Business Management Activities and Systemic Approach
Management Activities Set
The management set of activities includes:
- Planning: Making decisions.
- Implementation: Putting decisions into action.
- Control: Learning through evaluation.
- Feedback: Adjusting processes based on results.
The Company System
Components of the System
A company is seen as a set of interrelated elements open to the external environment, working toward common objectives.
Company Subsystems
The company is composed of subsystems, including processing and control, which interact with the external environment.
Systemic Approach
This approach defines desired objectives, implements a subsystem configuration, and uses control to continually improve the system.
Key Subsystems
- Real Subsystem: Includes supply, production, and marketing, involving all operations that transform resources into final products and services.
- Financial Subsystem: Manages financial resources and administration needed for system operations.
- Management Subsystem: Makes decisions to ensure objectives are achieved and adapts the company to external changes.
- External System: External factors such as economy, technology, laws, and policies that influence the company. This is composed of a generic (economical, technological, sociocultural laws, policies that give the general frame to run a company) and a specific set of factors that specifically affect our company or similar ones.
Company Objectives
Traditionally, the main objective was to maximize income, but the modern view is multi-objective, focusing on satisfying stakeholders (investors, employees, government, customers).
Value Chain Analysis
Value Chain Definition
The Value Chain is a tool for analyzing a company in terms of value creation. It helps identify areas for improving competitiveness and gaining competitive advantage.
Company Definition
A company is a set of activities to design, produce, and market products and services.
Value Definition
Value is the money buyers are willing to pay in exchange for the products and services. Companies aim to market products when value is higher than cost.
Value Activities (V.Act)
These are activities that differ physically and technologically from others and are necessary to give value to the buyers.
Primary Activities
Directly involved in the creation and marketing of the product:
- Inbound Logistics: Receiving, storing, and distributing raw materials or inputs.
- Operations: Transforming inputs into the final product (manufacturing, assembly).
- Outbound Logistics: Warehousing and distribution of finished products to customers.
- Marketing & Sales: Promoting and selling the product to customers.
- Post-Sales Support: Support provided after the sale to maintain and enhance the product’s value.
Support Activities
Provide resources, technology, and human resources for primary activities:
- Company Infrastructure: General management, finance, planning, and quality control.
- Human Resource Management: Recruiting, hiring, training, and employee development.
- Technology Development: Research and development, technological advancement to improve processes.
- Supply: Acquiring inputs (materials, equipment) needed for the production process.
Support activities include direct activities (directly add value to consumers), indirect activities (optimize direct activities), and quality assurance (assure the quality of other activities).
Value Chain Analysis Considerations (VCanalysis)
Michael Porter suggests analyzing the value chain based on:
- Customer segments
- Vertical integration
- Geographic location
- Industry sector
The value chain allows organizing company activities into specialized departments, balancing coordination and specialization.