The Purpose of the Business

The purpose of the business is to maximize shareholder value, but the stakeholder may be enriched in the same process. The media is evaluating the organization according to its hiring and firing policy and practices. The organization may be firing employees because of a strategic and profitable decision but the media will report this decision negatively. The organization may be hiring without good business sense but the media will positively talk about the organization even if the hiring is adding unnecessary cost to the bottom line. Drucker (2004) state that the purpose of business is to create and keep a customer. The customer will create the jobs and will demand products from the organizations. The customer demand will increase the organizational productivity which will enrich the shareholder then the stakeholder.
Rasmussen and Den Uyl (2009) state, the purpose of the business is to maximize the owners value by selling goods or services. Business leaders focus on their strategy’s direction, momentum, and balance to achieve the business goals. Setting and implementing good strategy will maximize the shareholder value and enrich the stakeholder. Walker and Shenkir (2008) state, the leader should examine the effect of the strategy on the organization’s objectives after he or she develop the strategy.

References:
Drucker, P. (2004). The daily drucker: 366 days of insight and motivation for getting the right things done. New York: Harper Business.
Rasmussen, D. B., & Den Uyl, D. J. (2009). Making room for business ethics: Rights as metanorms for market and moral values. Journal of Private Enterprise, 24(2), 1-19. doi: http://www.apee.org/journal-private-enterprise.html
Walker, P. L., & Shenkir, W. G. (2008). Implementing Enterprise Risk Management. Journal of Accountancy, 205(3), 31-31.

Is Balanced Scorecard easy to do?

custom_life_balance_13780Balanced Scorecard (BSC) is a management tool to measure the organizational implementation of the vision and strategy against the business and operating Key Performance Indicators (Carpenter & Sanders, 2009). BSC transform the strategy into tangible and intangible performance measures that make the strategy a dynamic process (Carpenter & Sanders, 2009). BSC is an innovative method to dissect and direct the strategy into four principles. The principles or categories that each strategy should have are finance, external relations, internal business process, and learning and growth. The vision and strategy can be mapped through the BSC information to give a clear representation of the strategy to the stakeholders and shareholders.

Some organizations think that BSC is a complete waste of resources and takes time to set up the required measures (Linna & Seal, 2009). The measure maybe is outdated and need change within a few months. Success in the internal processes or human resources is sometimes not rewarded (Linna & Seal, 2009); however, the rewards are usually linked to the financial measures only. BSC may be a good performance dashboard if the tangible measures are updated frequently, however BSC will not be dynamic enough when most of the measures are intangible and cannot be updated frequently.

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

Linna, Y., & Seal, W. (2009). The balanced scorecard. Financial Management (14719185), 27-28.

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Competitive Advantage

Market imperfections can be in the form of monopoly, externalities or public goods, but sometimes defined as anything that interferes with trade (DeGennaro, 2005). The organizational competitive advantage can be achieved by adapting to the external trends and events and adapt to the changes in capabilities and resources. The organizations can make the competitive advantages by formulating and implementing strategies that help adapting and taking advantage of these changes (Ogrean, Herciu, & Belascu, 2009). Organizations can definitely take advantage of the market monopoly and keep up its position until another competitor force its market penetration. Externalities can be used as a competitive advantage when the organization anticipates and plan for the positive externalities. Over fishing in a place would increase the demand when the fish supplied to the market is less than the demand. The organizations can take care of this externality by anticipating the decrease in the supply and importing enough supply of fish for the consumer in the local market.

Rolls-Royce found out that its automobile business was not competitive and its jet engine market was booming. Rolls-Royce sold its automobile business and concentrated on leasing jet engines to the airline companies (Carpenter & Sanders, 2009). The leasing strategy made Rolls-Royce take larger share of the jet engine business (Carpenter & Sanders, 2009). Xerox had good innovations coming from its research center in Palo Alto, which could have been good competitive advantages. Innovations like personal computers, bit-mapped, desktop, icons, and the use of mouse and menus (Carpenter & Sanders, 2009; Rothkopf, 2000). Xerox did not use these competitive innovations and lost a good chance to be a leader in these markets (Carpenter & Sanders, 2009; Rothkopf, 2000).

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

DeGennaro, R. (2005). Market Imperfections. Journal of Financial Transformation, 14(2005), 107-117.

Ogrean, C., Herciu, M., & Belascu, L. (2009). Searching for sustainable competitive advantage– From tangibles to intangibles. Journal of US-China Public Administration, 6(4), 1-9.

Rothkopf, M. H. (2000). Under the Mike-R-Scope: What happened at Xerox PARC? Interfaces, 30(6), 91-94.

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كيفة وضع الاهداف الشخصية والمهنية

I would like to apologize to the blog visitors and readers for presenting this post (video) in Arabic language. Many visitors and friends asked me to blog in Arabic and this is my first start in the blog.

Part 1

Part 2

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PESTEL Analysis

PESTEL model is useful for leaders and managers to analyze the microeconomics of business environment they are working in or attempting to enter in the future. Strategist use PESTEL model to find the macro-environmental factors that can or will affect their strategy implementations and the organizational performance. PESTEL model include six environmental influencers, which are Political, Economic, Social, Technological, Environmental, and Legal. These influencers may look independent but they are related to each other in different ways. Change in the political situation may change the economical and the environmental regulations. The environmental standards may be relaxed which make the organizational investments unjustified, on the contrast, the environmental regulations may become more stringent which may need more investment in an approved project.

Political factors: governmental instability make the intended market undesirable because new government may revoke contracts or change social policies (Evans & Richardson, 2007). The unexpected changes may consume the intended profit margin. Tax policies and trade regulations, like NAFTA, are equally important political factors.

Economic factors include unemployment rate, buyers disposable income, and credit accessibility (Carpenter & Sanders, 2009). These three factors affect the individuals buying power. Strategist need to look at these factors along with interest rate and inflation before offering their products and services in the intended market.

Social Factors are lifestyles, educational levels, wealth distribution, and population demographics (Evans & Richardson, 2007). A product or service may be successful in a country or part of the country because of the lifestyle of that area but could be unsuccessful in another. Trendy cafes may be successful with the young population but gourmet coffee shops are more desirable for the older population.

Technological factors like innovations and discoveries can affect the pace of technological obsolescence (Carpenter & Sanders, 2009). The introduction of iPod in the market signaled the obsolescence of the Sony Walkman. The same situation can be noticed with the DVD use over VHS tapes and now the online rent services made the DVD lose market share fast. Digital and audio books affected the printed books heavily. Boarders, the bookshop chain, just announce its troubled operations and its intention to close more stores.

Environmental factors are increasing and becoming more stringent every year. Waste disposal, energy conservation, and protections laws are the most important factors but not all. Environmental laws keep on increasing the limits after the noticed global environmental changes. Managers and business leaders need to plan for more changes in the protection laws because of the constant demand from the environmental groups and the international environmental organizations.

Legal factors are changing constantly depending on the market needs, or government political views (Carpenter & Sanders, 2009; Evans & Richardson, 2007). Change in the employment regulations like minimum wage, discrimination laws, and health and safety regulations can affect the operational cost.

Managers and business leaders should expect the risk of the changes in the above factors. Well planned and risk managed strategy can decrease the cost and maybe signal good opportunities in the future.

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

Evans, C., & Richardson, M. (2007). Assessing the environment. Manager: British Journal of Administrative Management(60), i-iii.

CSF and KPI

Acronyms are everywhere these days and they can mean different things to different people. In the business lingo, CSF means Critical Success Factor. These factors are what will make or break the organization. The organization should focus on a limited number of CSFs, typically between 3-8, that affect the services efficiency, or product quality. The success in the CSF will differentiate the organization from it’s competitors. For a hairstylist, the the design and beauty of it’s styles would be it’s CSF. For a baker, the freshness and taste of the it’s backed products will be a CSF. Successful surgeries with few (or no) complications is a good CSF for a medical surgeon. The CSF needs a Key Performance Indicators (KPI) to measure them. The old saying “What gets measured, gets done!” is so true in this situations. The critical success factors have key performance indicators which the organization should carefully monitor. The key Indicators should be measurable but not all of them can be measured easily. Customer satisfaction is a good KPI but very difficult to measure. However, number of units produces can be calculated easily.

Political Aspects of Organizations

The researchers, Chang, Rosen, and Levy (2009) state, organizational politics are widespread and affect the employees’ performance and resources allocation. Employees’ use of politics depends on the work situations, workplace, and type of goal they want to achieve (Bodla & Danish, 2009). Organizational politics will have positive results when used with good intentions to achieve important tasks. Bodla and Danish (2009) state that organizational politics are important for the organizational life and these politics affect the employees differently. Organizational politics has a negative effect when the employees misuse the politics. Employees who understand and control these politics respond less negatively, so employees should be aware of the politics and its effect on the organizations. Bolman and Deal (2008) explain that some groups have more access to decision makers and can take advantage of this closeness.The following discussion will develop organizational model to govern the organizational culture, climate, internal, and external stakeholders, and human capital issues. The model will discuss the difficulties in working with international teams and suggest a guideline for the organizational leadership to morally and ethically approach the international teams’ problems. Read the full research …

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Technical Position Training

Technical employees need intensive technical training but also need managerial and leadership training to advance in their jobs. Some organizations start the administrative and managerial training too late which make the technical employees struggle in approving and implementing their ideas.


Technical Position Training Model

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Organizational Climate

Organization climate is defined by Shapira-Lishchinsky and Rosenblatt (2009) as “shared perceptions that help employees to comprehend work processes and their organizational surroundings” (p. 720). The organizational climate affects the workers behavior positively and negatively. The workers behavior will be positive when the organization focus on morality and ethics (Shapira-Lishchinsky & Rosenblatt, 2009). Organizational climate is better defined by Hunter, Bedell, and Mumford (2007) as people’s “perceptions of, or beliefs about, environmental attributes shaping expectations about outcomes, contingencies, requirements, and interactions in the work environment.” (p. 70). Organizational climate is different from the organizational culture by being a localized experienced affecting on the individual or group in the organization. The organizational climate is changed esear than the culture because the climate is influenced by peer group and supervisory relations, the level of organization autonomy, management support, reward orientation, and mission clarity (Hunter, Bedell, & Mumford, 2007).
The transformational style is best set for the organization during the climate change process. But the transactional leadership style is needed to force the climate change because some groups in the organization require authoritarian style to force the change. Charismatic leaders are needed to use their charisma to support the climate changes offort. Charismatic leaders are required for their quick influences to score quick wins, but they will not be effective if hired from outside the organization.

References:
Shapira-Lishchinsky, O., & Rosenblatt, Z. (2009). Perceptions of organizational ethics as predictors of work absence: A test of alternative absence measures (Vol. 88, pp. 717-734): Springer Science & Business Media B.V.
Hunter, S. T., Bedell, K. E., & Mumford, M. D. (2007). Climate for Creativity: A Quantitative Review. Creativity Research Journal, 19(1), 69-90. doi:10.1080/10400410701277597

What Is Right For The Business?

Many employees work very hard to perform their  daily tasks, but they make mistakes and got blamed for it. The first reaction from their superiors is to look for the obvious mistakes and shortfalls in following the plans, procedure or regulations. Catching the obvious mistake is easy but will only solve the problem momentarily. Eliminating the cause of the problem is very difficult. Sometimes, the organization needs to change the procedures, review their assumptions or even ask themselves if they need the workers to perform that task at all. The following discussion and examples will show how mistakes and errors can take place and how we can we eliminate these mistakes immediately and permanently. Long term solutions needs time, effort and big budget, but eliminating a reoccurring problem will worth the cost, effort and time spent. Read More …

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