This essay sets out to show where the four popular management contingency variables of organisational size, routineness of task technology, environmental uncertainty and individual differences are reflected in the work of the manager that was interviewed. Using classical theories of Fayol, Mintzberg and Katz along practical examples from the managers’ day-to-day routine, this essay sets out to explain how these theories and functions impact upon how the manager applies the situational approach to management using the contemporary and widely accepted contingency theories.
The manager that was interviewed was Mr. Luke Jecks, the Director of Sales and Marketing within an Australian-based organisation in the private sector, Cellarmaster Wines. With over three hundred staff, the organisation is Australia’s largest selling direct retailer of wines, selling over one million cases of wine per annum to in excess of three hundred thousand club members a year, as well as exporting to international markets, namely the United Kingdom and New Zealand.
Cellarmaster Wines uses various forms of direct marketing, but predominantly focuses on Internet, print media and telemarketing to sell to their club members. Being a top-level manager, Mr. Jecks, performs an extremely diversified number of roles within his position, but Mr. Jecks’ main focus is defining marketing strategies, allocating advertising activities and budgets, motivating sales staff and other members of the organisation and monitoring the external sales environment.
In applying the situational approach to the dynamic and ever-changing organisational environment, Mr. Jecks applies various roles and functions outlined by the classical management theorists, Fayol, Katz and Mintzberg, in order to co-ordinate the organisation using the contemporary contingency approach. The contingency approach to management is based on the idea that there is no one best way to best way to manage and in order to be effective, planning, organising, leading and controlling must be tailored to the particular circumstances faced by an organisation. Robbins, Bergman, Stagg and Coulter, 2009). This open system perspective stresses the importance of organisations facing different contingencies, and thus requires different styles of management (Robbins et al, 2009) Managers must implement different ways of managing in line with the four popular contingency variables; organisational size, routineness of task technology, environmental uncertainty and individual differences. Organisational size is significant as it impacts on the effectiveness of different organisations (Barnett, 2006).
The larger the organisation, the delegation of tasks and goals becomes more fragmented, and coordination becomes more difficult. Due to the relatively large number of subordinates, Mr. Jecks applies Fayols’ principle of Division of work, as Fayol (as cited in Rodriques, 2001 p. 19-20) states “work can be performed more efficiently and more productively if it is divided into smaller elements to specific workers. ” Mr. Jecks sets clear and transparent work plans and allocates human resources to carry out the plans. Katz’s human skills are also applied by Mr. Jecks, which is defined by Katz (1955, p. 91) as the “ability to work co-operatively with others, to communicate effectively, to resolve conflict and be a team player”. Within the organisation, Mr. Jecks must apply this skill in order to be effective in administering work plans to other heads of departments and individuals, so that organisational plans can be accomplished. The interpersonal role of leader outlined by Mintzberg (1975,p. 54) states that “because he is in charge of and organisational unit, the manager is responsible for the work of the people of that unit. Mintzberg (1979) also states that mangers lead on a group level, especially by building and managing teams. This role is reflected when Mr. Jecks addresses the organisational contingency by motivating all subordinates, assigning the right staff to the right jobs and sets training programs so staffs are skilled to complete objectives. In addition to the organisational size theory, Mr. Jecks employs Routineness technologies to effectively manage the organisation. To achieve its purpose, an organisation uses task technology.
Routineness technologies require organisational structure, leadership styles and control systems that differ from those required by customized or non-routined technologies. (Robbins et al, 2010). Goodhue and Thompson (1985) imply that technologies are viewed as tools used by individuals in carrying out their tasks. And tasks are broadly defined by Perrow (1967) as the actions employed to transform inputs into outputs. Technology, or the work done by organisations, is considered the defining characteristic of organisations. Perrow (1967,p. 95) states that “organisations are seen primarily as systems for getting work done, for applying techniques to the problem of altering materials, whether the materials are people, symbols or things Perrow (1967) also states that Non-routine technology is where an organization has to develop structure that allows employees to respond quickly to manage exceptions and create new solutions. Routine and non-routine technologies are both employed by Mr. Jecks within the organisation. In applying Fayols’ principle of leading, Mr.
Jecks sets out clear and transparent work plans with centralised decision-making. Mr. Jecks applies the contingency variable of routineness of task technology, and places a high degree of dependence on written organisational directives, and repetition of established procedures and practices. Fayol (1949, p. 49) states “the best plans cannot anticipate all unexpected occurrences which may arise, but does include a place for these events and prepare the weapons which may be needed at the moment of being surprised. ” In responding to unexpected occurrences, Mr. Jecks employs the disturbance-handler role, as Mintzberg (1994,p. 57) explains that the “disturbance handler role depicts the manager involuntarily responding to pressures. ”
Mr. Jecks implements action plans to respond to unexpected downturns, for example, when sales are inexplicably falling. Conceptual skills, as outlined by Katz (1974) are also engaged by Mr. Jecks, as thinking “outside the box” when tackling the non-routine task, adapting marketing and sales strategies in response to fluctuations within the organisation. Along with the organisational size and task routineness contingencies, Mr. Jecks must also address the area of environmental uncertainty when managing the organisation. The environment that the organisation is in is extremely volatile and every-changing, as many external forces such as customers, suppliers and competitors dictate how Mr. Jecks executes his decisional roles of the entrepreneur and disturbance handler outlined by Mintzberg (1975). As the organisation is within the retail sector, the wants, needs and demands of customers and suppliers change constantly, as well as the actions of competitors, all of which must be monitored and addressed in a timely manner effectively and efficiently.
In the entrepreneurial role, Mr. Jecks analyses the sales market, defining and implementing sales goals in relation to external market forces. Mr. Jecks must also respond to unexpected disturbances from outside and within the organisation, and does so by organising and implementing action plans to respond to problems, e. g. downturns in sales, delivery constraints from suppliers and sale campaigns run by competitors. In addressing this environmental uncertainty, Mr. Jecks also applies conceptual skills highlighted by Katz (1974, p. 6) when addressing the environmental variable, “as conceptual skills extend to visualising the relationship of the firm to the external environment. ”
Mr. Jecks studies and analyses all approaches to multi-channel marketing, constantly adapting the marketing matrix used by the organisation in response to the external environmental forces. Technical skills outlined by Katz (1974) are also implemented, as a thorough understanding of the marketing and sales sciences are crucial to the organisation. Along with applying the organisational, task routineness and environmental uncertainty theories to management, Mr. Jecks must also consider the contingency theory of individual differences. Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity and expectations. These and other differences are important when managers select motivation techniques, leadership styles and job designs (Robbins et al. 2009) Mr. Jecks applies the leader role outlined by Mintzberg (1975) to this contingency and a major part of his position within the organisation is to motivate all subordinates, allocates staff with the necessary skills to perform specific jobs and helps to create training programs so staff are skilled to complete objectives.
The human skills of Katz (1974) are also reflected, as Mr. Jecks has to communicate effectively and resolve conflict. Technical skills are also applied to a certain extent when approaching this contingency, as highlighted by Peterson (1994,p. 1299)”managers must have technical skill, as these skills allow the manager to train direct and evaluate subordinates performing specialized tasks. ” The contingency approach to management is extremely appropriate in today’s modern organisational environment.
In addressing the four contingencies of organisational size, routineness of task technology, environmental uncertainty and individual difference, the manager must employ and execute a number of combinations of the various roles and functions outlined by the popular theorists of Katz, Mintzberg and Fayol. As we have seen, in order for the manager to direct the organisation efficiently and effectively, no one function or role can be solely implemented to address each of the four popular contingency theories.
Surecut Shears, Inc.
1. In his predictions, Mr. Fisher assumed that growth of sales in the year (July 95 till June 96) would be -0. 4% – which in the case of a company that has shown sustainable growing profits since 1958 should reflect some negative economic expectations that would be confirmed by the retail industry downturn – with monthly values for 1996 similar to homologues registered in 1995; production would be constant, so as the cost of goods (60% of sales); and sales seasonal peak is placed between July and December.
However, it happens that from August 1995 in beyond, the cost of final goods were supposed to decrease as result of productive efficiencies inherent to the plant modernization program, allowing to save about $ 900,000 per year before taxes in manufacturing costs, assuming these as materials and labour.
In fact, this cost should likely be 58% of the sales, instead of the affirmed 60%, with the year total value of those inputs equal to $18. 000, the saving value resultant from the gains of efficiency since the end of August 1995 until June 1996 equal to $ 750,000, and a total amount of sales of $ 30,000,000 (($ 18,000,000 – $ 750,000) / $30,000,000 = 57. 5%). For this reason we do not think this was a reasonable assumption to take.
2. Comparing the Pro Forma Income Statement with the effectively verified Income Statement for the period of July 95 till June 96, the first of the cause and effect relations that we can establish to explain the incapacity of SureCut Shears to repay its bank loan on March 31 is the Retail downturn, and consequent decrease on sales, which end up to register values 12. 24% under the forecasted. Directly related to that is also the verification of a higher lag sales collection period than the predicted (from the 45 estimated days to 50. 8), explained, for instance, by the high market power of large retailers, who constitute a considerable part of the companies’ clients. In the other hand, that was not actually compensated with an increase of the payment period, which in fact almost maintained equal to the predicted, in the order of 30 days. We computed both for every month, by multiplying the number of days (30 in average) respectively by accounts receivable and accounts payable divided by, once again respectively, sales and purchases, and from there we calculated the average until March.
Consequence of the sales decrease was, by its turn, the increase of the inventories, again comparing to the advanced by the Pro Forma Balance Sheet, which shows 108 days of average permanence of inventories in storage before being sold, against the real performed average of 125 days. 3. Although financial conditions had become worse during the analysis period, with the decline on the sales and all the referred consequences for the company, we cannot say that it has crossed a sustainability mark, since it still presents a positive current ratio in March: 5. 5. Therefore, one can say that Mr. Stewart has no motivations to be concerned with the loans due by SureCut Shears, Inc. , once the company still has capacity to accomplish with its obligations. 4. We are clearly facing different kinds of problem.
If, in the first case, the Clarkson Lumber, Co. was increasing its inventories due to a rise in demand, now what happens with SureCut Shears, Inc. s that inventories have increased as result of two distinct reasons: a downturn in the retail sector and seasonality that also influences sales once the policy followed is to maintain a constant production, which does not configure an optimal solution and forces readjustments. Thus, what happens is that in the first case loans were needed to finance the company’s growth, while in the current case discussion is in turn of the need of financing the short of liquidity. Joao Pinto # 224
Ethical Case Study Wal Mart Vs Petco
The adherence to good business ethics is crucial for the success and long-term survival of a business. Failing to practice ethical behaviors and exploiting stakeholders can impede growth and sustainability. Unfortunately, there have been numerous historical cases where prioritizing immediate financial gains overshadowed the significance of conducting business ethically. These instances encompassed various issues, including abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft that may potentially arise in any business environment.
Both Wal-Mart and PETCO were founded in the early 1960s and have nationwide stores that provide products and services to a diverse group of consumers. These companies understand the importance of making a positive impact on stakeholders while minimizing negative consequences. They have made substantial efforts to address and resolve accusations of unethical conduct, resulting in a significant impact on their reputation and long-term sustainability. The accomplishments of Sam Walton, the founder of Wal-Mart, can be attributed to his dedication to customer satisfaction and strong work ethic.
The “ten-foot-rule” mandated that associates must interact with customers by making eye contact, greeting them, and offering assistance. This requirement played a crucial role in the company’s growth over the next four decades, transforming it from a small chain of stores into the largest private employer in the United States, Mexico, and Canada. Currently, Wal-Mart’s primary focus is to maintain low costs in order to provide “everyday low prices.” However, this strategy has resulted in negative consequences for employees such as inadequate wages, insufficient benefits, unjust treatment at work, and various forms of discrimination. Furthermore, the company has faced criticism for employing unauthorized immigrants and operating sweatshops as cost-cutting measures.
Initially, Wal-Mart believed that a formal ethics program was unnecessary as they followed Mr. Sam’s ethical principles. However, this choice caused the company to face several lawsuits and experience substantial financial losses. Furthermore, Wal-Mart has been accused of participating in unethical behavior multiple times, resulting in unfavorable media attention and criticism regarding their treatment of employees, suppliers, and impact on communities. Consequently, from 2000 to 2005, the stock value of Wal-Mart declined.
In 2006, Wal-Mart took steps to improve employee relationships by introducing a pay-for-performance system in approximately one-third of its stores. Over the course of two years, the company also expanded employee benefits and stated that 90% of workers now have insurance coverage, with plans for additional improvements. However, despite these efforts, Wal-Mart denied allegations of discrimination and unfair working conditions while defending its decision to keep a contractor who hired undocumented immigrants at its stores.
In March 2005, Coughlin, the second highest-ranking executive at Wal-Mart and a potential CEO candidate, was forced to resign from the board of directors due to allegations of embezzlement totaling more than $500,000. Around the same time, concerns were raised about Wal-Mart’s failure to follow proper environmental practices. Consequently, a grand jury in Los Angeles issued a subpoena demanding documents and information relating to possible environmental wrongdoing. To restore its ethical reputation, Wal-Mart has taken steps including appointing new leaders, participating in community activities, and creating an ethics program.
Despite investing significant funds in rebuilding its reputation, Wal-Mart has demonstrated its commitment to ethics and stakeholders through various means. These include placing full-page newspaper ads, making charity donations, participating in disaster management projects, and catering to special interest groups by adopting eco-friendly practices and promoting the sale of “green” products. Moreover, the company has implemented the “Global Responsible Sourcing Initiative,” which encompasses guidelines and requirements for new supplier agreements. Nevertheless, Wal-Mart has not acknowledged any wrongdoing and has only offered limited training for its managers and employees.
Walter Evans founded a mail order veterinary supply store which is now known as PETCO – one of the largest pet supply specialty retailers in the country with over 950 stores. PETCO has implemented a thorough code of ethics program that prioritizes the well-being of animals. Additionally, PETCO’s code of ethics includes guidelines for addressing other stakeholders such as employees, customers, and businesses. It also covers various aspects of the business including selling practices, advertising policies, pricing, and buying practices. PETCO operates in a highly competitive industry, competing with major companies like Pet Smart and Wal-Mart.
Despite PETCO’s commitment to pets and animals in general, the company has not been immune to incidents of unethical behavior by its employees. From 2000 to 2005, PETCO faced various allegations including animal cruelty and neglect, overcharging customers on sale items, and contamination of pet food resulting in the deaths of pets. However, PETCO demonstrated a willingness to acknowledge and rectify mistakes by severing ties with North American Pet Distributor, Inc., increasing manager and employee training on animal care, and promptly responding to FDA recall notices. The company’s ability to address and resolve such issues highlights the effectiveness of its ethics program. Moreover, PETCO’s swift response to negative incidents and its support of fundraisers within the pet industry such as Think Adoption First, Tree of Hope, and We are Family indicate a genuine desire to do what is right. By training its employees to make ethical decisions, PETCO ensures both success in the marketplace and positive contributions to society.
However, Wal-Mart is making efforts to enhance stakeholder relations. Nevertheless, its future initiatives related to sustainability and social responsibility have caught the attention of consumers. The company’s new ethics and compliance program shows progress, but only time will determine if it can prevent another controversy.