Strategy is a tactical course of action which is designed to achieve long term objectives.

Strategy of a business
enterprise consists of what management decides about the future direction and scope of the business. Strategy
once formulated has long term implications. It is framed by top management in an organization. In short, it may
be called as the ‘game plan of management’.
Strategic management is the ongoing planning, monitoring, analysis and assessment of all necessities an
organization needs to meet its goals and objectives.
Five stages of strategic management process
• assessing the organization's current strategic direction;
• identifying and analyzing internal and external strengths and weaknesses;
• formulating action plans;
• executing action plans; and
• evaluating to what degree action plans have been successful and making changes when desired results are
not being produced.
5 Ps of strategic management
• Plan: Strategy as a consciously intended course of action to deal with a situation.
• Ploy: Strategy as a maneuver to outwit a competitor, which can also be part of a plan.
• Pattern: Strategy stemming from consistency in behavior, whether or not intended and which can be
independent of a plan.
• Position: Strategy as a mediating force or match between the organization and environment, which can
be compatible with any or all of the Ps.
• Perspective: Strategy as a concept or ingrained way of perceiving the world -- e.g., aggressive pacesetter
vs. late mover -- which can be compatible with any or all of the Ps.
Features of Strategy
• Top management responsibility
• Allocation of large amount of resources
• Impact on long term prosperity of the firm
• Future oriented
• Multi-functional or multi-business consequences
• Consideration of factors in the external environment

Strategies at Different Levels of Business

Corporate Strategies
• At this level, strategic decisions relate to vision of determining ‘Where the company wants to be’?
• It has two main aspects- Formulation of Strategy (strategic planning) and Strategy Implementation
• The nature of strategy at this level tends to be value-oriented, conceptual and then other levels.
• There is also greater risk, cost and profit potential as well as greater need of flexibility associated with this
level.
• Major financial policy decisions involving acquisition, diversification and structural redesigning belong
to this level.
Business Strategies – These are more about how a business competes successfully in a particular market. They
involve strategic decisions about:
Choosing products
Meeting the needs of the consumers
Gaining an advantage over the competitors
Creating new opportunities, etc.
Operational Strategies – These are about how each part of the business is organized to deliver the corporate and
business unit level strategic direction. Therefore, these strategies focus on the issues of resources, people,
processes, etc.
• Functional strategy involves decision-making with respect to specific functional areas- production,
marketing, personnel, finance etc.
• While corporate and business level strategies are concerned with “Doing the right things”, functional
strategies stress on “Doing things right”.

Steps in Strategy Management Process

• Setting up of strategic intent - vision, mission & objective
• Strategy formation – environmental & organizational appraisal
• Strategic implementation
• Strategic evaluation & control – evaluate, monitor & review

Value Chain Process

A company is in essence a collection of activities that are performed to design, produce, market, deliver and
support its product (or service). Its goal is to produce the products in such a way that they have a greater value (to
customers) than the original cost of creating these products. The added value can be considered the profits and is
often indicated as ‘margin’. A systematic way of examining all of these internal activities and how they interact
is necessary when analyzing the sources of competitive advantage. A company gains competitive advantage by
performing strategically important activities more cheaply or better than its competitors. Michael Porter’s value
chain helps disaggregating a company into its strategically relevant activities, thereby creating a clear overview
of the internal organization. Based on this overview managers are better able to assess where true value is created
and where improvements can be made.
One company’s value chain is embedded in a larger stream of activities that can be considered the supply chain
or as Porter mentions it: The Value System. Suppliers have a value chain (upstream value) that create and deliver
the purchased inputs. In addition, many products pass through the value chain of channels (channel value) on
their way to the buyer. A company’s product eventually becomes part of its buyer’s value chain. This article will
not go into the entire supply chain (from suppliers all the way to the end-consumer), but rather focuses on one
organization’s value chain. The value chain activities can be divided into two broader types: primary activities
and support activities.
Primary activities
The first are primary activities which include the five main activities. All five activities are directly involved in
the production and selling of the actual product. They cover the physical creation of the product, its sales, transfer
to the buyer as well as after sale assistance. The five primary activities are inbound logistics, operations, outbound
logistics, marketing & sales and service. Even though the importance of each category may vary from industry to
industry, all of these activities will be present to some degree in each organization and play at least some role in
competitive advantage.

Inbound Logistics
Inbound logistics is where purchased inputs such as raw materials are often taken care of. Because of this function,
it is also in contact with external companies such as suppliers. The activities associated with inbound logistics are
receiving, storing and disseminating inputs to the product. Examples: material handling, warehousing, inventory
control, vehicle scheduling and returns to suppliers.

Operations
Once the required materials have been collected internally, operations can convert the inputs in the desired
product. This phase is typically where the factory conveyor belts are being used. The activities associated with
operations are therefore transforming inputs into the final product form. Examples: machining, packaging,
assembly, equipment maintenance, testing, printing and facility operations.

Outbound Logistics
After the final product is finished it still needs to find its way to the customer. Depending on how lean the company
is, the product can be shipped right away or has to be stored for a while. The activities associated with outbound
logistics are collecting, storing and physically distributing the product to buyers. Examples: finished goods
warehousing, material handling, delivery vehicle operations, order processing and scheduling.

Marketing & Sales

The fact that products are produced doesn’t automatically mean that there are people willing to purchase them.
This is where marketing and sales come into place. It is the job of marketeers and sales agents to make sure that
potential customers are aware of the product and are seriously considering purchasing them. Activities associated
with marketing and sales are therefore to provide a means by which buyers can purchase the product and induce
them to do so. Examples: advertising, promotion, sales force, quoting, channel selection, channel relations and
pricing. A good tool to structure the entire marketing process is the Marketing Funnel.

Service
In today’s economy, after-sales service is just as important as promotional activities. Complaints from unsatisfied
customers are easily spread and shared due to the internet and the consequences on your company’s reputation
might be vast. It is therefore important to have the right customer service practices in place. The activities
associated with this part of the value chain are providing service to enhance or maintain the value of the product
after it has been sold and delivered. Examples: installation, repair, training, parts supply and product adjustment.

Supporting Activities
The second category is support activities. They go across the primary activities and aim to coordinate and support
their functions as best as possible with each other by providing purchased inputs, technology, human resources
and various firm wide managing functions. The support activities can therefore be divided into procurement,
technology development (R&D), human resource management and firm infrastructure. The dotted lines reflect
the fact that procurement, technology development and human resource management can be associated with
specific primary activities as well as support the entire value chain.

Procurement
Procurement refers to the function of purchasing inputs used in the firm’s value chain, not the purchased inputs
themselves. Purchased inputs are needed for every value activity, including support activities. Purchased inputs
include raw materials, supplies and other consumable items as well as assets such as machinery, laboratory
equipment, office equipment and buildings. Procurement is therefore needed to assist multiple value chain
activities, not just inbound logistics.

Technology Development (R&D)

Every value activity embodies technology, be it know how, procedures or technology embodied in process
equipment. The array of technology used in most companies is very broad. Technology development activities
can be grouped into efforts to improve the product and the process. Examples are telecommunication technology,
accounting automation software, product design research and customer servicing procedures. Typically, Research
& Development departments can also be classified here.

Human Resource Management

HRM consists of activities involved in the recruiting, hiring (and firing), training, development and compensation
of all types of personnel. HRM affects the competitive advantage in any firm through its role in determining the
skills and motivation of employees and the cost of hiring and training them. Some companies (especially in the
technological and advisory service industry) rely so much on talented employees, that they have devoted an entire
Talent Management department within HRM to recruit and train the best of the best university graduates.

Firm Infrastructure
Firm infrastructure consists of a number of activities including general (strategic) management, planning, finance,
accounting, legal, government affairs and quality management. Infrastructure usually supports the entire value
chain, and not individual activities. In accounting, many firm infrastructure activities are often collectively
indicated as ‘overhead’ costs. However, these activities shouldn’t be underestimated since they could be one of
the most powerful sources of competitive advantage. After all, strategic management is often the starting point
from which all smaller decisions in the firm are being based on. The wrong strategy will make it extra hard for
people on the work floor to perform well.
PESTEL Analysis
A PESTEL analysis or PESTLE analysis is a framework or tool used to analyses and monitor the macro-
environmental factors that may have a profound impact on an organization’s performance. This tool is especially
useful when starting a new business or entering a foreign market.
Political Factors:
These factors are all about how and to what degree a government intervenes in the economy or a certain industry.
Basically, all the influences that a government has on your business could be classified here. This can include
government policy, political stability or instability, corruption, foreign trade policy, tax policy, labour law,
environmental law and trade restrictions. Furthermore, the government may have a profound impact on a nation’s
education system, infrastructure and health regulations. These are all factors that need to be taken into account
when assessing the attractiveness of a potential market.

Economic Factors:
Economic factors are determinants of a certain economy’s performance. Factors include economic growth,
exchange rates, inflation rates, interest rates, disposable income of consumers and unemployment rates. These
factors may have a direct or indirect long-term impact on a company, since it affects the purchasing power of
consumers and could possibly change demand/supply models in the economy. Consequently, it also affects the
way companies price their products and services.

Social Factors:
This dimension of the general environment represents the demographic characteristics, norms, customs and values
of the population within which the organization operates. This inlcudes population trends such as the population
growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle
attitudes and cultural barriers. These factors are especially important for marketers when targeting certain
customers. In addition, it also says something about the local workforce and its willingness to work under certain
conditions.

Technological Factors:
These factors pertain to innovations in technology that may affect the operations of the industry and the market
favorably or unfavorably. This refers to technology incentives, the level of innovation, automation, research and
development (R&D) activity, technological change and the amount of technological awareness that a market
possesses. These factors may influence decisions to enter or not enter certain industries, to launch or not launch
certain products or to outsource production activities abroad. By knowing what is going on technology-wise, you
may be able to prevent your company from spending a lot of money on developing a technology that would
become obsolete very soon due to disruptive technological changes elsewhere.
Environmental Factors:
Environmental factors have come to the forefront only relatively recently. They have become important due to
the increasing scarcity of raw materials, pollution targets and carbon footprint targets set by governments. These
factors include ecological and environmental aspects such as weather, climate, environmental offsets and climate
change which may especially affect industries such as tourism, farming, agriculture and insurance. Furthermore,
growing awareness of the potential impacts of climate change is affecting how companies operate and the products
they offer. This has led to many companies getting more and more involved in practices such as corporate social
responsibility (CSR) and sustainability.

Legal Factors:
Although these factors may have some overlap with the political factors, they include more specific laws such as
discrimination laws, antitrust laws, employment laws, consumer protection laws, copyright and patent laws, and
health and safety laws. It is clear that companies need to know what is and what is not legal in order to trade
successfully and ethically. If an organisation trades globally this becomes especially tricky since each country has
its own set of rules and regulations. In addition, you want to be aware of any potential changes in legislation and
the impact it may have on your business in the future. Recommended is to have a legal advisor or attorney to help
you with these kinds of things.

Porter’s Five Forces

Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain
industry. It is especially useful when starting a new business or when entering a new industry sector. According
to this framework, competitiveness does not only come from competitors. Rather, the state of competition in an
industry depends on five basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of
buyers, threat of substitute products or services, and existing industry rivalry. The collective strength of these
forces determines the profit potential of an industry and thus its attractiveness.

Threat of new entrants

New entrants in an industry bring new capacity and the desire to gain market share. The seriousness of the threat
depends on the barriers to enter a certain industry. The higher these barriers to entry, the smaller the threat for
existing players. Examples of barriers to entry are the need for economies of scale, high customer loyalty for
existing brands, large capital requirements (e.g. large investments in marketing or R&D), the need for cumulative
experience, government policies, and limited access to distribution channels. More barriers can be found in the
table below.

Example
The threat of new entrants in the airline industry can be considered as low to medium. It takes quite some upfront
investments to start an airline company (e.g. purchasing aircrafts). Moreover, new entrants need licenses,
insurances, distribution channels and other qualifications that are not easy to obtain when you are new to the
industry (e.g. access to flight routes). Furthermore, it can be expected that existing players have built up a large
base of experience over the years to cut costs and increase service levels. A new entrant is likely to not have this
kind of expertise, therefore creating a competitive disadvantage right from the start. However, due to the
liberalization of market access and the availability of leasing options and external finance from banks, investors,
and aircraft manufacturers, new doors are opening for potential entrants. Even though it doesn’t sound very
attractive for companies to enter the airline industry, it is NOT impossible. Many low-cost carriers like Southwest
Airlines, RyanAir and EasyJet have successfully entered the industry over the years by introducing innovative
cost-cutting business models, thereby shaking up original players like American Airlines, Delta Air Lines and
KLM.

Bargaining power of suppliers

This force analyzes how much power and control a company’s supplier (also known as the market of inputs) has
over the potential to raise its prices or to reduce the quality of purchased goods or services, which in turn would
lower an industry’s profitability potential. The concentration of suppliers and the availability of substitute
suppliers are important factors in determining supplier power. The fewer there are, the more power they have.
Businesses are in a better position when there are a multitude of suppliers. Sources of supplier power also include
the switching costs of companies in the industry, the presence of available substitutes, the strength of their
distribution channels and the uniqueness or level of differentiation in the product or service the supplier is
delivering.

Example
The bargaining power of suppliers in the airline industry can be considered very high. When looking at the major
inputs that airline companies need, we see that they are especially dependent on fuel and aircrafts. These inputs
however are very much affected by the external environment over which the airline companies themselves have
little control. The price of aviation fuel is subject to the fluctuations in the global market for oil, which can change
wildly because of geopolitical and other factors. In terms of aircrafts for example, only two major suppliers exist:
Boeing and Airbus. Boeing and Airbus therefore have substantial bargaining power on the prices they charge.

Bargaining power of buyers

The bargaining power of buyers is also described as the market of outputs. This force analyzes to what extent the
customers are able to put the company under pressure, which also affects the customer’s sensitivity to price
changes. The customers have a lot of power when there aren’t many of them and when the customers have many
alternatives to buy from. Moreover, it should be easy for them to switch from one company to another. Buying
power is low however when customers purchase products in small amounts, act independently and when the
seller’s product is very different from any of its competitors. The internet has allowed customers to become more
informed and therefore more empowered. Customers can easily compare prices online, get information about a
wide variety of products and get access to offers from other companies instantly. Companies can take measures
to reduce buyer power by for example implementing loyalty programs or by differentiating their products and
services.
Example
Bargaining power of buyers in the airline industry is high. Customers are able to check prices of different airline
companies fast through the many online price comparisons websites such as Skyscanner and Expedia. In addition,
there aren’t any switching costs involved in the process. Customers nowadays are likely to fly with different
carriers to and from their destination if that would lower the costs. Brand loyalty therefore doesn’t seem to be that
high. Some airline companies are trying to change this with frequent flyer programs aimed at rewarding customers
that come back to them from time to time.

Threat of substitute products

The existence of products outside of the realm of the common product boundaries increases the propensity of
customers to switch to alternatives. In order to discover these alternatives one should look beyond similar products
that are branded differently by competitors. Instead, every product that serves a similar need for customers should
be taken into account. Energy drink like Redbull for instance is usually not considered a competitor of coffee
brands such as Nespresso or Starbucks. However, since both coffee and energy drink fulfill a similar need (i.e.
staying awake/getting energy), customers might be willing to switch from one to another if they feel that prices
increase too much in either coffee or energy drinks. This will ultimately affect an industry’s profitability and
should therefore also be taken into account when evaluating the industry’s attractiveness.

Example
In terms of the airline industry, it can be said that the general need of its customers is traveling. It may be clear
that there are many alternatives for traveling besides going by airplane. Depending on the urgency and distance,
customers could take the train or go by car. Especially in Asia, more and more people make use of highspeed
trains such as Bullet Trains and Maglev Trains. Furthermore, the airline industry might get some serious future
competition from Elon Musk’s Hyperloop concept in which passengers will be traveling in capsules through a
vacuum tube reaching speed limits of 1200 km/h. Taken this altogether, the threat of substitutes in the airline
industry can be considered at least medium to high.

Rivalry among existing competitors

This last force of the Porter’s Five Forces examines how intense the current competition is in the marketplace,
which is determined by the number of existing competitors and what each competitor is capable of doing. Rivalry
is high when there are a lot of competitors that are roughly equal in size and power, when the industry is growing
slowly and when consumers can easily switch to a competitors offering for little cost. A good indicator of
competitive rivalry is the concentration ratio of an industry. The lower this ration, the more intense rivalry will
probably be. When rivalry is high, competitors are likely to actively engage in advertising and price wars, which
can hurt a business’s bottom line. In addition, rivalry will be more intense when barriers to exit are high, forcing
companies to remain in the industry even though profit margins are declining. These barriers to exit can for
example be long-term loan agreements and high fixed costs.

Example
When looking at the airline industry in the United States, we see that the industry is extremely competitive because
of a number of reasons which include the entry of low cost carriers, the tight regulation of the industry wherein
safety become paramount leading to high fixed costs and high barriers to exit, and the fact that the industry is
very stagnant in terms of growth at the moment. The switching costs for customers are also very low and many
players in the industry are similar in size (see graph below) leading to extra fierce competition between those
firms. Taken altogether, it can be said that rivalry among existing competitors in the airline industry is high.

Human Resource Management, or HRM, is the practice of managing people to achieve better performance.
For example, if you hire people into a business, you are looking for people who fit the company culture as they
will be happier, stay longer, and be more productive than people who won’t fit into the company culture.

These four elements or factors of HRM can be described as follows:

1. Acquisition
Acquisition function is concerned with recruitment and selection of manpower requirement for an organization.
It ensures that the company has the right number of people at the right place and at the right time who are capable
to complete required work. Acquisition is primarily concerned with planning, recruitment, selection and
socialization of employees.

2. Development
Development phase begins after the socialization of newly appointed employees in an organization. It is
concerned with imparting knowledge and skill to perform the task properly. It can be done through teaching,
coaching, class-room courses, assignments, professional programs and so on. The ultimate goal of employee
development is of course to enhance the future performance of the organization by the efficient employees.

3. Motivation
Only training and development do not inspire employees to do better work. For this, they should be motivated.
Here motivation means an activity which induces and inspires people to perform well in actual work floor.
Motivation includes job specification, performance evaluation, reward and punishment, work performance,
compensation management, discipline and so on. It is important for better work performance because high
performance depends on both ability and motivation.

4. Maintenance
Maintenance is the last components of human resource management. it is concerned with the process of retaining
the employees in the organization. This contributes towards keeping the employees who can do extremely better
for the organization. This requires that the organization should provide additional facilities, safe working
conditions, friendly work environment, and satisfactory labor relations. If these activities are performed in the
right manner, we can expect to have capable and competent employees in the organization.
STEPS OF HRM
RECRUITMENT: Right people for the right job are procured
SELECTION: Choosing the most suitable person out of all the applicants.
PLACEMENT: Process of assigning a specific job to the selected candidates
Training and Development: increase the knowledge and skills by providing relevant and proper training.
DEPLOYMENT: Use of manpower in a effective way.
RETENTION: Possession of employees by the employer
PROMOTION: Reassignment of individual to a job of higher rank
SUPERANNUATION: Pension given to employees after retirement or Includes all the benefits, arrears,
compensations & financial settlements.

Human Resource Planning is the process of people forecasting. It also involves the processes of Evaluation,
Promotion and Layoff.

Recruitment: It aims at attracting applicants that match a certain Job criterion.

Selection: The next level of filtration. Aims at short listing candidates who are the nearest match in terms
qualifications, expertise and potential for a certain job.
Hiring: Deciding upon the final candidate who gets the job.
Training and Development: Those processes that work on an employee onboard for his skills and abilities
upgradation.
Characteristics of HRM
• Managing people at work
• Concerned with developing the employees
• Essential in organizations
• Continuous in nature
• Tools for human benefits
• Strategy focused
• Social and dynamics process
• Involvement of the line managers
• An important component of management
• System based/ focused

Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to understand the
abilities of a person for further growth and development. Performance appraisal is generally done in systematic
ways which are as follows:
 1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.
Objectives of Performance Appraisal
Performance Appraisal can be done with following objectives in mind:
1. To maintain records in order to determine compensation packages, wage structure, salaries raise, etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.
3. To maintain and assess the potential present in a person for further growth and development.
4. To provide a feedback to employees regarding their performance and related status.
5. To provide a feedback to employees regarding their performance and related status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programs.
Purposes of performance appraisal
• Performance appraisal helps the management to take decision about the salary increase of an employee.
• The continuous evaluation of an employee helps in improving the quality of an employee in job performance.
• The Performance appraisal brings out the facilities available to an employee, when the management is
prepared to provide adequate facilities for effective performance.
• It minimizes the communication gap between the employer and employee.
• Promotion is given to an employee on the basis of performance appraisal.
• The training needs of an employee can be identified through performance appraisal.
• The decision for discharging an employee.
• Performance appraisal is used to transfer a person.
• The grievances of an employee are eliminated through performance appraisal.
• The job satisfaction of an employee increases morale

Succession planning is a strategy for identifying and developing future leaders at your company — not just at
the top but for major roles at all levels. It helps your business prepare for all contingencies by preparing high-
potential workers for advancement.

Characteristics/Features of Motivation:
1. Interaction between the individual and the situation:
Motivation is not a personal trait but an interaction between the individual and the situation.

2. Goal-directed behavior:
Motivation leads to an action that is goal oriented. Motivation leads to accomplishment of organizational goals
and satisfaction of personal needs.
3. Systems oriented:
Motivation is influenced by two forces:
a. Internal forces:
These forces are internal to the individual, i.e., their needs, wants and nature.
b. External forces:
These forces are external to the individual, which may be organizational related such as management philosophy,
organizational structure, and superior-subordinate relationship, and also the forces found in the external
environment such as culture, customs, religion and values.

4. Positive or negative:
Positive motivation or the carrot approach offers positive incentives such as appreciation, promotion, status and
incentives. Negative motivation or stick approach emphasizes penalties, fines and punishments.

5. Dynamic and complex in nature:

Human behavior is highly complex, and it becomes extremely difficult to understand people at work. Motivation
is a dynamic and complex process.

Technique of motivation
• Financial incentives
• Participation
• Delegation of authority
• Job security
• Jon enlargement
• Job enrichment
• Job rotation
• Reinforcement
• Quality of work life
• Competition
Maslow's Hierarchy of Needs
Maslow's hierarchy is most often displayed as a pyramid. The lowest levels of the pyramid are made up of the
most basic needs, while the most complex needs are at the top of the pyramid.

Needs at the bottom of the pyramid are basic physical requirements including the need for food, water, sleep, and
warmth. Once these lower-level needs have been met, people can move on to the next level of needs, which are
for safety and security.
As people progress up the pyramid, needs become increasingly psychological and social. Soon, the need for love,
friendship, and intimacy becomes important.
Further up the pyramid, the need for personal esteem and feelings of accomplishment take priority. Like Carl
Rogers, Maslow emphasized the importance of self-actualization, which is a process of growing and developing
as a person in order to achieve individual potential.
Physiological Needs
The basic physiological needs are probably fairly apparent—these include the things that are vital to our survival.
Some examples of physiological needs include:
Food
Water
Breathing
Homeostasis
In addition to the basic requirements of nutrition, air and temperature regulation, the physiological needs also
include such things as shelter and clothing. Maslow also included sexual reproduction in this level of the hierarchy
of needs since it is essential to the survival and propagation of the species.

Security and Safety Needs

As we move up to the second level of Maslow’s hierarchy of needs, the requirements start to become a bit more
complex. At this level, the needs for security and safety become primary.
People want control and order in their lives. So, this need for safety and security contributes largely to behaviors
at this level. Some of the basic security and safety needs include:
Financial security
Health and wellness
Safety against accidents and injury
Finding a job, obtaining health insurance and health care, contributing money to a savings account, and moving
into a safer neighborhood are all examples of actions motivated by the security and safety needs.
Together, the safety and physiological levels of the hierarchy make up what is often referred to as the basic needs.

Social Needs
The social needs in Maslow’s hierarchy include such things as love, acceptance, and belonging. At this level, the
need for emotional relationships drives human behavior. Some of the things that satisfy this need include:
Friendships
Romantic attachments
Family
Social groups
Community groups
Churches and religious organizations
In order to avoid problems such as loneliness, depression, and anxiety, it is important for people to feel loved and
accepted by other people. Personal relationships with friends, family, and lovers play an important role, as does
involvement in other groups that might include religious groups, sports teams, book clubs, and other group
activities.
Esteem Needs
At the fourth level in Maslow’s hierarchy is the need for appreciation and respect. When the needs at the bottom
three levels have been satisfied, the esteem needs begin to play a more prominent role in motivating behavior.
At this point, it becomes increasingly important to gain the respect and appreciation of others. People have a need
to accomplish things and then have their efforts recognized. In addition to the need for feelings of accomplishment
and prestige, esteem needs include such things as self-esteem and personal worth.
People need to sense that they are valued and by others and feel that they are making a contribution to the world.
Participation in professional activities, academic accomplishments, athletic or team participation, and personal
hobbies can all play a role in fulfilling the esteem needs. People who are able to satisfy the esteem needs by
achieving good self-esteem and the recognition of others tend to feel confident in their abilities.
Those who lack self-esteem and the respect of others can develop feelings of inferiority. Together, the esteem and
social levels make up what is known as the psychological needs of the hierarchy.
Self-Actualization Needs
At the very peak of Maslow’s hierarchy are the self-actualization needs. "What a man can be, he must be," Maslow
explained, referring to the need people have to achieve their full potential as human beings.
According to Maslow’s definition of self-actualization, "It may be loosely described as the full use and
exploitation of talents, capabilities, potentialities, etc. Such people seem to be fulfilling themselves and to be
doing the best that they are capable of doing. They are people who have developed or are developing to the full
stature of which they capable."
Self-actualizing people are self-aware, concerned with personal growth, less concerned with the opinions of
others, and interested in fulfilling their potential.

Herzberg’s Two-Factor Theory of Motivation

Herzberg’s Motivation Theory model, or Two Factor Theory, argues that there are two factors that an organization
can adjust to influence motivation in the workplace.
These factors are:
Motivation factors: Which can encourage employees to work harder. Motivational factors include:
• Recognition
• Growth and promotional opportunities
• Responsibility
• Meaningfulness of the work
Hygiene factors: These won’t encourage employees to work harder but they will cause them to become
unmotivated if they are not present. Hygiene factors include:
• Pay
• Company Policies and administrative policies
• Fringe benefits
• Physical Working conditions
• Status
• Interpersonal relations
• Job Security
Theory X and Theory Y
In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behaviour at
work, or in other words, two different views of individuals (employees): one of which is negative, called as Theory
X and the other is positive, so called as Theory Y. According to McGregor, the perception of managers on the
nature of individuals is based on various assumptions.
Assumptions of Theory X
• An average employee intrinsically does not like work and tries to escape it whenever possible.
 • Since the employee does not want to work, he must be persuaded, compelled, or warned with punishment
so as to achieve organizational goals. A close supervision is required on part of managers. The managers
adopt a more dictatorial style.
• Many employees rank job security on top, and they have little or no aspiration/ ambition.
• Employees generally dislike responsibilities.
• Employees resist change.
• An average employee needs formal direction.

Assumptions of Theory Y
• Employees can perceive their job as relaxing and normal. They exercise their physical and mental efforts
in an inherent manner in their jobs.
• Employees may not require only threat, external control and coercion to work, but they can use self-
direction and self-control if they are dedicated and sincere to achieve the organizational objectives.
• If the job is rewarding and satisfying, then it will result in employees’ loyalty and commitment to
organization.
• An average employee can learn to admit and recognize the responsibility. In fact, he can even learn to
obtain responsibility.
• The employees have skills and capabilities. Their logical capabilities should be fully utilized. In other
words, the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve
organizational problems.
Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behaviour at work, while
Theory Y presents an optimistic view of the employees’ nature and behaviour at work. If correlate it with
Maslow’s theory, we can say that Theory X is based on the assumption that the employees emphasize on the
physiological needs and the safety needs; while Theory X is based on the assumption that the social needs, esteem
needs and the self-actualization needs dominate the employees.
McGregor views Theory Y to be more valid and reasonable than Theory X.

Effective Ways to Motivate Employees

• Create a Positive Work Environment
• Increase salary
• Set Goals
• Build Trust and Respect
• Business Promotion
• Understanding Employees
• Improve productivity
• Reduce workload
• Improve your leadership
 • Provide Incentives
• Building Employee Recognition Program

• Recognize Achievements

• Share Profits

• Solicit Employee Input

• Provide Professional Enrichment

• Positive Reinforcement

• Cross Training

• Radiate Positivity

• Be Transparent

• Motivate Individuals Rather Than the Team

Leadership
Leader is someone who can influence others and who has managerial authority.
Leadership is defined as the relationship in which one person influences others to work together to reach a desired
level of achievement. If there is no follower, there is no leader. It is the process of influencing and supporting
others to work enthusiastically toward achieving objectives. It is a process whereby one individual influence other
group member toward the attainment of defined group or organizational goals.

Characters of leadership
• Empathy
• Consistency
• Honesty
• Direction
• Communication
• Needs support from all
• Assume obligation

Leadership Qualities:

• Abilities to inspire followers

• Problem solving skills
• Matured behavior
 • Ability to understand human behavior
• Dedication to organizational goals
• Willingness to take risk
• Ability to use power
• Ability to act
• Physical fitness
• Situational adaptation
• Self confidence
• Listening power
• Moral integrity
• Clear vision

Leadership styles
1. Democratic Leadership
Commonly Effective
Democratic leadership is exactly what it sounds like -- the leader makes decisions based on the input of each team
member. Although he or she makes the final call, each employee has an equal say on a project's direction.
Democratic leadership is one of the most effective leadership styles because it allows lower-level employees to
exercise authority they'll need to use wisely in future positions they might hold. It also resembles how decisions
can be made in company board meetings.
For example, in a company board meeting, a democratic leader might give the team a few decision-related options.
They could then open a discussion about each option. After a discussion, this leader might take the board's
thoughts and feedback into consideration, or they might open this decision up to a vote.

2. Autocratic Leadership
Rarely Effective
Autocratic leadership is the inverse of democratic leadership. In this leadership style, the leader makes decisions
without taking input from anyone who reports to them. Employees are neither considered nor consulted prior to
a direction, and are expected to adhere to the decision at a time and pace stipulated by the leader.
An example of this could be when a manager changes the hours of work shifts for multiple employees without
consulting anyone -- especially the effected employees.
Frankly, this leadership style stinks. Most organizations today can't sustain such a hegemonic culture without
losing employees. It's best to keep leadership more open to the intellect and perspective of the rest of the team.

3. Laissez-Faire Leadership
Sometimes Effective
If you remember your high-school French, you'll accurately assume that laissez-faire leadership is the least
intrusive form of leadership. The French term "laissez faire" literally translates to "let them do," and leaders who
embrace it afford nearly all authority to their employees.
In a young startup, for example, you might see a laissez-faire company founder who makes no major office
policies around work hours or deadlines. They might put full trust into their employees while they focus on the
overall workings of running the company.
Although laissez-faire leadership can empower employees by trusting them to work however they'd like, it can
limit their development and overlook critical company growth opportunities. Therefore, it's important that this
leadership style is kept in check.

4. Paternalistic leadership
This type of leader assumes the role of a father. He treats their followers as members of his family and guides
them as the head of the family. He likes to help his followers to do the work, guides, protects and keeps them
happy to work as family members. This type of leader always tries to provide his followers with good working
conditions, fringe benefits and employee services. Obviously, because of differences in style, people working
under this style of leadership exert themselves even harder to accomplish the jobs
5. Situational/contingency Leadership style
It stresses a leader has adopt his/ her style according to the situation of his or her organization. It is a kind of
opportunistic leadership style. The motive of situational leadership is not self-interest but the growth and
effectiveness of the organizations. It is a model not a theory; it is based on tested methodologies and provide
practical guidance to leadership. It can work in a dynamic environment effectively and efficiently.
They go a step further by considering each as either high or low and then combining them into four specific
leadership styles.
• Telling – (high task and low relationship)-leader defines roles.
• Selling- (high task and high relationship)-the leader provides both directive and supportive behavior.
• Participating- (low task and high relationship)-the leader and follower share in decision making. Main role
of leader is facilitating and communicating.
• Delegating- (low task and low relationship)-the leader provides little direction and support.
6. Behavioral Leadership style
It is the study of specific behavior of a leader. A leader’s behavior is the best predictor of his or her leadership
influences and as a result, it is the best determinant of his or her leadership success. In this style there are two
factors; people concern and task-oriented behavior leadership.
Leaders can be made, rather than are born.
Successful leadership is based on definable, learnable behavior.
Behavioral leadership style does not seek inborn traits –they look at what leaders actually do.
Success can be defined in terms of describable actions.

7. Strategic Leadership
Commonly Effective
Strategic leaders sit at the intersection between a company's main operations and its growth opportunities. He or
she accepts the burden of executive interests while ensuring that current working conditions remain stable for
everyone else.
This is a desirable leadership style in many companies because strategic thinking supports multiple types of
employees at once. However, leaders who operate this way can set a dangerous precedent with respect to how
many people they can support at once, and what the best direction for the company really is if everyone is getting
their way at all times.

8. Transformational Leadership
Sometimes Effective
Transformational leadership is always "transforming" and improving upon the company's conventions.
Employees might have a basic set of tasks and goals that they complete every week or month, but the leader is
constantly pushing them outside of their comfort zone.
When starting a job with this type of leader, all employees might get a list of goals to reach, as well as deadlines
for reaching them. While the goals might seem simple at first, this manager might pick up the pace of deadlines
or give you more and more challenging goals as you grow with the company.
This is a highly encouraged form of leadership among growth-minded companies because it motivates employees
to see what they're capable of. But transformational leaders can risk losing sight of everyone's individual learning
curves if direct reports don't receive the right coaching to guide them through new responsibilities.

9. Coach-Style Leadership
Commonly Effective
Similarly, to a sports team's coach, this leader focuses on identifying and nurturing the individual strengths of
each member on his or her team. They also focus on strategies that will enable their team work better together.
This style offers strong similarities to strategic and democratic leadership, but puts more emphasis on the growth
and success of individual employees.
Rather than forcing all employees to focus on similar skills and goals, this leader might build a team where each
employee has an expertise or skillset in something different. In the long run, this leader focuses on creating strong
teams that can communicate well and embrace each other's unique skillsets in order to get work done.
A manager with this leadership style might help employees improve on their strengths by giving them new tasks
to try, offering them guidance, or meeting to discuss constructive feedback. They might also encourage one or
more team members to expand on their strengths by learning new skills from other teammates.

Great Man Theory of Leadership:

• Leaders are born, not made.
• This approach emphasized that a person is born with or without the necessary traits of leaderships. Early
explanations of leadership studied the “traits” of great leaders
• “Great man” theories (Gandhi, Lincoln, Napoleon) Belief that people were born with these traits and only
the great people possessed them
 • Great Man approach actually emphasis ““charismatic” leadership. charisma being the Greek word for gift.
• No matter what group such a natural leader finds himself in, he will always be recognized for what he is.
• According to the great man theory of leadership, leadership calls for certain qualities like commanding
personality, charm, courage, intelligence, persuasiveness and aggressiveness.

Differences Between Being A Leader And A Manager

• Leaders create a vision, managers create goals.
• Leaders are change agents; managers maintain the status quo.
• Leaders are unique, managers copy.
• Leaders take risks, managers control risk.
• Leaders are in it for the long haul, managers think short-term.
• Leaders grow personally, managers rely on existing, proven skills.
• Leaders build relationships, managers build systems and processes.
• Leaders coach, managers direct.
• Leaders create fans, managers have employees.

Team
A team is a group of people who collaborate on related tasks toward a common goal.

Characteristics of Effective Teams

Common Goal: The members work to achieve a particular team objective.
Team spirit: The enthusiasm of the members to reach out the team goal is always high.
Trust: In a team, individuals believe and rely on each other’s capabilities and skills.
Leadership: There is a clear leadership within a team, and the selected team leader heads the activities.
Mutual Accountability: Each individual is equally responsible for the underperformance and failure of the team.
Interdependency: The actions of the members within a team are jointly dependent on that of other members.
Defined Roles: Every individual in a team, has been allocated specific roles or responsibilities to accomplish.
Streamline Direction: The team leader is the one who shows the way to the members and monitors their
operations.
Collaboration: There is a high degree of synergy or coordination among the team members.

Reasons for team building

• Builds trust
• Regulates communication
• Increases productivity
• Brings people together
 • Fosters creativity and learning
• Healthy competition
• Resolves conflicts
• Employees can acquire skills
• Improves company culture

Stages of Team Development

This process of learning to work together effectively is known as team development. Research has shown that
teams go through definitive stages during development. Bruce Tuckman, an educational psychologist, identified
a five-stage development process that most teams follow to become high performing. He called the stages:
forming, storming, norming, performing, and adjourning. Team progress through the stages is shown in the
following diagram.

Most high-performing teams go through five stages of team development.

Forming stage
The forming stage involves a period of orientation and getting acquainted. Uncertainty is high during this stage,
and people are looking for leadership and authority. A member who asserts authority or is knowledgeable may
be looked to take control. Team members are asking such questions as “What does the team offer me?” “What is
expected of me?” “Will I fit in?” Most interactions are social as members get to know each other.
Storming stage
The storming stage is the most difficult and critical stage to pass through. It is a period marked by conflict and
competition as individual personalities emerge. Team performance may actually decrease in this stage because
energy is put into unproductive activities. Members may disagree on team goals, and subgroups and cliques may
form around strong personalities or areas of agreement. To get through this stage, members must work to
overcome obstacles, to accept individual differences, and to work through conflicting ideas on team tasks and
goals. Teams can get bogged down in this stage. Failure to address conflicts may result in long-term problems.
Norming stage
If teams get through the storming stage, conflict is resolved and some degree of unity emerges. In the norming
stage, consensus develops around who the leader or leaders are, and individual member’s roles. Interpersonal
differences begin to be resolved, and a sense of cohesion and unity emerges. Team performance increases during
this stage as members learn to cooperate and begin to focus on team goals. However, the harmony is precarious,
and if disagreements re-emerge the team can slide back into storming.

Performing stage
In the performing stage, consensus and cooperation have been well-established and the team is mature, organized,
and well-functioning. There is a clear and stable structure, and members are committed to the team’s mission.
Problems and conflicts still emerge, but they are dealt with constructively. (We will discuss the role of conflict
and conflict resolution in the next section). The team is focused on problem solving and meeting team goals.
Adjourning stage
In the adjourning stage, most of the team’s goals have been accomplished. The emphasis is on wrapping up final
tasks and documenting the effort and results. As the work load is diminished, individual members may be
reassigned to other teams, and the team disbands. There may be regret as the team ends, so a ceremonial
acknowledgement of the work and success of the team can be helpful. If the team is a standing committee with
ongoing responsibility, members may be replaced by new people and the team can go back to a forming or
storming stage and repeat the development process.