Materials Management – Standardisation

Standardisation of Quantities

This is a standardisation of material requirements. The material requirements have to be carefully planned.

When the production process is finished a target/performance comparison is carried out.

Therefore two steps are necessary:

1. prognosis of material requirement
2. target/performance comparison

Example of step 1:

prognosis of materials requirement

normal net requirement per unit multiplied by the number of units                                      10 x 1200
= net material requirement                                                                                                  12.000
+ gross correction (unavoidable additonal requirement e.g. 3 %)                                                360
= standard materials requirement                                                                                        12.360
+ avoidable additional requirement (e.g. 1 %)                                                                           120
= material requirement forecast                                                                                           12.480

The required materials have to be provided corresponding to the demanded quantity, the appropriate type and on schedule. The material requirement might be ascertained by three different methods: program-oriented, consumption-based, and by subjective estimate.

Source: This article is based on

Materialbestand und Materialbedarf im Unternehmen

(2013.02.19)

Project Management in Event Management

Curriculum

Project management at a commercial high school
10 units of 50 minutes

Objectives

Identify similarities between project management and event management
Apply project management techniques to event planning
Explain the importance of risk management and insurance of risks
Plan an event by using project management tools

Requirements

Knowledge of project management tools
Knowledge of event management

Characteristics of a project applied to an event

Projects as well as events are unique and timed operations producing and outcome.
Their objectives should be formulated in a SMART way. This means objectives have to be
specific
measurable
achievable (or agreed on)
realistic
timed

The deliverables have to be met within the boundaries of time, costs and quality.

Useful tools from Project Management are:
Work Breakdown Structure
Project Planning Techniques
Gantt Charts
Risk Management

Work Breakdown Structure

The event manager has to break down the job into parts and put these parts in a hierarchical order.

Gantt Charts
This tool is easily applicable to events showing the tasks in a time order. Gantt charts conist of the list of tasks and the time it takes to finish them.

Risk Management
Event managers have to provide a safe event for all people concerned. This means all staff involved need adequate training. Furthermore legal requirements have to be met – regulations set by the
EU, by provincial governement or local authorities.

Task
Imagine that your organisation (a producer of toys made of wood) is planning to exhibit a new range of products at an international trade fair. Carry out the planning of that exhibit by using appropriate project management tools.
This task involves looking for a suitable trade show, calculating the costs, preparation of promotional material, staff training and planning of marketing activities.

Literature: Shone, Anton and Parry, Brian. Successful Event Management. A practical handbook. Second Edition. Thomson. London 2004

 

Event Management

event

Lesson Objectives

  1. Give a definition of events
  2. Outline event categories by using examples for each
  3. Name and explain characteristcs of events
  4. Compare characteristics of services to characteristics of events
  5. Apply the theoretical knowledge to different kinds of events. (See exercise)

Terms and definitions

Special events are:
“That phenomenon arising from those non-routine occasions which have leisure, cultural, personal or organizational objectives set apart from the normal activity of daily life,
whose purpose is to enlighten, celebrate, entertain or challenge the experience of a group of people.” Shone and Perry (2004, 3)

Goldblatt stresses the celebratory aspect of events:
‘A special event recognises a unique moment in time with ceremony and ritual to satisfy specific needs.’ Shone and Perry (2004, 3)

Getz defines: ‘…a special event is an opportunity for a leisure, social or cultural experience outside the normal range of choices or beyond everyday experience.’ Shone and Perry (2004, 3)

Shone and Perry suggest a categorisation of special events:

  1. Leisure events (Leisure, sport, recreation)
  2. Cultural events (ceremonial, sacred, heritage, art, folklore)
  3. Organizational events (Commercial, political, charitable, sales)
  4. Personal events (Wedding, birthdays, anniversaries)

Shone and Perry (2004, 4)

Events have key characteristics in common with projects – they are “non-routine” and “unique” – and many other characteristics are similar to characteristics of services.

Characteristics of events are:

  • uniqueness
  • perishability
  • ambience and service
  • labour-intensive
  • fixed time-scale
  • intangible
  • ritual or ceremony
  • personal interaction

Uniqueness
Each event will be different. There are the participants, the surroundings, the audience and other variables that make the event unique. There have been about 300 repeated editions
of Olympic Games, each unique because of different athletes, organizers and different audience.

Perishability
An event cannot be repeated in the same way. Thus event managers have to use a variety of techniques to encourage activities in quiet periods.

Intangibility
An event organizer has to consider that tangible items will help to make the idea of how good an event has been memorable.

Ritual and ceremony
This is the major characteristic of events. Ritual and ceremony emphasize the continuity of tradition. Modern events -like the Awarding of the Berlin Golden Bears – are specially made up.
To attract tourists even brand new special events are created.

Ambience and service
An event manager can try to make an event a success by giving careful attention to details. Though people cannot be compelled to enjoy themselves.

Personal contact and interaction
To make an event successful event managers must be aware of the fact, that an enjoyable atmosphere is dependent on the actions and reactions of people.

Labour-intensiveness
Complex and unique events require labour-intensive organisation and operation, a high level of communication and planning, a big amount of time and effort. No two events are
likely to need the same number of staff – an athletic competition will require completely different operations than a company annual outing to a theme park.

Fixed timescale
Events – like projects – run to a fixed timescale – short or very long.

Shone and Perry (2004, 13-18)

Exercise:

  1. Repeat features of services. Compare characteristics of services with characteristcs of events. What are the differences/similarities?
  2. Analyse events of each category according to theory:
  • Leisure/sporting event: The Olympic Games (past or future)
  • Personal event: A wedding or anniversary
  • Cultural event: Klangwolke, Viennese Opera Ball
  • Organisational event: Trade fair, Open Day

Shone, Anton and Parry, Bryn (2004). Successful event management. Thomson. London

Key Concepts in International Human Resources Management

IHRMThe scope of IHRM is wider than the domestic one. IHRM occurs when a national firm goes abroad, when foreign markets are entered.

Stereotypes
Stereotypes are a kind of generalisation. Our brain – exposed to an information overflow – organises the incoming data to function effectively. Behaviours, values, beliefs and patterns of thinking distinguish members of a certain group from another. Stereotypes are generalised statements made about members of certain groups.

Ethnocentric
Ethnocentrism is the tendency to believe that one’s ethnic or cultural group is centrally important, and that all other groups are measured in relation to one’s own. The ethnocentric individual will judge other groups relative to his or her own particular ethnic group or culture, especially with concern to language, behaviour, customs, and religion. These ethnic distinctions and sub-divisions serve to define each ethnicity’s unique cultural identity.
Sources: Margaret L. Andersen, Howard Francis Taylor (2006). Sociology: Understanding a Diverse Society. Thomson Wadsworth. ISBN 0534617166
http://en.wikipedia.org/wiki/Ethnocentrism (18.04.2013)

Polycentric
Polycentrism is the principle of organisation of a region around several political, social or financial centres.
In intercultural competence the term polycentrism is understood as attitude and openness towards other cultures, opinions and ways of life: when intercultural actions and correlations are interpreted not only with the background of own cultural experiences, but when the independence of other cultures is recognized and appreciated and when cultural values are relativised and seen in the whole context. This in the way of non-ethnocentrism, opposite to ethnocentrism. Source: http://en.wikipedia.org/wiki/Polycentrism (18.04.2013)

Regiocentric
What is regiocentric orientation?
It is an approach for staffing of foreign operations on a regional basis. If the firm is an MNC than it would recruit local people under this orientation.
Regional orientation is defined as a functional rationalisation on a more-than-one country basis. Subsidiaries get grouped into larger regional entities. Regions are consistent with some natural boundaries, such as the Europe, America and Asia-Pacific. Both polycentric and regiocentric approaches allow for more local responsiveness, with less corporate integration.

Read more: regiocentric orientation

Geocentric

A management orientation based upon the assumption that there are similarities and differences in the world that can be understood and recognized in an integrated world strategy. The geocentric orientation or world orientation is a synthesis of the ethnocentric orientation (home country)and polycentric orientation (host country).
Geocentrism is an approach found in international firms where host-country nationals manage the subsidiaries and co-ordinate operations on a regional basis. The geocentric orientation  is a synthesis of the ethnocentric orientation (home country) and polycentric orientation (host country). There is local autonomy for day-to-day decision-making and regional control over strategic aspects of the subsidiary businesses. However, the top jobs at head office are dominated by parent-country nationals.
Source: http://www.marketingpower.com/_layouts/Dictionary.aspx?dLetter=G (18.04.2013)

Review Questions:
Describe the difference between ethnocentric, polycentric, regiocentric, and geocentric management orientations.

Hundreds of business terms can be found on the new Business English Posters:
http://wirtschaftsenglisch.lerntipp.at/

International Marketing

Three organisational types of International Marketing

The three organizational types – multinational, global and international – differ according to a degree of centralization and emphasis on either efficiency or effectiveness.
The transnational type combines the advantages of market proximity (differentiation) and like (standardization).
Multinational companies act according to the needs of the specific national markets. Well-known examples are Nestlé and Unilever offering food, washing powder and hygiene items. Before Unilever could sell margarine in the Asian market, they had to change eating habits first.
Global Enterprises pursue a world market orientation where marketing activities are standardized. Their main objective is to achieve a maximum benefit from economies of scale.
Adidas is an example for a global enterprise. Its design, development, production and sales outlets are centralized at a few locations. The goods are produced in South East Asia and distributed by a logistics centre in Hongkong.
“Activities of the company and its around 170 subsidiaries are directed from the Group’s headquarters in Herzogenaurach, Germany. It is also home to the adidas brand. Reebok Headquarters are located in Canton, Massachusetts. TaylorMade-adidas Golf is based in California. The company also operates creation centres and development departments at other locations around the world, corresponding to the related business activity.
adidas Sourcing Ltd., a fully-owned subsidiary headquartered in Hong Kong, is the worldwide sourcing agent for the adidas Group.
Effective December 31, 2012, the adidas Group employed 46,306 people.”
Source: http://www.adidas-group.com/en/ourgroup/our_business/default.aspx (18.04.2013)

International enterprises are mixed forms of the above two extreme types. Certain responsibilities and decisional structures are delegated to national units to generate a balance between economic marketing efficiency and a broader effectiveness.
Here is the formulation example of the carmaker Fiat’s PALIO. The development of this car was guided by awareness that the demands of customers in the developing countries are distinct from those in the industrialized nations. Fiat decided to offer a product variant tailored to customer preferences in the developing countries. The PALIO offers a strengthened chassis and body for use on purely surfaced roads. The wheels were modified in terms of suspension and design. The bumpers had greater resistance to flying stones and dirt. The production facilities for the PALIO: Poland, Venezuela, Brazil, Argentina, India, Turkey, South Africa and China. It is also built under licence in North Korea. Assembling and logistics were controlled centrally in Turin.

Source: Backhaus, K. , Büschken, J. & Voeth, M. (2005). International Marketing. New York: Palgrave Macmillan. p 27-29

Launched in 1996 in Brazil, as part of Fiat’s “178 project”, the Palio was Fiat’s first attempt to build a world car, the same basic design being produced in numerous nations around the globe. Four principal models were produced -hatchback, sedan, pickup and station wagon-, with different versions being built for different markets. The powerplants, both diesel and petrol, also varied from region to region depending on local production capability, legislation and market requirements.
The basic chassis was a development of the Fiat Uno, but little remained unchanged. The entire structure was significantly stronger in order to be suitable on the rougher roads found in some of the markets for which it was intended, as was the suspension. The body was a completely new design by the I.DE.A Institute of Turin, who also designed the new interior.
Production began in 1996 in Brazil and was followed later that year by a plant in Argentina. 1997 saw production starting in Venezuela, Poland and Morocco whilst Turkey started building the same car in 1998. India and South Africa began production in 1999, Egypt in 2001 and China in 2002.
A complete new-generation Palio was announced by Fiat Auto in early 2007. Some prototypes have seen spotted in Italy in an early stage of development. [1] but this news was wrong. The car spotted was the new Ford Ka, which has been tested in Italy. The Ford Ka is a co-development between Ford and Fiat (The 500).

Second generation (2011-present): An all-new generation of Palio was revealed in October 2011.
Source: http://en.wikipedia.org/wiki/Fiat_Palio (18.04.2013)

Questions

1. Explain the terms

  • Global Marketing
  • Multinational Marketing
  • International Marketing and
  • Transnational Marketing.

What are the main differences?

2. Go to the Websites of Nestlé, Unilever, Fiat and Adidas. Create a summary of their international marketing activities.

Global Marketing

1. DECIDING WHETHER TO GO ABROAD

Objectives:
1.Know factors a company should review before it goes abroad
2.Know how companies can evaluate and select specific foreign markets to enter
Companies need to enter and compete in foreign markets, though the risks are high:

  • Political and legal uncertainties (unstable governments)
  • Foreign-exchange problems (volatile currencies)
  • Corruption
  • Technological pirating
  • Different customer needs and expectations
  • Foreign languages
  • Tariffs and other trade barriers
  • High cost of product and communication-adaption

The main characteristics of global firms are that they plan, operate and coordinate their activities on a worldwide basis. Acting globally is not a matter of size. Even a small or medium-size firm can serve global niches.

There are various reasons for going abroad:

  • Higher profit opportunities than in the domestic market
  • Larger customer base to achieve economies of scale
  • Reduce the dependence on one market

The main decisions in International market to be made are based on these questions:
1.Whether to go abroad?
2.Which market to enter?
3.How to enter the market?
4.Which marketing program to chose?
5.Deciding on the marketing organization

But going global will cause risks that would not affect a company acting only domestically. Here are some examples:

  • Not understand foreign customer preferences
  • Failing to offer a competitively attractive product
  • Not understand the foreign business culture or know how to deal effectively with foreign nationals
  • Underestimate foreign regulations that mean unexpected costs.
  • Lack of managers with international experience

2. DECIDING WHICH MARKETS TO ENTER

When going abroad a company has to define its international marketing objectives and policies, whether to market in a few countries or many and determine the pace. Firstly it may seem wise to enter fewer countries.

The attractiveness of countries is influenced by factors like
Product
Geography
Income
Population
Political climate

Though it’s less risky to sell in the the European Union, the United States and Far East, the developing world represents a huge potential market for a wide range of goods. Furthermore regional economic integration has intensified, e.g the European Union.

Review Questions:


1.What factors should a company review before it goes abroad?
2.How can companies evaluate and select specific foreign markets to enter?

Management by Objectives

What is MBO?

Every large organisation has problems coordinating the activities of all the employees. There is a danger that they are more interested in their own targets rather than those of the firm as a whole. Such problems often increase with the size of a firm.It becomes more difficult to keep in constant and personal contact with people and to check on what they are doing.

Originator of MBO was Peter Drucker.1973: Management, Tasks, Responsibilities and Practice.He wrote: A manager in the first place, sets objectives. He determines what the objectives should be. He determines what the goals in each area of the business should be. He decides what has to be done to reach these objectives. He makes the objectives effective by communicating to people whose performance is needed to attain them.

It is not enough to establish objectives. At the same time a system must be established to let people see for themselves, how they are performing against the targets set. By delegating power in this way bosses no longer need to check regularly on what each employee is doing.

From mission to MBO

Corporate aim or mission is the overall reason for the firm’s existence. This is written in the mission statement. E.g. the lowest cost producer in
Europe or the best in the industry.The mission is a general target, it is meant to inspire, to motivate. But it lacks the specific information for planning. To plan properly the firm needs to turn the mission into a corporate objective. This will specify exactly what the firm wants to measure, how much of an increase it wants and when it wants to achieve the target. For example: The firm might set out to increase profits by 20 % over a five year period. The firm then has to turn this overall objective into more detailed targets for individual departments and managers.To achieve the corporate objective all the different functional managers (such as marketing, finance, operation and human resources) must have their own target. E.g. the marketing objective might be to increase sales, whilst the operations department tries to reduce costs. These functional objectives lead to further targets within each business area. To increase sales, for example, the marketing manager might decide to increase the level of promotional activities, to reduce costs the operations manager might aim to reduce the number of reject products. Every time an objective is set, the next level of managers must decide how this is to be fulfilled. If everyone meets their targets successfully then the firm will achieve its overall objective. Once managers have agreed their objectives, it is possible to develop appropriate strategies.

The strategy is the plan which shows how to fulfil the objective. If for example, the objective is to generate 23 % of sales from new products, the strategy might be to invest more heavily in research and development.

How does MBO work?

An MBO system is based on mutually agreed objectives. A manager will discuss with subordinates what needs to be achieved in their particular section of the firm. They will agree specific targets for each subordinate. For the MBO system to work effectively it is important that the objectives are agreed by the subordinates and not simply imposed on them. It is good practice, therefore, to allow staff to set objectives for themselves subject to the superiors approval. They are likely to be much more committed to them because they will feel they own these targets themselves.

Advantages of MBO

  • Each manager knows exactly what he has to do ( Example with E-mails, priorities)
  • MBO-System acts as a motivator. Herzberg said that responsibility is a vital motivator.
  • Peter Drucker believed that the most effective way to give people a sense of responsibility for their working lives was to make them decide for themselves how to achieve their objectives.
  • The targets act as a control mechanism for the organisation. Everyone’s performance can be judged against the targets.
  • MBO ensures that employees in every department are all working towards common goals. MBO allows delegation to be achieved in a coordinated way.

Problems of MBO

MBO system sounds appealing in theory, in practice it can become bureaucratic and time consuming. Managers and subordinates can spend hours in meetings trying to agree targets which may be unrealistic anyway. Setting targets does not guarantee that they are achieved. In some cases, companies introduce MBO but individual managers are unwilling to delegate fully to their subordinates. This results in frustration as the executive feels they will be held responsible for something they do not fully control. Another problem is that the objectives can become out of date and inappropriate very quickly. (Environment changes rapidly). With new competitors, new product offerings, new technology and new legislation the world in which a firm operates can be very dynamic. Targets may soon become irrelevant. Consequently some managers think it is more important to set out the general direction the firm wants to move in. Not try to be too specific about the exact route. Much better, some say, to let the managers react for themselves to the situation in which they operate.

The features of a good objective A good objective should be:

Specific – this means it must be clear what the firm is trying to achieve. For example, mangers may want to increase sales, increase profit or increase customer satisfaction.

Measurable – this means that all objectives should include a quantifiable element. For example, the firm might aim to increase profit by 30 %. This means that the managers can easily check whether the target has been achieved.

Agreed – targets need to be agreed by the different people who are involved in the process. There is no point imposing a target on someone.

Realistic – a target should always be achievable. If you set an objective which cannot be achieved people will not be motivated by it. It may even discourage them, because they know the target can never be reached anyway. To work well employees must believe that their efforts can be successful.

Time specific – all objectives should state quite clearly when they should be achieved. Managers need to know exactly how long they have so that they can plan accordingly.

MBO – an evaluation

The aim of management by objectives is to coordinate the decisions of all the different parts of the firm. This is needed to bring about a consistent approach and ensure that a workforce of perhaps 50.000 people is all heading in the same direction. It can also form part of a regular appraisal system in which managers and workers meet to review performance and set new targets. However, in recent years MBO has been rejected in many organisations because it can act as a constraint on management thinking. Once certain targets have been set, managers may only focus on these areas of their job and may neglect other business opportunities which present themselves. Given the increasing pace of change targets can quickly become out of date, which limits the value of the system.

An even more issue is that MBO may cause problems in business with a weak corporate culture. In the 1980s and 1990s, many large financial businesses such as Prudential found severe problems with sales staff. In the pursuit of their sales objectives, the staff had been miss-selling private pension plans to people who would have been better off staying in the state pension scheme. The employees short-term pursuit of their objectives led the companies into years of bad publicity and very expensive refunds to customers. Management by objectives can give the green light to short-termist decision making unless a positive long-term vision is clearly in place.

Key terms
Mission statement – a statement of the firm�s overall reason for its existence.
Objective � a quantifiable target which helps to coordinate activities Short-termist � pursuing an objective without considering the longer term impact

Strategy – a plan which shows how to achieve an objective