Issues & Challenges in

Management:
PPM 1a : 2020-22,

Dr A Jagan Mohan Reddy

SIBM,SIU,Hyderabad
Emerging Issues & Challenges in Management
1. Technological Changes:
 In the present competitive world, technological breakthroughs
can dramatically influence organization.
 Be it the products, services markets, suppliers, distributors,
competitors, customers, manufacturing processes, marketing
practices and competitive position.
How Technology can Impact an Organization?
i. Recent technological advances like robotics,ML;AI etc .,led to
significant operational improve­ments.
ii. Manufacturers, banks and retailers- Computer technology
Traditional tasks at lower costs-Passbook- customer satisfaction.
iii. Internet- online purchase, communication, Interactions-Virtual.
Technology and Competitive Advantage: C Q & S :
Vastur Mulyam Pramanena,Sevena,Samayena ,Mithavyaya
Amulyam Bhavathi
The Guru Of The Bottom Of The Pyramid : C K Prahalad,
 Most creative management thinker of his generation.
 Revolutionized thinking on business strategy and economic
development & made a significant contribution to innovation.
 Bottom of the Pyramid (BOP) was first used by U.S. President
Franklin Roosevelt in 1932.
 BOP is used in particular by people developing new models of
doing business that deliberately target the poorest regions, e.
g., Selling Shampoo in sachets.
 Does it mean earlier to CK people had some misnomer about
poor,they being able to purchase-effective demand?
Four Main Misperceptions Of Poverty :
 Income is too low, the poor can’t buy MNCs’ products ,e.g.,HL.
 Goods sold in developing markets are cheap : MNCs can’t make
profit.
 Poor don’t waste money on luxury products, fulfill basic needs.
 Poor don’t have required skills for use of advanced technology.
Going back to the changes……..
 New technologies need to upgrade existing employee skills.
 Downsizing and Rightsizing: Fewer people do more work than before.
 Telecommuting: relocation of work from office to the home- Well-
being.
 Internet and information technology have enabled companies to
become more competitive by cutting costs.
 Managing virtual corporations and virtual workers -Virtual workers
work from home, hotels, cars wherever their work takes them
2. Globalization and Managers:
 World is shrinking :Companies virtually dance all over the place.
 They are not constrained by national borders.
 Most companies try to exploit opportunity in any part of the globe
now.
 Managing a global corporation in the 21st century could be truly
challenging.
3. Managing Talent:
 Realization that people(A,A,A) are the most im­portant assets of an
organization.
 Backbone of organization & primary sources of firm’s competitive
advantage.
 Put your best foot forward to attract and retain talent:
 Recognize, Attracting,Selecting & Retaining Talent.
4. Dealing with Workforce Diversity:
 Workforce diversity refers to similarities and differences among
employees in terms of age, cultural background, physical abilities
and disabilities, race, reli­gion, sex, and sexual orientation.
 WD, is essentially concerned with the differences that people
bring to their jobs on the basis of gender, age, race, ethnicity or
professional background. India is a multicultural country.
5.Economic Challenges:
 “The Great Recession”,Covid-19:Revenue loss; layoffs.
 Ensuring that reduced staff doesn’t become overworked.
& burned out- reduced worker productivity.
6.Customer Satisfaction
 Managers often become very busy with work and often neglect to
get close to what is going on.
 Kishore Biyani of Future; Sumant Moolgaonkar (Architect of Tata
Motors)-SUMO.
 Frequent employee performance reviews to ensure Quality
Control-Customer Satisfaction-C,Q & S.
7.Employee Development-Investment in them- Motivates
 Opportunities for training, investing in employees- Enthuse.
Other Issues:
 Employee Disputes, Gossip,
 Jealousy and poor time management can be frustrating for
managers.
“Clients do not come first. Employees come first. If you take care
of your employees, they will take care of the clients“
Richard Branson Founder of Virgin Group  which controls more than 400
companies in various fields.
Employees First, Customers Second— In this candid and personal
account, Vineet Nayar—HCLT's celebrated CEO—Defied the
conventional wisdom that companies must put customers first, then
turned the hierarchical .
Outside-in not inside-out perspective- Talent, Leadership& Capability.
Not being the employer of choice, but the employer of choice of
employees customers would choose.
Dave Ulrich, Professor of Business at the Ross School of Business
10 Main Challenges Faced by Managers
1. Globalization.
2. Quality and Productivity.
3. Ownership.
4. Environment.
5. Strategy Formulation-Org.Capability.
6. Ethics and Social Responsibility.
7. Workforce Diversity.
8. Change.
9. Empowerment.
10. Information Technology.
Lets briefly look at each one of the above.
1. Globalisation:
 Globalisation or regionalism? Finance & Mfg activities at the
global level and HR and advertising at the regional level,i.e.,Vivo
2. Quality and Productivity:
 Focus on producing more and better with fewer resources.
3. Ownership:
 Foreign investors buying stocks of home companies and ownership
concerns- Chinese Banks/Companies.
4. Environment:
 Organizations have to change with the competitive environment
to maintain their customers.
 Understand the internal and external environmental factors and
their application to business operations.
5. Strategy Formulation:
 Managers who frame effective strategies will remain in the market
and those who fail to do so will leave the market.
 Strategy formulation requires constant attention of managers.
6. Ethics and Social Responsibility:
 Firms which do not adhere to ethical standards and social
responsibilities are not accepted by the society.
7. Workforce Diversity:
 Diversity in the workforce exists when members differ in terms of
race, colour, caste, creed, nationality, gender etc.
 Traditionally, workforce with no or very little diversity- Local
 Tremendous change in the composition of workforce.
 Firms employ people from diverse sets of cultural, social, economic
and ethical backgrounds.
8. Change:
 Change is a continuous process.
 They must accept the changes that confront their everyday life.
9. Empowerment:
 Management is ‘the art of getting things done through others,’.
 Participative decision-making & formation of groups/work teams
help in fulfillment of individual, group and organizational goals.
10. Information Technology:
 IT refers to the resources used by an organization to manage
information that it needs to carry out its mission- Decision Making
 Information is an important part of communication- Gelli*.
 Lack of control over use of information can result in lack of control
over business operations.
 *CMD of Vysya Bank,Promoter & CMD of GTB.
Peter Drucker’s Contribution to Management:
1.Nature of Management:
 A way of life for the well-being of society- P-TBL-Multiple
Stakeholders.
 Management is the dynamic, life-giving element in an
organization, which converts resources into results.
 Management is a Discipline as well as A Profession;
 A liberal profession w/o meeting criteria of a true profession.
 Management is more a practice than a science (inexact).
2.Functions of Management:
 The function of Objective-Setting is very important.
 He sets out Eight Areas in which objectives should be set and
performance should be measured:
 Market standing.
 Innovation.
 Productivity.
 Physical and financial resources.
 Profitability.
 Managers’ performance and development.
 Workers’ performance and attitude.
 Public responsibility.
3. Management by Objectives (MBO):
 Most significant contribution by Drucker to present- day-
management.
 Drucker introduced this concept in 1954 in his classical work,
“The Practice of Management”.
MBO definition:
 A distinct philosophy of managing any business enterprise in
which objectives for subordinates are worked out through a
process of mutual consultation between subordinates and
concerned superiors, in verifiable (i.e. numerical) terms; and
such objectives subsequently becoming standards of control for
measuring performance of individuals against these.
Analysis of the Definition:
 MBO is a short-term management programme-week to a year.
 MBO is based on principles of democratic management- mutual
consultation between subordinates and concerned superiors.
 Verifiability is the key to MBO- numerical or quantitative terms;
 MBO is both a technique of planning and controlling.
How to go about with MBO?
Formulation of a MBO involves following steps:
 Preliminary setting of objectives at the top management level:
Guides down the line setting their own objectives.
 Clarification of organizational roles: Clear responsibility.
 Setting individual objectives: Process of mutual consultation.
 Matching goals with resources: Objectives might be revised in case
of limitations of resources.
 Recycling objectives: Recycling or reshuffling if inconsistent with
that of subordinates in other departments.
 Performance appraisal: Final step of MBO, Judging against
objectives .
Merits of MBO :
 Overall improvement in organizational performance:
 Specific Planning; Elicits commitment; Better controlling:
Limitations of MBO:
 Failure of teaching philosophy of MBO.
 Tug-of-war phenomenon: Among superiors and subordinates.
 Over-emphasis on short-run goals.
 Over-quantification of management: qualitative aspects of
managing may be completely overlooked.
 Wastage of time.
Concluding Observations:
 Research-Less than 10% of cases where MBO scheme been
exceedingly successful.
 In most of the cases, MBO schemes have been either a flop or
only a mediocre success.
4. Organizational Structure:
Drucker has criticized bureaucratic organization structure.
 An enterprise should be organized for performance
 Itshould contain least possible number of managerial
levels.
 Itmust make possible the training and testing of
tomorrow’s top managers.
5. Organizational Change
 Drucker has visualized rapid changes in society because of
rapid technological developments.
 Managers must accept changes for making the society better.
 Dynamic structures of the organization should be developed to
cope with environmental changes and challenges- Rupa:
BRICS.
6. Federalism:
 Drucker has developed the concept of federalism; which refers
to centralised control in a decentralised structure.
7. Miscellaneous Contributions:
 An organization is a social system as well as an economic one.
 People are a resource &would better satisfy customers if they
had more involvement in their jobs, gained satisfaction.
 Managers must see the business as a whole i.e. they must view
organization from the system’s perspective.
 Purpose of the business is to find a customer (Profit)
 Advocated privatization, pointing out ineffectiveness of
government.
 Quality is a measure of productivity.
2. Michael E. Porter:
 An authority on competitive strategy.
“Strategy is not a Subject Of Poets”.
 It is a set of ideas which give competitive advantage to business
units.
Two Most Important contributions by Porter include:
(i) Value chain analysis.
(ii) Generic strategies.
1.Value Chain Analysis:
 Two categories of value activities: primary and support .
 Competitive advantage lies not in activities themselves; but the
way the activities relate to each other, forming a value chain for
competitive advantage.
I. Primary Activities: physical creation of a firm’s product/service.
II. Support Activities: Provide infrastructure for primary: Procurement;
Technology Development; HRM; Co’s infra-structure:
Comment:
 To survive amidst competitive conditions, the company must link all
value chain activities together- R-S-I-PA
 Weakness in any of the activities will have impact on the entire
value-chain &affecting competitiveness adversely.
2. Generic Strategies driven by Five Force Analysis:
Three Fundamental Generic Strategies:
 Cost leadership strategy-Lowest Cost
 Differentiationstrategy- product in terms of physical and
psychological attributes
 Focus strategy- selecting a market segment;
serving it (niche market) to exclusion of others.
Porter's Five Forces Framework
 A method for analyzing a company's competitive environment.
 Competitive rivals, potential new market entrants, suppliers,
customers, and substitute products influence a company's
profitability.
3. C.K. Prahalad:
 His outstanding work on strategy ‘Competing for the Future’,
written in association with Gary Hamel.
 Prahald and Hamel coined the term ‘core-competence’ .
 C.K. Prahalad and Gary Hamel define core competence as
follows:
“A core competence is a bundle of skills and technologies
that enables a company to provide a particular benefit
to the customers”.e.g., Apple iPhone
Point of Comment:
 Core competency theory advises business enterprises to identify
their core competencies and focus only on the them and
getting everything else done through outside agencies.
Salient Features of the Concept of Core Competence
 Strength of a firm competitors cannot easily match or imitate
 Largely a technological competence;
 Development of CC requires a learning organization.
 CC requires corporate imagination, to realize its potential.
To Quickly Recapitulate:
Issues & Challenges in Management:
1. Technological- lowering the costs ; operational improvements 
 Competitive Advantage- CK Prahalad
 Bottom of pyramid- shampoos in sachets
 Poor can’t buy; fulfil basic needs 
2. Globalisation: virtual, borders broken
3. Managing Talent - competitive advantage 
4. Workforce Diversity- difference people bring
5. Economic challenges COVID-19 revenue loss
6. Customer satisfaction- outside in 
7. Employee Development 
Challenges Faced by Managers 
Peter Drucker:
 Profit, liberal profession ;objective function
 Management by Objectives  
Mutual verifiable control 
 Criticized bureaucratic org. Structure 
 Visualized major changes / Managers 
Michael E Porter :
 Value chain Analysis - primary & secondary 
 Generic strategies ; five forces 
CK Prahalad:
 Core competence ; bottom of pyramid