Martin-Luther-Universität Halle-Wittenberg

Principles of Management

Prof. Dr. Julia Mueller-Seeger

Institut für BWL, insb. Unternehmensführung

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 Overview Day 1
 Introduction to the lecturers
 Introduction to the course
 What is organization, management, strategy?
 Strategic Management

2 Principles of Mgmt

Hello and welcome to the course Principles of Management. Today we would like to
introduce ourselves and explain the content of this course. For the first day we will start
with clarifying the concepts of organization, management and strategy, as well as
presenting the process of strategic management

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 Chair for Strategic Management
Prof. Dr. Julia Müller-Seeger Contact person:
Head of Chair - examination
julia.mueller@wiwi.uni-halle.de

Contact person:
Gapeyeva-Yukce, M.Sc. - lecture & seminar
Research Assistant - organization
liudmila.gapeyeva-yukce@wiwi.uni-halle.de

The chair for strategic management is led by Prof. Dr. Julia Müller-Seeger. As the head of
Chair she is your contact person for examination purposes. Her research assistant Ms.
Liudmila Gapeyeva-Yukce will lead the lectures and is your contact person for questions
about the course, seminar and organization purposes.

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Martin-Luther-Universität Halle-Wittenberg

Introduction

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 Introduction to the course
Topics
 Vision, mission statement, strategies
 Leadership
 Business models
 Strategic principles
 Market definition
 Strategic analysis (external & internal, SWOT etc.)
 Strategy on SBU-level
 Evaluating strategies

 See syllabus for exact date

5 Principles of Mgmt

The topics within this course will follow the model of the process of strategic
management, which will be discussed later on. We will start with the basics, for example
the explanation and definiton of vision, strategy and mission statement. They are very
important to understand the next few steps, that‘s why they will contain 4 lectures. From
lecture 5 we will then go on dealing with different kinds of leadership, business models
and strategic principles. The market definition and PEST-Analysis will follow, just like the
strategic analysis and strategy on SBU-Level. The course ends with a lecture about
evaluating strategies, which is also the last part of the mentioned process of strategic
management.

For the exact dates, please see the course syllabus uploaded to Studip.

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 Introduction to the course
Skills
 Understanding of principles of strategic management
 Analyzing business situations (incl. using tools)
 Case study analysis
 Discussion skills
 Presentation skills
 English skills

6 Principles of Mgmt

Besides the theoretical input and knowledge about the principles of strategic
management you will get during this course, you will also increase your skills for
discussion, presentation and English. Moreover you have the opportunity to use your
acquired knowledge by analyzing business situations and case studies.

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 Introduction to the course
Literature
 Mooradian T. A./Matzler K./Ring L.: Marketing Strategy, Prentice Hall, 2011. (selected
chapters and notes)
 Case studies

 Please read literature before session!

 Check studip regularly!

 Additional literature (not compulsory)

 Grant, Contemporary Strategy Analysis, 6th edition.
 German literature (not compulsory):
 Matzler, Kurt, Julia Müller und Todd A. Mooradian (2011) Strategisches Management:
Konzepte und Methoden, Linde: Wien.
 Hinterhuber, Hans H.: Strategische Unternehmungsführung. Band 1 und Band 2, W. de
Gruyter, Berlin-New York, 7. Auflage (2004)
 Hinterhuber, H.H.: Leadership. Strategisches Denken systematisch schulen von Sokrates bis
Jack Welch. Frankfurt am Main: F.A.Z. - Inst. für Management-, Markt- und
Medieninformationen (2007)
 See also “Semesterapparat” in library

7 Principles of Mgmt

For preparing the lectures and especially for better understandig and consolidating the
knowledge learned from the lectures, you can use the literature listed on this slide.
Please check your studip regularly for messages and new uploaded content.

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 Introduction to the course
Examination mode
 Analysis of examples:
 Analyze one vision or one mission statement (project task 20%)
 Formulate the vision for your business idea (project task 20%)
 Analyze corporate values and orientations in one letter to the shareholder (project task
20%)
 Analyze the leadership behavior in one case study (project task 20%)
 Value chain analysis
 Create a value chain analysis (i.e. draw the value chain and add reasons why some parts
were included and why some parts are bigger than others) (project task 20%)
 Consultant simulation:
 Solve the problem of the case study. Use tools learned in the course to convince the
others in a presentation (max. 10 minutes). Be prepared for questions! (group task 100%)
 GROUP BUILDING: see course syllabus

 Deadline for Analysis of Examples 1-4: see course syllabus;

 Deadline for Value Chain Analysis: see course syllabus;
 Deadline for sending slides of consultant presentation: see course syllabus

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The following slides will give you an overview of the examination mode in this course.
These details will also be available in the syllabus and will be explained additionally by
the course representative while announcing each task. As you can see, there are 5
project tasks that are prepared individually by every student and one group task. Please
note that some of the dates might change during the semester, therefore it is important
to follow the announcements in studip.

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 Analysis of examples
 Analyze one vision or one mission statement
 Take one vision or one mission statement
 Use the elements from the lecture slides
 Write in max. 1 page what you have identified (and what might be missing)
 (project task 20%)
 Formulate the vision for your business idea
 Think about a business you might want to open. It is not necessary that your business idea is real or realizable.
 Think about why you want to open it and why it might be successful.
 Address the elements of a vision (see slides) when formulating your vision.
 About 1 sentence
 (project task 20%)
 Analyze corporate values and orientations in one letter to the shareholder
 Take one letter to the shareholders
 Read and underline key words
 Reflect on cultural values and orientations that are addressed in the letter
 Write one page describing what you identified and use examples from the letter to show why you identified them
 (project task 20%)
 Analyze the leadership behavior in a case study
 Take the case study
 Read and underline passages of leadership behavior
 Take approaches from the lecture slides and show how your underlined passages fit with these
 Write one page describing the leadership behavior in the text according to the approaches in the slides
 (project task 20%)

 Deadline for Analysis of Examples: see course syllabus

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On this slide you can see the details about first four project tasks. The materials for the
tasks will be distributed by the course representative.

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 Value chain analysis
 Participate in the online meeting with a company
representative
 Ask questions if the necessary information was not delivered
during the presentation
 Draw the value chain for the company
 Indicate with keywords why you included certain elements in the
drawing
 Indicate why some elements are bigger than others (indicating their
importance)
 About 1 page

 (project task 20%)

 Deadline for Value Chain Analysis: see course syllabus

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Two online meetings are planned at the end of January with company representatives.
After attending one of the meetings we ask you to prepare a value chain analysis as the
fifth individual project task.

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 Consultant simulation
 Read the case and identify the problems. Choose one problem
and find solutions. Solve the problem in the year discussed in
the case, at the same time it is also possible to integrate the
current situation. Use the necessary tools learned in the
course to convince others about your solutions.
 The presentation duration is max. 10 minutes.
 Be prepared for questions about missing tools (that you have
not used in the presentation for solving the problem) or
clarification.
 (group task 100%)

 Deadline for sending slides of consultant presentation: see

course syllabus

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The final project for the course is a group project. Each group will receive a case from
the course representative and work on it.

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 To pass the course
 Each part (Project tasks and Consultant Presentation) has
to be positive!
 If you are negative in both parts, you can repeat the tasks.
 If you are negative in one part, you can only repeat the
negative task(s).

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Please pay attention to these requirements in order to pass the course

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 Martin-Luther-Universität Halle-Wittenberg

Questions?

If you have any questions, you can ask them via email or during the online sessions that
should take place every week.

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 What is organization

An organization is deliberate arrangement and conscious

coordination of people to achieve a common goal or set
of goals. It is a managed system designed and operated to
achieve a mission, vision, strategies and goals.

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Before starting talking about the process of management, its principles and strategy, it is
important and necessary to establish definitions for some key aspects. The first one is of
course an organization. There is no one definition of organizations that is agreed on by
all researchers, but for this course the following definition is offered. An organization is
deliberate arrangement and conscious coordination of people to achieve a common goal
or set of goals.
Organizations have a distinct purpose and a deliberate structure, and they accomplish
specific goals through the work and behaviour of people. An organization is not a
random group of people who come together by chance, rather it is a consciously and
formally established entity that is designed to accomplish certain goals that its members
would be unable to reach by themselves.
An organization is a managed system designed and operated to achieve a mission, vision,
strategies and goals.

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 What is management

The process that managers follow to accomplish

organizational vision, mission, strategies, and goals
through the use of people (human resources),
money (financial resources), things (physical
resources) and data (informational resources).

The individuals in organizations who

guide and direct the actions of
others to accomplish organizational
goals.

A specific body of knowledge that

examines various methods used by
managers and organizations

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Management is a process that happens inside of, or as a part of organizations. The term
“management” has three different definitions that are presented on the slide.
A manager’s job is to achieve high performance relative to the organization’s desired
outcomes. Good managers accomplish desirable organizational outcomes both
effectively and efficiently. An effective manager constantly and consistently
accomplishes organizational mission, strategies, goals and objectives. An efficient
manager accomplishes organizational outcomes with minimal waste of human, financial
and physical resources, making the best possible use of money, time, materials, and
people.

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 Management functions
 Planning

 Organizing

 Directing

 Controlling

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The job of managing is typically broken down into four main functions: planning,
organizing, directing and controlling.

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 Planning
 Analysing the current situation and anticipating the future.
 Determining the vision, mission, strategies, goals and
objectives
 Determining the resources needed to achieve those
desired outcomes
 Selecting tasks that employees perform, indicating when
and how those tasks should be done.

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The planning function of management involves:

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 Organizing
 Assembling and coordinating the human, financial, physical,
informational and other resources.
 Attracting qualified people
 Arranging work assignments and activities
 Creating conditions that facilitate the coordination of all the
resources

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The organizing function of management involves:

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 Directing
 Influencing employees to perform as well as possible
 Leading, motivating and communicating with employees
 Guiding and inspiring employees to new levels of
achievement
 Setting a good example for employees, serving as a role
model, showing the way to career success.

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The directing function of management involves:

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 Controlling
 Monitoring employee progress toward outcome success
and making appropriate changes when necessary.
 Setting performance standards
 Providing feedback
 Identifying problem areas by comparing actual performance
levels to performance standards
 Solving performance problems
 Cutting costs and reducing waste
 Taking employee disciplinary action when necessary

20 Principles of Mgmt 18.10.2021

The controlling function of management involves:

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 Martin-Luther-Universität Halle-Wittenberg

What is strategy?

Now that we have the clarity of what is organization and management it is possilbe to
look into the idea of strategy as well as strategic management.

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 Strategy
 Strategy, the art of war, especially the planning of movements of
troops and ships etc., into favorable positions, plan of action or
policy in business or politics etc. (Oxford Pocket Dictionary)
 The determination of the long-run goals and objectives of an
enterprise, and the adoption of courses of action and the allocation
of resources necessary for carrying out these goals. (Alfred Chandler 1962)
 A strategy is the pattern or plan that integrates an organization's
major goals, policies and action sequences into a cohesive whole. A
wellformulated strategy helps marshal and allocate an organization's
resources into a unique and viable posture based upon its relative
internal competencies and shortcomings, anticipated changes in the
environment, and contingent moves by intelligent opponents. (James
Brian Quinn 1980)

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The concept of strategy can be looked at from different perspectives. First of all, it can be
a plan of actions to achieve some goals. It can also include not only the actions, but also
the process of finding and allocating necessary resources. More to that, a strategy is also
a certain kind of attitude to the situation, a position or point of view. On the next slide
you will see the 5 Ps of strategy suggested by H. Mintzberg.

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 Five Ps of Stratgy (H. Mintzberg)
 Strategy as plan (intended course of actions)
 Strategy as pattern (consistency in behaviour)
 Strategy as position (a means of locating an organization
in an environment)
 Stragegy as perspective (way of perceiving the world, e.g.
aggressive or stable behaviour)
 Strategy as ploy (maneuver intended to outwit an
opponent)

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Strategy is often defined as “top management’s plans to attain outcomes consistent with
the organization’s missions and goals”. According to Mintzberg, such a definition falls
short. Instead, different definitions (Five Ps) are required for the strategy formulation:

Strategy as pattern: Strategy sets the direction and guides the initiatives a company will
take in the future. So it describes the way to reach the goal. However, the reality often
shows that this plan could not be carried out. Perhaps it is because some unintended
actions that turned out to be successful became the pattern of behaviour and influenced
the initial plan . A strategy is therefore a plan for the future, but at the same time it
contains patterns that emerge or come from the past. That is why the difference
between “intended” (intended) and “actual” (realized) strategy is often visible.

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 Intended vs. Realized strategies

Non-realizable
strategy

Emergent strategy

Figure 2

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Strategies that are intended and have been planned for a long time can also be called
“deliberate” strategies. However, there are also strategies in day-to-day business that are
not intended, but arise from the situation and by chance. These are called “emergent”
strategies. The relationship between deliberate and emergent strategies is shown on the
slide.

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 Five Ps of Stratgy (H. Mintzberg)
 Strategy as plan (intended course of actions)
 Strategy as pattern (consistency in behaviour)
 Strategy as position (a means of locating an organization
in an environment)
 Stragegy as perspective (way of perceiving the world, e.g.
aggressive or stable behaviour)
 Strategy as ploy (maneuver intended to outwit an
opponent)

25 Principles of Mgmt

Strategy as position and perspective: Strategy is often about positioning in the market,
for example which market segments a product should serve. The perspective rather aims
at the fact that strategies are also a guide for how situations are dealt with in a company
or how profits are generated (with the help of business models). Like the other
comparisons, these two perspectives are relevant for a strategy at the same time.

Strategy as a maneuver (ploy): This classic view aims to include specific maneuvers or
measures in a strategy to outperform the competition.

The term strategy has no clear definition in strategic management. However, there are
various elements that are related to the formulation of the strategy. Everything cannot
be planned in the strategy formulation process. However, it is undoubtedly helpful to
follow a few steps to arrive at a comprehensive corporate strategy or business unit
strategy. The process of strategic management with its instruments helps.

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  Think of a successful person/company. Why are they
successful?

26 Principles of Mgmt

In order to understand what strategic management is please first think of a successful

person or a company. Why are they successful? You may find out that some companies
are more experienced on the market, or they effectively use technology, invest in the
know-how or their employees, have outstanding customer service or offer personal
touch to the customer. In the very end there is something that makes a particular
company different from the others.

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 Strategy

 Creation of a unique and valuable position, involving a

different set of activities. The essence of strategic
positioning is to choose activities that are different from
others (M. E. Porter)

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Therefore, strategy can also be viewed as creation of a unique and valuable position,
involving a different set of activities. The essence of strategic positioning is to choose
activities that are different from others

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 What is Strat. Mgmt.?
„Maybe I cannot outrun that bear,
but I surely can outrun YOU!“

 Strategic Management is to achieve and maintain

competitive advantage

28 Principles of Mgmt

And the essence of Strategic Management is to achieve and maintain competitive

advantage.

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 Strategic management
 Strategic management consists of analysis, decisions and
actions an organization undertakes in order to create and
sustain competitive advantage.

 … focus on integrating management, marketing,

finance/accounting, production/operations, research
and development and computer information systems
to achieve organizational success.

29 Principles of Mgmt

To sum it up, Strategic management consists of analysis, decisions and actions an

organization undertakes in order to create and sustain competitive advantage.

It focuses on integrating management, marketing, finance/accounting,

production/operations, research and development and computer information systems to
achieve organizational success.

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 Origins of Strategic Management
 Military strategy (e.g. Alexander the Great, Hannibal,
Caesar, Marc Aurel, Macchiavelli, Friedrich der Große,
Napoleon, Helmuth von Moltke)

 What is the current situation? What is expected to occur?

 How can we face these developments?
 How can we implement the important steps?

30 Principles of Mgmt

The concept of strategy was transferred from the military environment to the situation
of companies. Because "strategy is about winning" and strategic management is about
trumping competitors in the market.

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 Changes in Strategic Management
•Vision and
Leadership
•Defining strategic
•External Audits
frameworks
•Competition
•Open-mindedness
analyses
and willingness to
•Defining
Strategy orientation

strategic thinking
competitive
•Annual budgets strategies
•Variance analyses
•Budgeting •Resource needs
•Functional focus specified

1st Phase: 2nd Phase: 3rd Phase: 4th Phase:

Financial Long-term Strategic Strategic
Planning Planning Planning Management
-Stable -Cost pressure -Instability -Problems in
environment -Accelerated growth -High Competition implementing
until 1950s until 1970s until 1980s since 1980s

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During history the parts and meaning of strategic management have changed.
Until the 1950s strategic management was a financial tool for budgeting and had
a rather functional focus. Twenty years later in the 1970s, strategic management
became a long-term planning tool used for annual budgeting and variance
analyzing. In the 3rd Phase, during the 1980s it became a more strategic planning
tool and was used for defining competitive strategies and analyze competition.
Since then in became today’s known strategic management.

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 Successful trategy

Successful
strategy

EFFECTIVE IMPLEMENTATION

Simple, Profound
consistent, understanding Objective
long-term of the appraisal of
goals competitive resources
environment
Grant, 2008, p 7

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To achieve a successful strategy, military strategists as well as managers need:

• simple, consistent and long-term goals,
• a profound understanding of the competitive situation,
• objective assessment of resources and
• an effective implementation.

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 Room for Maneuver
Analysis and prognosis of
Analysis and prognosis of Cultural ideals of top-
the environment
the company, core management (what are the
(opportuinities, risks,
competencis desired aims?)
success factors)

Market opportunities (Fit

between success factors and
core competencies) (what is
achievable?)

Strategic room for

Social responsibility (what
maneuver (what are useful
should be done?)
aims?)

Figure 4
Hinterhuber 2004

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Room for maneuver is important in strategic management and is defined as the

opportunity to change your plans or choose between different ways of doing something.
As you can see in figure 4, there are several steps and aspects to be considered during
organizational actions. They influence each other and lead to strategic room for
maneuver at the end.

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 Relationship of Management
Operational, Financial Operational Strategic
Management Management Management

Adequate returns on Secure sustainable

Purpose Secure liquidity
capital employed existence of the firm

Key criteria
Liquidity Success Success factors

Main
information Revenues/costs Profits/expenditure Market position

Sources of
External- and internal
information Accounting
Balance sheet/profit and
Audit
loss statement
Portfolio-Analysis

Short-term Medium-term
Long-term

34 Principles of Mgmt

To understand how strategic management works, it is important to know the

characteristics and relationship of management. As you can see in the figure above,
there are operational, financial and strategic management, either used for short-term,
medium-term and long-term goals and planning.

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 Advantage of Strat. Mgmt.
 … allows an organization to be more proactive than
reactive in shaping its own future
 … allows an organization to initiate and influence
activities (rather than just respond to them)
 … allows an organization to exert control over its own
destiny

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The advantages of strategic management are, that it allows an organization to be

more proactive than reactive in shaping its own future, to initiate and influence
activities such as to exert control over its own destiny.

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 Process of Strategic Management
Vision & Business model

Leadership

Product life cycle

Experience curve
principles
Strategic
Economies of Scale
Economies of Scope
ROI & Market share
Price Quality (Value Map)

External Analysis Internal Analysis

Market definition Customer Value-Analysis
PESTAnalysis Core competencies
Strategic Analysis

Industry analysis Value chain analysis

Competitor analysis

SWOT-Analysis

Corporate level SBU level

formulation

Strategy diamond
Strategy

Portfolio-Analysis Competitive (Generic) strategies

Ansoff-Matrix Specific strategies
New product development

Strategy evaluation
Balanced Scorecard
Assessment and adjustment

36 Principles of Mgmt

Strategic management, which is now firmly anchored in corporate practice, deals with
developments in the company that affect the selection of the products and services
created and offered, the positioning in the market, the differentiation of competitors,
the acquisition of resources and skills, etc. These decisions are recorded in strategies. In
order to arrive at these strategies, it is necessary to proceed systematically and step by
step. In practice, it has turned out that the process of strategic management does not
always adhere to the theoretical order. Nevertheless, all steps of the management
process are crucial to arrive at a sustainable strategy.

The strategic management process comprises the following steps, which are also shown
in the Figure on the slide. The vision and business model are crucial for the company to
know where it is going and how it wants to achieve its goals. The strategic principles,
which include, for example, empirical knowledge of product life cycles as well as
experience curve and size effects, set the framework and internal options for
formulating the strategy. In the strategic analysis, a distinction is made between an
external analysis, which deals with the markets and competitors and identifies
opportunities and risks, and an internal analysis, which deals with one's own resources
and skills and shows the strengths and weaknesses. The findings of these analyzes flow
into the formulation of strategic goals and the formulation of the strategy, which must
be carried out on the one hand at the company level and on the other hand at the level
of the business unit. The last step is strategy implementation and implementation
control, the results of which are the basis for any adjustments to the strategy in a new
process.

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