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Contemporary management revolves around the management functions including Organizing, leading, planning and controlling the functions to achieve the managerial purpose. Developing the expertise, in efficiently allocating and utilizing the resources at hand, so that the company can go ahead and progress in the right direction. In-order to achieve successful relation and environment within the company and outside and to take advantage of the opportunities in the environment it is necessary to enhance decision making capabilities, monitoring the information and systems also, monitoring information and supervising personnel. In diverse and changing market place the managers face many challenges, most importantly in this situation where the fuel prices are soaring high and breaking records it becomes difficult for the managers to resolve the technical issues as well as create cost effectiveness and keep the customer with a view to progress in the positive direction. These challenges may include leading and managing a varied work force, using up-and-coming technologies also maintaining the competitive edge and performing ethically. To successfully achieve all this a manager is required to train in the leadership skills so that he/she can learn to identify realistic goals and manage risks with this make contingency plans to perform well in this ever changing market. Because threats to some are the opportunities for others;
Let's introduce the topic and the industry, Automobile industry is one of many industries that take the effect when ever there is any change in the market environment. Market environment is ever changing whenever there is any change in the market indicators there is change also whenever there is any change in resource side there is change so work of the manager is an ongoing task.
The main focus of the industry is to design, develop, produce, and advertise and trade the automobiles.
The instability of the fuel prices can be defined as the primary force that has led the automobile industry to take a down turn. (Adewoyin, B., 2011)
Also due to the increase in the fuel prices the automotive manufacturers are devoting there capabilities to use innovative technologies in-order to build energy efficient automobiles which in-turn is also taking up there profits. (Adewoyin, B., 2011)
As it is rightly pointed out by Wells and Orsato that this automobile industry not only include the production of the cars and means of transportation but also have a great impact on infrastructure by use of these vehicles, maintenance and recycling. This industry is especially important as it creates job and wealth for the economy. (Orsato, R.J. and Wells, P., 2007)
This is the era of constant oil price fluctuation. Many factors are responsible for the price change. These include environmental changes in industrial performance, depletion of resources, currency fluctuation, inflation, regulations and duties and last but not the least the world politics. That's not all the producers face another challenge that is due to the price increase in raw material which in-turn is due to oil prices. This put burden on company's research and development department as they have to look for new energy efficient vehicles and also try to build cars with alternative fuel resource. All this activity requires capital investments and put the company's well being at risk due to its decreasing cash liquidity condition. (Adewoyin, B., 2011)
Effect of evolutionary theories on the discussion, and which one is better when followed in the current market scenario;
It's about time to discuss how to employ the theories in contemporary management to benefit the manager in the times of turbulence.
Management theories have evolved to accommodate the managers need to make organizational process more successful and proficient. (Jones, G.R. and George, M. J. 2006)
Contemporary management theories help sort the turbulent market conditions and swiftly changing conditions of the corporation in today's economy. (McNamara, C. 2011)
The driving force behind all this is the better utilization of the resources available. These evolutionary changes occur because the practicing mangers find better ways to organize, control, plan, guide, evaluate and manage the human resources and other organizational resources. (Jones, G.R. and George, M. J. 2006)
Older hierarchal structures need to be changed in-order to accommodate the newly evolved workforce that includes knowledgeable work force. This type of work force can only be accommodated by applying flexible systems such as networks or even virtual organizations. These new formations influence the way the managers perform their roles in an organizational culture where they can hardly see each other. (Smit, P.J. 2006)
There are two schools of thought on management theories one comes under classical theory and the other under contemporary school of thought. It is another thing to be considered that no one theory can be implanted in today's scenario of changing environment and diversified workforce. As an alternative the new electric approach is in practice where the principles of different theories are used in accordance with the changing business environment. (Smit, P.J. 2006)
Classical approaches are scientific management theory, administrative theory and theory of bureaucracy. (Smit, P.J. 2006)
These three theories evolved in the nineteenth century by the Frederick W. Taylor, he was a mechanical engineer. In that era the production was highly labor intensive. So, managing the labor was a problem in those days because directing and coordinating their efforts became a major issue. To control the efforts and labor this system was evolved. (Smit, P.J. 2006)
Principles evolved by Henry Fayol and Max Weber are as relevant to the today's changing scenarios as they were when the times were different.
Professor Gary Hamel also favored Taylor's ideas and proved that they are applicable to today's world as well. According to him Taylor pointed out three principles, firstly, he gave the idea of best practice that is known as benchmarking in today's philosophy. Secondly, he emphasized on breaking the job into tasks that is a popular practice now a days and we call it business process reengineering. Third point Very true and still applicable to the new systems, it states to get free of those elements that don't add worth to the system. (Hamel, G. 2000)
The contemporary approaches like behavioral theory, management science theory which includes Hawthorn studies and organizational theory which includes contingency theory are the product of the changing scenarios of the current markets. It's better to use the electric concept then following any specific theory to combat crises.
Issues that a manger faces while trying to move forward in this market condition of oil price fluctuation;
BBC's Lorna Gordon talked to a haulier Chris Flynn about the impact of the price increase and how it will affect his company. Mr. Flynn replied by highlighting the constraints he's facing due to the fact of price fluctuation. Like any other industry this transportation businesses is also suffering from the impact of fluctuation in oil prices. According to him it has become difficult for them to keep the transportation costs down. On the other hand they cannot press the consumers further to pay more.
Likewise, the automobile industry has to pay the price for this fluctuation. Let's have a look in the challenges faced by the managers in this industry.
The automobiles used around the globe are round about 806 million and the gasoline is used around 260 billion gallons per year. (Anon., 2011)
Due to the changes in beliefs that people hold now a days about things like, work, pay, profits, loyalty and government rules and regulations are changing the face of today's management. This is also happening due to the unbelievable technology evolution and change in market patterns. All these factors are exerting pressure in the way work force utilize their capabilities and ultimately on the working of the managers. (Singh, B. R. 2004)
First challenge is to lead a diversified work force. When the fuel prices rise, there is always a chance of increase in the costs of the organization that will affect the employees. When there will be a cut down in the production of the automobiles it will ultimately effect the work force. There will be down sizing expected. As, rightly mentioned by Freight Transport Associations that the present fluctuations of oil prices has powerful effect on the many industries that depend upon fuel for their operations with major cut back n employment. (Adewoyin, B. 2011)
In UK automobile industry oil price fluctuations have made chaos for example Nissan UK has announced that it has downsized 1200 of its employees in Northern England following 2008. This scenario has not only affected the current employment capacity of the automobile industry but also affected the reduced job opportunities in United Kingdom. (Adewoyin, B. 2011)
The automotive industry is an ever changing market. If take its history as a guide and forces influencing will remain in play it is only natural to say that automotive industry will keep on evolving, adapting and changing. (Bradley, D. et. al. 2005)
SWOT analysis and Porters five force models suggests that due to increase in oil prices customers are looking for fuel efficient vehicles which are scarce in the UK and American market. The Asian markets are attracting new customers because of their alternative resource and fuel efficient models. This suggests another issue for managers in the form of threat of the new entrants and competitors.
Another issue faced by the managers is of raw material price increase due to oil price fluctuation. Many companies in this industry will be threatened by pressures of Supply-chain due to oil price fluctuation. This will consequently have a severe impact on prices of the related basic bits and pieces. In this we can take the example of steel, which is used as the raw material to produce automobiles. It will be heavily affected by the oil prices which in-turn continue to make the haulage and equipment usage more costly. (Adewoyin, B. 2011)
It is therefore important to concentrate on creativity and generate original ideas to combat the changing global scenario. Managers should focus on creativity to build loyalty and effectiveness in organizations. (Certo, S. C. and Certo, T. 2011)
Now let us observe how this negative impact will benefit the sub-sectors;
This is also noticed that the sub-sectors may be benefited by this change. People are switching towards the public transport due to lesser prices. Other UK brands evaluated this as an opportunity like UK van and commercial vehicle manufacturer LDV as they trying to focus there resources on the production of electric vehicles only. This is a very negative situation but some of the manufacturers of this automotive industry are capitalizing on this as opportunity by producing green vehicles and fuel efficient vehicles. (Adewoyin, B. 2011)
When ever there are crises like the crises in automobile industry due to fluctuation in the oil prices the managers have to take certain positive steps to overcome them. These steps include identifying the problem and defining why there are crises or problem
Secondly, a team must be created to do research and development and organize process such as legal and human functions etc (Franks, G.F, 2011)
After this a control hub must be setup to ensure that the work can be monitored. When the problem has been identified it is necessary for the team to communicate the whole to the PR and media and upper management. Communication out means that the problem has been identified and then this information is taken to the executive committee and the whole thing is divided into points and related processes are identified. After the problems are divided into related concerns the feedback is taken from the partners and stake holders and their problems are addressed. (Franks, G.F, 2011)
Another important aspect is to learn from the mistakes and try not to place the blame when there is crises situation. (Anon., 2009)
It is always work of the entire team to get out of the certain problem so always promote team work. (Dooley, D. and Banada, M. 2009).
Due to this increase of Oil price 2p a liter and increase VAT of 20% the automobile industry is suffering to a great deal. In this event the mangers have to take steps to search alternative resource generation and efficient ways to enhance their capabilities by employing the green technologies. Also, emphasis must be given on the proficient allocation of resources.