective interface between the company and the
environment, reflected in the organizational performance.
• Reflects, to a certain extent, the interests of at least some of the organizational
stakeholders: the owner(s), managers, employees, customers or suppliers
• Is a result of explicit or implicit stakeholder negotiation, facilitating harmonization of
stakeholders' interests, fostering the development of an organizational culture (inside
dimension of negotiation) and a relational system (outside dimension of negotiation)
supporting long-term performance.
Organizational culture is reflected in managers and employees’ attitudes, behaviors,
beliefs aspirations and values, and their effectiveness during organizational processes.
• In SMEs this is usually the business plan while in large corporations, strategies have their
own, well defined structure, involving complex procedures and mechanisms
Components:
1. Organizational mission – includes the fundamental goals, the business concept
(philosophy), the market on which company operates and what differentiates the
company from similar ones;
2. Strategic objectives – strategic objectives designate those goals on the long-term, usually
3 to 5 years, covering the whole of the company's activities or its major components.
Objectives are the first operational component of the strategy to be established. They
had to be set up accordingly, starting from the organizational mission and considering the
results of the organizational diagnosis and the environment analysis.
I. Economic objectives: long-term goals from a financial point of view (earnings per
share, share value, profit, margin, etc.
II. Social objectives are less common, but with a rapid growth trend over the past
decade (pollution, cooperation with public authorities, wages or working conditions).
3. Strategic choices - major approaches, with implications for the content of an appreciable
part of the company's activities, on the basis of which it is determined how it is possible,
rational and effective the achievement of strategic objectives.
4. Resources - all the elements of personnel, technical, materiel, and economic nature that
provide the means necessary to accomplish the organizational mission and strategic
objectives, following strategic choices. There are four categories of resources:
information, human, technical & material and financial.
5. Deadlines – sets the period for the strategy to be implemented
6. Competitive advantage – the ultimate goal of the business strategy providing long-term
competitiveness:
• According to Porter, the competitive advantage of a company essentially means
either a low cost or a product or service that is differentiated by its qualities from
similar products or services.
• To be viable, the competitive advantage needs to be sustainable, the company can
achieve and support it for a long time.
Typology
1. According to coverage:
a. Global strategies - the establishment of common directions to be followed in all
areas (commercial, production, HR, etc.) and for all products or services in the
portfolio.
b. Partial strategies – how the companies must act in specific areas
2. According to strategic objectives dynamics:
a. Recovery strategies – when the company experienced a decline; the objectives are
set higher than the ones on the last period;
b. Consolidation strategies – objects similar in quantitative terms with the last
period, but higher in qualitative terms so to consolidate the market position;
c. Development strategies – both quantitatively and qualitatively higher objectives;
imply large costs;
3. According to the nature of the objectives:
a. Specialization strategies - concentration of the company on a small range of
products or services, simultaneously seeking to improve them in terms of
technical, economic and social characteristics and performance;
b. Diversification strategies - require widening the range of products or services
provided by the company;
c. Offensive strategies – new markets penetration / increase of market share;
d. Defensive strategies – retreat from some markets / reduce the market share;
4. According to competitive advantage:
a. Cost-oriented strategies – cutting production costs as to ensure better prices on
the market
b. Differentiation strategies - distinguish the product by as many characteristics as
possible from the products of competition, in particular by improving its functions
c. Niche-oriented strategies - setting strategic objectives to ensure customer
satisfaction for a specific, well defined, segment of customers
d. Quality-oriented strategies - by setting strategic objectives to achieve superior
product quality in relation to competitors' products
8. Creativity methods (Managerial tools -> Specific methods -> Intuitive methods)
The intuitive methods are characterized by the removal of some emotional or intellectual
inhibitions of individuals or groups. This category includes brainstorming, Philips 66, Delphi,
Synectic, Panel method, Delbecq, brainwriting, etc.
Philips 66 - focuses on delivering new ideas by multiple creative groups, also called functional
teams (recommended no more than 5), made of 6 people each. Delimitation from brainstorming:
• the much larger number of participants (approximately 30, if the classical parameters of
group composition are observed);
• the composition of the groups involved in the creativity meeting (each group designates
a leader);
• the duration of the creativity session, approximately 2 hours;
• the way it is deployed (sequential - debates within each group and debates in plenary);
• the existence of three important categories of "characters": the leader of the meeting,
the group leaders and the members of the group.
A. the first stage prepares the creative meeting and, in addition, sets up the groups to debate
the issue and their leaders are appointed;
B. in the next stage, the problem is debated in two distinct sequences:
• group (or within groups) debate, with the group leaders recording the ideas being issued;
• the plenary debate, starting with the presentation of the ideas issued in the creativity
groups by their leaders. They are presented without any limitation and are the subject of
critical discourse to which group members (members) can contribute
C. The last step is assessment the solutions and is also carried out in two sequences:
• assessment by group leaders and their presentation in plenary, followed by the final
assessment provided by the leader of the creativity meeting;
• presenting the selected ideas to the management after having been previously analyzed
by experts.