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Management development is an effort which improves the capacity to manage organizations. Management development needs arise activities of managers, and to ensure there are effective managers able to translate the organisations' aims into action, and also from the need to change and shape the organisation's direction as the environment changes. Therefore, investment in management development can have a direct economic benefit to the organization.
Normally, managing includes activities of planning, organizing, leading and coordinating resources. Planning has to be an integral and essential part of management development process.
This assignment shows some models and theories, and then evaluates the above statement assessing the role of management development in the formulation and implementation of an organisation's corporate strategy.
Planning and environment analysis:
Planning is a mental managerial activity involving the arrangement of multiple linked decisions and to achieve a long-range, or major objective. It's a management process, concerned with defining goals for future organizational performance and deciding on the tasks and resources to be used in order to attain those goals.
A plan would cover all parts of the organization and show the level of resources allocated to each area ( whether that be functions, divisions, or business units).
The planned approach to strategic control is able to monitor the implementation of strategy. The detailed way in which planning can support strategies varies:
Planning can achieve by standardization of work processes (such as product or service)
Enterprise resource planning (ERP) systems, supplied by software specialists such as SAP or Oracle, use sophisticated IT to achieve planning type control. The systems aim to integrate the entire business operations, including human resources, finance, operations, distributions, ect.
Centralised planning approaches often use a formula for controlling resources allocation within an organization.
(Johnson, Gerry. 2009)
In planning, one of the most important elements is environment analysis. Every plan starts from environment analysis. It's is a fundamental part which is useful for strategic management. The planners in organizatons have to be sensitive to the environment and scan it for the change which will affect their organization and industry. Moreover, the relationship between the firms and the environment is very close and it depends strongly upon the individual firm, the nature of the industry, and the nature of the environment.
There are some frameworks to help the planners to evaluate and analyse the environment of the organizations.
The PESTLE framework:
The PESTLE framework can be used to identify how future trend in the Political, Economic, Social, Technological, Environmental, and Legal environments that could impinge on organization.
Political factors: These refer to government policy such as the degree of intervention in the economy.
Economic factors: These include interest rates, taxation changes, economic growth, inflation and exchange rates which can have a major impact on a firm's behaviour
Social factors: Social trends changes can affect the demand for a firm's products and the availability and willingness of individuals to work.
Technological factors: new technologies create new products and new processes. They are useful to develop and expand the business.
Environmental factors: They include the weather and climate change.
Legal factors: these are related to the legal environment in which firms operate.
(see Appendix 1)
The Porter's 5 forces framework:
The Porter's 5 forces is developed in 1979 by Michael Porter of Havrad business school. It uses concepts developed in economics to derive five forces (new entrants, bargaining power of buyers, bargaining power of suppliers, substitute products or services, and rivalry among existing competitors) which determine the competitive intensity and therefore attractiveness of a market.
A firm may use the model to analyse the attractiveness of a new industry by identifying whether new products or services are potentially profitable or to gain an understanding of the strength of the company' completive position.
Five forces are:
The threat of substitute products: the existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases
The threat of the entry of new competitors: Profitable markets will attract firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked, the profit rate will fall.
The intensity of competitive rivalry: For most industries, this is the major determinant of competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation or marketing.
The bargaining power of customers: The ability of customers put the firm under pressure.
The bargaining power of suppliers: Suppliers of raw materials, components, labor, and services to the firm can be a source of power over the firm. Suppliers may refuse, or they may change excessively high prices for their products and services.
(see Appendix 2)
The SWOT framework:
The SWOT analysis is a way of drawing together an understanding of strengths, weaknesses, opportunities, and threats that an organization faces. The aim is to identify the extent to which strengths and weaknesses are relevant to, or capable of dealing with, the changes taking place in the business environment.
Strengths are internal factors that a firm may build on to develop a strategy.
Weaknesses are internal factors that a firm may need to protect itself against.
Opportunities: they are external conditions that are helpful to achieving the objective.
Threats: They are external conditions which could do damage to the objective.
(see Appendix 3)
Strategy formulation and strategy implementation:
After the environmental analysis, the firm should match its strengths to the opportunities that it has identified, while addressing its weaknesses and external threats. Moreover, the firm seeks to develop a competitive advantage over its rivals to improve the profitability. A competitive advantage can be based on cost or differentiation.
There are three aspects of strategy formulation:
Corporate Level Strategy: We concerned with broad decisions about the whole organization's scope and direction. We need to made changes to achieve the objectives and targets.
Competitive Strategy: "Strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value." (Michael E. Porter)
Functional Strategy: It is relatively short-term activities that each functional area within a company will carry out to implement the broader, longer-term corporate level and business level strategies.
The strategy implementation involves organization of the firm's resources and motivation of the staff to achieve objectives. It has a significant impact to the success of the organization. There are 6 key factors in strategy implementation such as action planning, organization structure, human resources, the annual business plan, monitoring and control, linkage.
The effective of implementation poses a fundamental dilemma for strategic planners because of its requirement of the accommodation of two fundamentally opposing forces: those leading to organizational integration and those leading to organizational segmentation.
"â€¦includes personal development and the design and application of competencies to improve behavioural outcomes, as well as broader issues of socialization, organisational change and organisational learning"
Management development includes 3 main parts such as:
Management education: developing knowledge of business, organization and management.
Management training: developing skills in the practice of business, organization & management.
Management experience: programmes of systematic, exposure to business, settings to develop competence.
It is the process in which the managers learn how to improve their skills for the benefit of not only themselves but for their organization as well.
There are approaches to management development such as coaching, mentoringâ€¦
Coaching: "coaching that serves primarily a task function and which is employed in order to improve an individual employee's proficiency in a job or task through information help or instruction from a more skilled colleague. It can also serve more of a developmental function with a long term and growth focus, especially when applied to manager, leader, or executive development."
(Eugene Sadler-Smith. 2006)
Mentoring: "Mentoring is to support and encourage people to manage their own learning in order that they may maximize their potential, develop their skills, improve their performance and become the person they want to be."
Eric Parsloe, The Oxford School of Coaching & Mentoring
Besides, there are some Learning and Development theoretical approaches:
Behaviorist theory: The behaviourism in its educational manifestation frames the learning process as the communication of predetermined, presequenced information to learners with feedback, reinforcement and remediation (Borthick et al.2003). Amongst the fundamental assumptions of behaviourism were 3 keys. The first was that the human behaviour is determined by factors outside of the person, and thoughts, feelings, intentions also play role in what we do. The second was that humans are biological machines that react to stimuli. The last was that learning cannot be observed directly but only inferred from behaviour. (Gregory 1987).
Cognitive information processing theories: They enable us to delve inside the black box in order to explain human memory and information processing. However, human are not always rational, emotions and feelings play an important part in the way we think and behave, as does tacit knowledge and implicit learning. (Eugene Sadler-Smith. 2006)
Social learning theory: It offers further insight to cognition. It's about how to learn the certain standard such as how to interact work, the dress codeâ€¦ and the importance of observational learning and perhaps the implicit learning processes that may be at work. Informal socialization processes expose the newcomers to models of behavior
The management development model is about how to develop leaders and managers. There are skills which are unique to all who manage others or resources, including the skills of leadership. The term 'leadership' is often used almost interchangeably with 'management'. However there is a big different between management and leadership. Management tends to be thought about rational thinking, leadership includes more emotional aspects, and is more closely tied to individual personality and authenticity. However, leadership is an important component of management.