Micro Marketing

Blog No 11    Marketing No 3     In business Management     10 December 2024

Micro Marketing

On my journey so far….in developing the six core subjects ‘in business management. The  following sticks out to me as striking.

·         Business can be separated from management. Management as the software, if business was ever about evil capitalism…… modern management has ended that and made business the great provider.

·         Management  is not only confined to business but other organisations …...government departments to sports clubs and unions.

·         Can a corrupt organisation be well managed? No, corrupt businesses are not sustainable. Integrity and honest contributions to society are needed. You also cannot market immoral and unethical practices or products. A formula for corruption :   Power + freedom of action - accountability = corruption.

·         Marketing has at least two areas macro and micro marketing. Macro marketing reveals the continuous growth of opportunities, written about in blog 10.

·         The individual is an example of where micro marketing starts. I mentioned in a previous blog a person in managing themselves can be an ideal example of where business management starts. Micro marketing is part of individuals managing themselves. If you cannot manage and market yourself ……forget about managing others or marketing a product or service.

         Let me explain. How does an individual become an achiever in his career?

         You must find the opportunities in a macro market, get yourself properly

    qualified then market yourself to an employer……or go into a business of

    your own.

·         Macro marketing provides a plethora of career opportunities. Society must provide education and training to fulfill the needs in this gigantic market. Education and skills training authorities must work with macro marketing to supply the market with the skills it needs. Skills training is now an opportunity for businesses……. what the government cannot do……business will enter this gap and see it as an opportunity.

Micro Marketing is concerned with the specific strategies and tactics employed by individual businesses to reach and engage their target markets. It delves into the details of marketing, planning, implementation, and evaluation…..this is an AI definition of micro marketing.

I would add……... “you don’t have a business without marketing”…..SOEs otherwise known as state monopolies are not successful businesses because there is no competition.  

A reminder that you are competing when you enter the business world, this  is illustrated by Porter’s Five competitive forces.

Porter’s “Five Competitive Forces” is given in the model above. The essence of the model is to heighten awareness to change – new competition, the power of suppliers, the power of buyers, the threat of substitutes, and internal rivalry.

Competition and Change

Businesses are not unlike sport….. they compete;– staying on top or near the top is not easy. It requires constant assessment of one’s strengths and weaknesses, internally and externally – awareness of the opportunities and threats. In essence, any business must sustain its competitive advantage to survive and thrive.

The Value Chain discussed in earlier blog runs in Parallel to the Five Competitive Forces. The value chain is about all those activities that make a business unique – there might be a need for more innovation, or re-engineering, or looking at the distribution channel, procurement policies, a more effective marketing strategy, etc

The four Ps of marketing are: This is somewhat historic still applies and a good place to start a blog on Micro marketing.

1.    Product: This refers to the actual product or service being offered. It includes factors like quality, features, branding, and packaging.

2.    Price: This is the amount a customer pays for the product or service. It's influenced by factors like production costs, competition, and perceived value.

3.    Place: This refers to the distribution channels used to reach the target market. It includes factors like physical stores, online platforms, and sales representatives.

4.    Promotion: This is the communication strategy used to promote the product or service. It includes factors like advertising, public relations, sales promotions, and social media marketing.

5.    People : I would like to add people and make it 5 p’s. peoples’ needs and what is good for them is a major focus of marketing…...and the complexity and the exciting challenge of engaging with people.

The Internet and the computer

Information Technology (IT) associated with the above would have revolutionised the promotion of products and services with websites, the use of online marketing and buying. This brings much of marketing to everyone’s laptop or cell phone. 

Seven cold hard facts about winning and keeping customers:

1)    It costs six times as much to gain a new customer as it does to

          keep an old one.  

          2)  On average, one dissatisfied customer will tell 11 others who

               will tell five others. That’s 55 bits of negative advertising

           3)  96% of customers don’t complain when they have a problem –

                they just don’t come back. 

          4) Because less than 4% of unhappy customers complain, management is

              often lulled into thinking all is well.  

         5)  Customers who tell companies they are “fairly satisfied” won’t be repeat

              buyers.  

         6)   68% of customers who stop dealing with a particular

               organisation do so because of company indifference. 

         7)  Organisations providing quality service grow twice as fast and pick up

               market share three times quicker than their competitors.

 It can be a rude awakening for a firm to find out they are not held in the esteemed position they had believed. It needs market intelligence, feedback, surveys.

Most of all, the bosses must not be surrounded by sycophants….a boss needs to hear the problems and turn them into opportunities. Top CEOs want to hear the bad news for things to be fixed, the good news can wait. 

Marketing  and Salespeople

In my first blog on marketing in Business Management, I was taken to task by one of my readers and a good friend for not emphasising enough the value of top effective salespeople in a business. Here is a quote from my friend. 

“While Marketing creates awareness, generates interest and positions the product, Salespeople are more robust and transactional. Sales involves breaking down doors, building relationships, negotiating and finalising the deal to the benefit of both parties”.

Where a firm mostly sells to other businesses my friend is right …...Business to business, but business to consumer the days of the hard sell might be over…...after all you are supplying what they need.

The salespeople are part of micro marketing and often the firm they work for will be judged by the conduct of the salesperson.

 I like the difference between selling and marketing described as…… selling focuses on the needs of the seller…… whereas marketing focuses on the needs of the buyer (customer). Selling is concerned with the seller’s need to convert product to cash, while marketing is associated with satisfying the needs of the customer by paying attention to a whole cluster of needs.        

Generally, one deals with salespeople one likes and respects. Their professionalism, their knowledge of their product, their sincere interest in their buyer’s requirements, their honesty, especially in saying if they don’t know. Their conduct, returning calls and communicating timeously.

Finally let these good salespeople not forget the analogy of the twin the towers I made in Blog 9 headed Marketing. I gave on signalling criteria and user criteria in marketing.

Summary and Conclusion

In marketing both macro and micro are at the heart of business management. The principles of marketing have influence on other organisation providing a service to society 

When business uses empathy in marketing……how much more important is the focusing of political parties on empathy for the needs of the voters .

“People who are successful in making a difference in the

market, especially in providing leadership, tend to nurture

optimism within themselves and try to detoxify cynicism and

pessimism. That is one of the reasons they are effective.”

John Kotter

 Neil Wright

Macro aspects of Marketing

Macro Marketing

Macro Marketing focuses on the broader economic and societal aspects of marketing. It examines how marketing influences the overall economy, industries, and consumer behaviour on a large scale. 

Not for nothing is marketing considered by many authorities of business management as one of the most important subjects in business. There is a need to broadly divide marketing into macro and micro divisions. In this blog we discuss the macro-overview. Blog No11 will concentrate Micro Marketing 

First, let me answer the question: Where are we?...... in this series of marketing. Blog No 8 Part One: this was my introduction to marketing

Blog No 9 “A Sense of Urgency” by John Kotter…...it was a lesson for Marketing

Blog No 10 Part Two:  Macro aspects of Marketing

Blog No 11 Part thee:  Micro aspects of Marketing   

 My target market for this series of blogs are for people in business or interested in Business Management. They could be individuals as sole traders, startups, SMEs (Small and Medium Enterprises) family businesses to large corporations and multinational companies.

 Businesses are going to achieve Job Creation……...the beginning of tackling poverty and growing our economy. All businesses need to be a learning and teaching organisation if they are going to sustain being thriving and profitable entities. This is Particularly important now where there is a great deal of ignorance about business.

 I will in this series cover all areas that make up the value chain of a business. Six core subjects are taken from Michael Porter’s value chain.1) Marketing, 2) financial management 3) strategy and structure, 4) operations, 5) technology 6) human resources.

World Developments influencing Macro Marketing 

The market does change and our management authorities, led by Peter Drucker impressed on practising managers, they should be aware of World developments. E.g. Chat GPT in IT – What impact will this have on marketing in the future? 

Then Climate Change, the Green  and Circular……... the green economy should include the infrastructural  restoration from  storm and fire damage, it is reactive. Restoration must also be proactive ……doing something before the devastation from storms, hurricanes, fires and flooding……including the rise in the sea level.  

It all makes one think. What do we need in the future? Who is going to make it happen? Business…….where there is a need business will deliver……business will also fix what is broken.     .  

We have started off on a strategic planning footing in this blog on Macro Marketing…… let me mention the three simple questions in strategic planning.

·         Where are we?

·         Where are going?

·         How do we get there?

These three questions are relevant in marketing. How often should a leader of any organisation ask themselves these questions? The SWOT analysis of strategic planning is also useful. The OT (OPPORTUNITIES and THREATS) Assists marketing in assessing the environment marketing is likely to operate in. Both the weather climate environment, also the socio-economic and political. 

 The OT can also apply to the micro side…...opportunities that businesses may be able to pursue because of a variety of reasons, namely, capital both hard cash and intellectual capital (dynamic management expertise)……..this to investment in new developments.   

Marketing stimulates  imagination and must embrace thinking big. What of the capital needed for these massive developments ?. Let me say it again we need to grow the economy 6 to 8 % annual compound growth of GDP for at least 15 Years.

Only business can do this with the help of a committed government and a civil society…… that doesn’t accept….. just muddling along. SA needs to use the resources it has. 

Once we start growing like this, we have seen first how the US grew and developed and closer to us Germany and Japan …….followed by many, South Korea, Ireland, Singapore, Costa Rica, Estonia (written about by Temba A Nolutshungu) and more even Ukraine, China and India. 

On Germany rising like phoenix after the second world war…...we thought it all happened because of the Marshall plan, massive investments from the US, Wrong.

 After the war West Germany followed a free-market economy …... in a constitutional democracy with all the rights for all individuals……the rule of law, bill of rights, freedom of expression and association, separation of powers, the legislative, executive and judiciary. I might also add a federal system of government.  

Two gentlemen are mentioned as leading this direction Konrad Adenauer and Ludwig Erhard, they also advocated European integration, later the creation of the European Union. Family businesses led by hardworking and enterprising individuals…...they  became a strong force in Germany. Many businesses led Germany to become one of the leading export countries in the world. Yes, the businesses needed capital, supplied by the Marshal Plan and by supportive German Banks.  

The Industries the Market covers

The market consists of industries and economies a broad list of core industries is as follows

Major Industries in the World ranked by size

Here's a list of the major industries in the world, starting with the biggest:

1. Technology: This includes software development, hardware manufacturing, telecommunications, and internet services.

2. Healthcare: This encompasses pharmaceuticals, medical equipment, hospitals, and healthcare services.

3. Finance: This includes banking, insurance, investment, and real estate.

4. Manufacturing: This involves the production of goods, from automobiles to consumer electronics.

5. Energy: This includes oil and gas exploration and production, renewable energy, and power generation.

6. Retail: This involves the sale of goods and services directly to consumers.

7. Transportation: This includes airlines, shipping companies, and logistics including online.

8. Agriculture: This involves the cultivation of crops and the raising of livestock.

9. Construction: This involves the building of infrastructure, such as roads, bridges, and buildings.

10. Tourism: This involves the provision of services to visitors, such as hotels, restaurants, and attractions.

Note: These are broad categories, and each industry can be further divided into smaller segments. For example, the technology industry, Google Gemini gives 26 segments under 7 headings. A growing number of segments and opportunities for Job creation. 

New Industries and their segments open  opportunities for Marketing

In marketing  businesses need to be aware of developments in these major industries and their segments, some industries are moving faster than others because of the advances in technology. Notably in technology and healthcare. Further research can be done into the growth of segments, Google Gemini was my source. Marketing is assisted by developments in digital and social media. Much of this technology in used in micro marketing.  

Top Economies by Employment: ranking major economies by the numbers employed on average worldwide  

1. Agriculture: This remains one of the largest employers worldwide, especially in developing countries. It includes farming, livestock, and related activities.

2. Manufacturing: The production of goods, from automobiles to electronics, is a significant source of employment in many countries.

3. Services: This broad category encompasses a wide range of industries, including retail, healthcare, education, hospitality, and finance.

4. Construction: Building infrastructure like roads, bridges, and buildings provides employment opportunities in many regions.

5. Government: Public sector jobs in administration, education, healthcare, and defence are a major source of employment.

6. Wholesale and Retail Trade: The distribution and sale of goods to businesses and consumers is a significant employer.

7. Transportation and Logistics: The movement of people and goods, including trucking, shipping, and aviation, is a major industry.

8. Information and Communications Technology (ICT): The development, production, and distribution of technology products and services is a rapidly growing sector.

Other Notable Economies

Healthcare: While included in services, healthcare deserves a separate mention due to its increasing importance.

•   Education: Another essential service sector that provides employment opportunities in various roles.

• Tourism: The hospitality and travel industry can be a major employer in regions with natural attractions or cultural significance.

• Energy: The exploration, production, and distribution of energy sources (oil, gas, renewables) can be a significant employer.

Note: The specific ranking of these economies can vary depending on the country or region. For instance, in developed countries, the service sector might be the largest employer, while in developing countries, agriculture and manufacturing might be more prominent.—/ 

We could add to this list Sport including all the segments that contribute to job creation and the economy.

Economic Impact

• Job Creation: Sport in general as an industry creates jobs in various sectors, including coaching, administration, media, and hospitality.

• Tourism: International  matches and tournaments can attract tourists, boosting local economies.

• Social Cohesion: The Paris Olympic games is an example of a role played in promoting social cohesion and unity in the world.

• Women entering sports previously confined to men: this is a growth sector attracting growing number of spectators. 

Education Skills training and Employment

The lack of skilled persons with a broader education is a block to achieving that 6 to 8% percentage compound GDP growth for the economy. Skilled and trainable people will be needed when the boom in the economy takes off. 

In overcoming this shortage, important that strategic planners in education and skills development know what industries and segments are growing and what skills will be needed and what subjects should be taught. Leavers also need to be prepared for continuous learning and be able to become excited about their future careers. 

“Striving for Excellence – Going Back to Basics”  

“The Excellence Dividend” is my reference from Tom Peters’ latest book.  The book is regarded as a sequel to his 1982 book “In Search of Excellence” that he co-authored with Robert Waterman.  The book that shot the lights out of the business world, it was so successful.

What are these basics in excellence?  Let me summarise a few: 

·         Excellence is seemingly small acts that shout “We care” and which linger in the memories of those we interact with – our own people, our communities, and our suppliers, putting people first – Ubuntu. 

·         Excellence is a culture; it is reflected in the persons attitude towards the coming day, excellence that translates into an emotional bond with customers and communities.  It cannot be replaced by algorithms.  Excellence is a human-driven affair, a state of mind, not a computer-generated exercise.  Excellence is sustained by a culture of excellence. 

·         Excellence in management is a grand human achievement.  More about this in the series. 

·         “We are who we hang out with”.  Instinctively we might know this.  Peters devotes a chapter to this.  The point he makes is that diversity is enriching to society, should be celebrated; it precedes excellence. This diversity is from the top down, a board of directors → managers → shop floor to quote from Peters’ book: He from a book written by Scott Page “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies.”  

·         A passion for design – a differentiation or the power of design.  Steve Jobs might have put the power of design on the map.  It is a principle now.  I like the quote “People behave in a peaceful harmonious way when their surroundings and equipment are aesthetically and beautifully designed”.  That’s an incentive to achieve living areas that make a statement about quality and design. Design is ……… 

Design = Care

Design = Elegance

Design = The best of human achievement

Design = Contribution to human culture

Design = Respect

Design = Thoughtfulness

Design= Avoiding insult

What a statement design makes.  And what an indictment on society when we don’t care what something looks like, what state it is in.  Not for nothing is design eye-catching!

 Excellence certainly has a place in macro marketing of achieving businesses and other organisations. 

Summary and conclusion 

Philosophical content in marketing e.g. The concern and care for other’s needs, empathy……. should be a feature of our lives. Living outside oneself, becoming an achiever and not a taker……. in a world full of opportunities.

Macro aspects of Marketing

SENSE OF URGENCY

 A “sense of urgency” is an important leadership trait. How often has one visited an operation, a store, hospital, police station and there has been no sense of urgency? Nothing seems to get done.

“An organisation that can sustain a high sense of urgency over time has the potential to become a high-performance machine, where results go from good to great and beyond.”  A quote from Kotter’s book

 John Kotter, a leading management authority, gives some interesting insights.

 A False Sense of Urgency

A false sense of urgency – people looking as if they are busy, rushing around, looking as if they know what they are doing, not getting anywhere…. fast.  Their flapping around is a smokescreen.  Why would they do this?  Good question - could be because they don’t know what to do or because they are lazy, but they need to fool somebody or even themselves that the matter is in hand. This attitude is shortsighted and dishonest.

 Often people have difficulty in saying “I do not know … I must find out.”  For them this is like admitting a weakness.  Not being able to say “I do not know” has a great deal to do with maturity and a lack confidence. Sometimes individuals blame others, often displaying some urgency in blaming others. They blame others for failing or being dysfunctional. It is part of the same smokescreen.

True Sense of Urgency

A true sense of urgency is driven by a deep determination to win.  It is focusing on critically important items that need attention, now.

 Complacency

The opposite to a sense of urgency is complacency, being “laid back”. 

The dictionary definition of complacency is “a feeling of contentment or self-satisfaction, especially when coupled with a lack of awareness of possible danger or trouble”.  Complacency often arises from success.  The person, or organization, has been successful and falls into the trap of thinking the  status quo will remain forever.

  Arrogance and complacency often go together.  Complacency is one of the dangers that face successful companies.  Key managers become complacent, their focus becomes inward, they fail to see what is happening to the market or other developments outside the firm, like new technology.  The larger the firm the more likelihood of complacency: “We are so big nothing can happen to us”, might be the thinking.  IBM is an example; it once turned down the PC (personal computer), because they knew better.

Creating a True Sense of Urgency

The first tactic to avoid complacency is by bring the outside in – reconnect the firm with the real world. Listen to customers, listen to employees; do surveys.  Many a firm has a false sense of how good they are and how valued they are by their customers.  Surveys often reveal the opposite.

 The second tactic, have a sense of urgency everyday.  Be wary of being so busy and cluttered up with appointments and low priority activities that you don’t have time to be urgent about what really matters. Do things timeously and with speed – keep up to date, delegate and reply to calls, letters and e-mails as quickly as you can.

  In communication remember to talk to people’s hearts as well as their heads, be passionate, show feeling and inspire. The point Kotter makes, is that unless you speak to people’s hearts and raise some emotion, facts and figures, items from the head, will not achieve sufficient action. 

The third tactic is to find opportunities in a crisis.  Some people might succumb to a crisis – there is a crisis, all has gone wrong and there is nothing to be done.  The positive approach is to look for opportunities. In an economic crisis, a recession is an example, where winning firms upgrade their services and products to attract custom in spite of the downturn. In boom conditions firms are often pulled along by the demand. In a recession you must push. Achieving when you have to push can be more fulfilling, one is being challenged, there is a need to be even more creative and resourceful.  

Avoiding a false sense of urgency in a crisis is vital, being jolted into action, and then proceeding without a structure and sense of strategy is problematic.    

Creating a crisis may also have its place to elevate a sense of urgency.  It could be an imagined crisis as a means of heightening awareness of how the organization should react.  Like a fire drill, so when it happens everyone is prepared.  In the increase of robberies to small businesses and households. A crime drill might highlight what is needed.  The robbers’ strongest weapon is surprise, nearly always in a crime, victims are caught off guard.

 The fourth tactic dealing with No! Nos!  persons

In most organisations there are persons who are blocks to true urgency.  They are normally talented and competitive in what they do, good communicators with a sense of authority – might be an older person with considerable experience. For some reason they put a block on the organisation from making real change.  They know better, they are more than skeptics.  A skeptic might be annoying and slow down movement but might be very useful in preventing naïve enthusiasts from creating damage.  But a No No raises anxiety, kills urgency and can be very dangerous.  Kotter concludes, “say goodbye to these individuals”.

 Are there some No Nos in your firm, holding up progress?  In our battle against crime policy - are there some No Nos that prevent a sense of urgency in tackling the problem.

Sustaining that true sense of urgency is the challenge for organisations. 

A true sense of urgency must be ingrained in the culture of an organisation. I did business with some top firms and every time we really succeeded and produced good results, they were the most difficult. They knew that generally, to quote Kotter again:

 “The basic pattern is simple: urgency leads to success leads to complacency”. 

Successful firms or organisations prevent this from happening.

 Weekly meetings

Structure helps to sustain urgency, the weekly report back meeting, checking KRAs (key result areas), looking at the calendar ahead, checking on  the “ to do lists”. A good practicing manager can turn up the urgency at these meetings, put people under pressure who are behind. 

 In our transforming society in South Africa the lack of a true sense of urgency maybe a core reason for the lack of service delivery and ineptitude in some institutions, hospitals, schools and police stations.  Creating the right culture with a sense of urgency is often what is needed.  

John Kotter’s book “ a Sense of Urgency” provided a great deal of information in this blog  

 Neil Wright

Marketing: Part One in Business Management:

Introduction

                          Porter’s Value Chain for businesses

Marketing is a link in the value chain of businesses as shown in the diagram above……historically marketing has developed independently making its own contribution and has boosted not only businesses but other organizations as well. Read more

Signal Criteria  and  Use Criteria of Marketing

The implosion of the Twin Towers of the World Trade Centre in New York 9/11/2001  dramatizes  the disaster that can happen when the two criteria between a buyer and seller fail. Let me explain.

The seller puts out signal criteria, first sets the parameters and draws the attention – this is achieved through all those promotional tools such as websites, advertising, brand names, media reports, TV and radio magazine programs, as well as one-minute elevator pitch  presentations . It is communication that strikes a chord and gives a message that stays.

The experience of the buyer, use criteria  the product or service will be used because of signalling – if the user is pleased, accepts, is rewarded and believes the product or service either improves user performance or reduces user costs or both, then we have a chemical equation, like H2 + 0 = H20 (water). Signalling Criteria + Use Criteria = Success.

The seller is not going to achieve user acceptance without signalling, and the better the signal the more pressure to achieve use criteria. Without signalling the public doesn’t know what you are about, whether you want to succeed or not, whether you believe passionately in your product or service – be this in an institution of education  or the promotion of a Volkswagen car.

Signalling must be continuous, the public or users need to be reassured that they are getting the best. Good signalling should not mislead anyone, what the user needs is apparent and then signalled.

If there are lies, dam lies, fake information… credibility is lost…. It is…. 9/11. The implosion of Twin Towers one tower representing sellers signal criteria and the other the buyer use criteria……they have been flattened.

Historic developments

In earlier times, a period from 1900 to1980 the emphasis was on production. A good product sold itself with limited promotion…...this particularly applied to home appliances as well as cars. Henry Ford said of his Model T Ford. “You can buy any colour as long as it is black”. This was the attitude then, production was king.

In countries like Germany quality was a key factor, manufactured products lasted a long time and if they broke down, they were fixed within a short period. Krups Household Appliances was an example. If a product could not be fixed in 48 hours, a new product was supplied free of charge. That’s how confident Krups was of their quality.

This era of production was followed by the rise of mass- production. Price would have played a major part; competition would have been stiff, assisted by mass media (radio and TV). Countries like Japan became very good at replicating products, at first, of poor quality (Jap crap), later Japan led the world in quality standards, quality became their market strength.

Technology

The advances of technology played a part in mass production…...new and more user-friendly models came onto the market frequently. There was a demand for updated models using new technology this created the throw away society. Electronic models of numerous products, not only home appliances but computers, printers, copiers, cell phones and more……were only kept for a few years.

 Customer Centric

Marketing progressed after the Second World War (after 1945) together with management. Competition increased in a world that supported the free market.  By the 1980s the focus of marketing was to give the customer what they needed, it ment suppliers becoming customer centric. Businesses focused on understanding customer needs, preferences, and behaviour…… to tailor make their offerings and experiences. This took the focus away from hard selling.

In essence, modern marketing is about building long-term relationships with customers by providing value, addressing their needs, and creating a positive brand experience.

 The difference between selling and marketing

 Selling focuses on the needs of the seller, whereas marketing focus is on the needs of the buyer (customer). Selling is preoccupied with the seller’s need to convert product to cash, while marketing is associated with satisfying the needs of a customer by paying attention to a whole cluster of things – including creating, innovation, distribution channel, quality, use or consumption of the product, etc

 Michael Porter

Michael Porter became one of the leading thinkers and authors in marketing. He might have been the first to state that a product is either purchased on price or on differentiation…...  a quality product with refinements. Porter is also known for his work in Strategic Planning. His major contributions include signal and use criteria, the two charts the one in our introduction the Value Chain of a business entity and the other the Five Competitive Forces that determine an industries profitability.

Strategic planning also started playing a major role, emphasizing a firms marketing philosophy…… important were brand names, mission statements, and a firm’s core values both moral and in competency. The SWOT analysis (strengths, weaknesses, opportunities and threats) is a great tool in a buzz session for evaluating a firm’s marketing strategy.

Marketing’s leadership Role in Society

Marketing with its customer centric approach joins management and can be used by any organization. This could be the Department of Education, Department of Health, Home Affairs, or our Police Force, could we suggest a signal? For our Department of Education, “Inspiring Curiosity, Igniting Possibilities.”

Empathy in Marketing

I first saw the word used in marketing in Walter Isaacson’s book “Steve Jobs.” It was the first principle he learnt in marketing from his mentor.

·         Empathy is a word that sits between sympathy and compassion.

·         Sympathy is feeling sorry for someone else's misfortune,

·         Empathy is the ability to understand and share the feelings of others. It is placing oneself in another person's shoes.

·         Compassion is the desire to mitigate the pain of others.

Marketing is using a strong word; empathy not yet moving to compassion, but it is indicating its sincere caring for customers. I am not going to mention the cynics. It would be great, if South Africa could overtake businesses’ empathy in  marketing by becoming a compassionate society …. mitigating the pain of others.  

Steve Jobs clarified the principle of giving the customer what they want. To quote; “Our job is to figure out what the customer is going to want before they do. Mostly people don't know what they want until you show them.”

Another quote from a Marketing sage, Philip Kotler

“Good companies will meet needs: great companies will create markets.”   

Summary and Conclusion

Marketing is one of those endeavours that takes one outside of oneself. That's where the opportunities are...  out there, in the wide open world, with blue skies. Marketing is by nature creative, certainly imagination and innovation come from within oneself but the action of making it happen puts you on the front foot.

Neil Wright

The Practice of Management Part 2

Introduction

“Nothing is quite so powerful or so natural as engaged managers who are committed to developing themselves, their institutions and their communities.”  Quote from the master, Professor Henry Mintzberg from his book “Managing”

Before saying more about Mintzberg, the following is a summary of management’s doctrine and philosophy we have inherited from the legacy of Peter Drucker.  

 ·         Humanitarian inclusiveness and openness. He stated management could apply to any organization, it could be a church, a school, a union, and not only businesses.

·         Management might have tamed business from some of its earlier ruthlessness, and maybe it is still being tamed.

·         Drucker was very much an academic, his doctorate, professorship and then the pursuit of knowledge, research, objectivity, using facts, doing analysis, avoiding opinions. We have said that he was practical, used common sense, not always a strength of academics. He came to business from academia.

·         We can value business management being very much part of the study at universities with their well-known business schools.

·         He made us aware of the global village we live in, nothing brought this home more than the COVID-19 pandemic. Drucker talked about being aware of the developments in the world including new technology.

·         We must add the autonomy of businesses, their value systems following core values in morals and competencies, with the need for integrity.

·         Then the focus on the customer as being the prime driver of the business’s achievements.

 The practice of Management as a feature

 Not all managers are associated with the practice of management. A manager can be an administrator or a controller – management can be divided into of staff management, and line management, the practising manager is very much part of line management  . 

Clem Sunter made a big impact by describing managers as either Foxes or Hedgehogs. The practising manager is a fox. We need hedgehogs ....efficient, competent bureaucrats and administrators. They slow things down, allow foxes the time to think.  

 Professor Henry Mintzberg 

McGill University in Montreal, Canada is Henry Mintzberg’s University, where he heads up the Business School. He came up with a Masters’ Course, IMPM (International Masters in Practicing Management).  These Master Courses are now given in Universities in England, Canada, India, Japan, Korea and France – including in South Africa at the Gordon Institute of Business Science at Pretoria University. 

Does this course compete or compliment  the Standard Master of Business Administration ( MBA)? I can’t answer that. But Mintzberg is firmly of the view that the practice of management is learnt on the job from experience.

  MBA covers business subjects, marketing, accounting, financial management, human resources, strategic planning, compliance and more. But to learn how to manage and lead diverse persons in their jobs is a skill that must be learnt by the practising manager themselves.

 The Career Path of the Practising manager       

 The Practising manager must be qualified and experienced in the industry or in a sector of that industry, this before even thinking of becoming a manager. The person may have had some years in tertiary education and skills training or after leaving school might have joined a firm and worked his way up the ladder.

 The newly employed will inevitably start in a team or unit  under a  manager (practising). In business divisions or units, they are in appropriately known as responsibility centres. The practising manager being accountable for performance.  

•  The newly employed can climb the ladder, if ambitious, keeps up to date with continuous learning, self-taught, mentored and coached by the firm.   

• The first step on the way up is being appointed a junior manager,                      ( foreman/forewoman) age 24 to 30 years.

• Next step, middle management could be operations manager, age 30 to 40 years

• then top management, could be general manager, 40 to 50 years

• then on the board of directors, even managing director /CEO 50 to 65 years

• and then Chairman/President  60 to 75 years ,        

We are talking here of a mature firm that has proved its worth in its industry and is stable and is sustainable. The ages above are a perception not written in stone only a realistic guide.

 It is in these years of 24  to 50 years that managers can hone their skills in managing and leading …...It is the practice Malcolm Gradwell was talking about. It is also between  these ages that Prof Mintzberg believes is a good time to return to the classroom and undertake a IMPM degree.     

 “The classroom is a wonderful place to enhance the comprehensions and competencies of people already practicing management, especially when it draws on their own natural experience.”  I quote Mintzberg again:

 The IMPM focuses on the manager as the person responsible to achieve developments through a diverse team of others. Communication is one of those skills, it is often not a strength of an executive manager whose training has been in engineering, accountancy, or computer science as examples.

Staff leave or stay not because of the firm but because of their immediate manager.

 If communication skills are a collective term, it must embody a whole host of subjects, coaching, psychology, instinctual leadership, even neuroscience, conflict resolution, motivation, empowerment, staff selection and more. Let me mention AI (Artificial Intelligence) How important is AI in the future of management?

 The Triangle of Management Practice

Tom Peters famous for co-authoring with Robert Waterman “ In Search of Excellence” described Prof Mintzberg as a modern management thinker in line with Petter Drucker.

I quote from Henry Mintzberg’s book; Simply Managing  He extends  his description of management as a practice. The triangle below places management practice in the centre of three areas  – Art, Science and Craft.

Science: Management applies science, it is not in itself a science. Science provides the knowledge needed by a practising manager. Science develops systematic knowledge through research.

• Art: Produces insights and vision. Mintzberg adds that, based on intuition, we often surpass ourselves by coming up with some amazingly creative ideas.…innovative, and imaginative.

• Craft: Learning from experience. This is often the hard one. In whatever field you are managing, you need knowledge and qualifications. You might acquire the knowledge through experience.

• Mintzberg summarises these areas of the triangle as follows:

• “Art brings in the ideas and the integration; craft makes the connections, building tangible experience; and science provides the order through systematic analysis of the knowledge.”

 Achieving executives know what the practice of management is about, they value it, they want to know more about it. They are makers not takers. They are humble, understanding there is always more to learn. They are people of integrity – you can’t be accountable, be responsible, if you are crooking the system. Mintzberg even described Management as a calling.

 Two quotes from Peter Drucker one on leadership and management and the second What defines a manager.

Leadership and Management

There is no substitute for leadership. But management cannot create leaders. It can only create the conditions under which potential leadership qualities become effective; or it can stifle potential leadership.

What defines a manager?   

The function which distinguishes the manager above all others is an educational one. The one contribution he is uniquely expected to make is to give others vision and ability to perform. It is vision and moral responsibility that, in the last analysis, defines the manager.

Summary

Seven blogs completed to put business management theory and practice at centre stage for South Africa and Africa. Encouraging for me to discover in my notes the emphasis Drucker gives to education……managers are expected to give others vision and moral responsibility. …...it requires education. Top businesses must aspire to become a learning and teaching organisations.

The practice of Management : Part One

Practice isn't the thing you do once you're good. It is the thing you do that makes you good. Quote from Malcolm Gladwell

We will return to the quote later, but first to the dawn of this golden era of management.

In the early 1950s General Motors (GM) was the largest and arguably one of the most successful companies in the world. Much of the credit went to Alfred Sloan, he was the CEO (Chief Executive Officer) from 1923 to 1956, that is a massive 33 years.

Sloan called in Peter Drucker to do a study on management areas at GM, it was a feather in Drucker’s cap, a notably recognition at this early stage of Drucker’s life by this famous CEO of GM.

It was expected that Drucker would pour adulations on the success of GM and by association in praise Alfred Sloan as the CEO.

However, Drucker did not!

By this time, Drucker had written three books, and one was in the making.

The End of Economic Man 1939

The Future of Industrial Man 1942

The Concept of the Corporation 1946 

The practice of management1954 (in the making)

Important that I give a brief background to Drucker…… he was an ideal of persons to set the stage for this golden era of management…… and given this period he lived through……..two World Wars.

• 1909 born in Vienna, Austria, into a high achieving scholarly family.

• 1931 completes a doctorate at the university of Frankfurt Germany in public and international law. 

• His first post as foreign and financial editor of a Frankfurt city paper General Anzeiger ……this was during the rise of Hitler's Nazi Germany; he wrote a philosophical essay condemning Nazism.

• 1933 he left for England.

• 1937 he left for the USA and continued his reporting on financial and business news.

• 1940 to 1942 he taught at Sarah Lawrence College which led to his appointment as professor of philosophy.

• 1950 to 1972 he was professor of management at New York University Graduate School of business. While at this post, he had this assignment at GM.

Enough background on Drucker for the moment, he was an esteemed Academic, doing research, he was a prolific writer. He was easy to understand writing in simple English………unlike some academics.

Drucker’s Research Report on GM management

The report shocked many that eagerly awaited his findings, see findings below.

• The assembly line: it created inefficiencies, it moved at the pace of the slowest person.

•  It was demotivating, the end result was not seen by most of the assembly line operators. No pride in what was made.

• A plethora of minutiae of checks, rules and controls with layers of bureaucracy. This slowed down decision making. Created adversarial labour relations. This did nothing for creating the self- governing plant. A term Drucker used in his writing.

• There was an absence of decentralized operation. Drucker mentioned that with GM's hierarchy of command and controls they would be slow to respond to a rapid change in the future.

• In summary, the difference between Drucker and GM was, GM saw the workforce force as a cost, in the quest for profits…... Whereas Drucker saw people as a resource, if more absorbed in their jobs, this would result in benefits for both the firm and the staff.

The drama: How would Alfred Sloan react to these findings? Drucker was years ahead of his time …….seeing the dangers of the assembly line and the attitude to staff as only a balance sheet cost. The Japanese showed the way with their Kaizen practice.

The reaction from Sloan was a disappointment, anticlimax, he said nothing, even when his book was published ”My Years with General Motors.” He might have disappointed some people only setting out the scientific credo of GM’s philosophy, he talked little of the people, because in Sloan’s mind people were of insignificant importance relative to the systems GM followed.

The ignoring of Drucker’s criticism by Sloan is explained as:  Drucker’s criticism was more implicit than explicit. Drucker said Sloan had vision rather than perspective and implied that leadership had been sacrificed to the rulebook. This is a quote from my source in relaying this.

The meaning of implicit and explicit. We must understand that implicit means being more diplomatic than being confrontational, as is implied by being explicit. In communication a subject I will present on a blog later. It is important to know the difference between implicit and explicit.

Below is a summary in bullet points of Drucker, on management before  writing his book “ The Practice of Management”.    

 Management as a separate function and discipline, Drucker’s notions:

• social and environmental responsibility of the organisation

• relationship between the individual and the organisation

• role of top management and the decision-making process

• a need for continual training and re-training of managers with the focus on their own responsibility for self-development

• nature of labour relations

• imperatives of community and customer relations.

Drucker’s fourth book “The practice of management”  established Drucker as a leader in his field. It set trends in management for decades and reputations were built by adopting and expanding on the ideas which Drucker set out. The book is still regarded by many as the definitive management text.

Drucker stated that there was only one valid purpose for the existence of a business: to create a customer. He argued that an organisation is kept afloat, not by internal structure, controls, organisation and procedures, but rather by the customer, who pays, and decides what is important. He set out eight areas in which objectives should be set and performance should be measured:

• market standing

• innovation

• productivity

• physical and financial resources

• profitability

• manager's performance and development

• worker's performance and attitude, and

• public responsibility.

The practice of management, the book is probably best-remembered for  Management by Objectives and Self Control (Drucker's term - he didn't coin the MBO acronym).

The book also identified the seven tasks for the practising manager of tomorrow. He or she must:

• manage by objectives

• take risks and allow risk-taking decisions to take place at lower levels in the organisation

• be able to make strategic decisions

• be able to build an integrated team with team members capable of managing and measuring their own performance and results in relation to overall objectives ……self-management.

• be able to communicate information quickly and clearly, and motivate employees to gain commitment and participation

• be able to see the business as a whole and to integrate their function within it and be able to relate the product and industry to the total environment, to find out what is important and what needs to be taken into account. This perspective must embrace developments outside the company's particular market or country and the manager must begin to see economic, political and social developments on a world-wide scale.

Summary

Drucker must be remembered for his inclusive and humanitarian principles that underpinned the functions of management. He was also a scientific thinker, so these principles contributed the universal practices of achieving results for organisations…… Business entities topping the list.    

Part 2 will continue the subject the practice of management and I use Professor Henry Mintzberg as my reference. Like Drucker challenged the management at the time of Alfred Sloan of GM. Mintzberg challenged other aspects of management that he believed were moving away from reality. By the end of Part two, you will see why at the beginning of this blog, I used Malcolm Gladwell’s quote, in high lighting the Practice of Management.

Neil Wright

MANAGEMENT: Part two of Prologue: Business Management

                                                                                                                                        Date 26 July 2024

Introduction

I made the distinction that business was the hardware and management the software. More specifically management is the human side of this productive partnership. We know humans are capable of boundless positive creativity and in contrast, mammoth negative destruction. What makes the difference?  Vision and Values.

HISTORY of MANAGEMENT

The term management has its roots in the 16th century derived from the Italian word maneggiare meaning to handle or control. It is also related to French word manège and relates to the art of training and handling horses.

Henri Fayol (1841–1925) was the first person credited for identifying management as a discipline of its own. He was a French mining engineer. To plan, to organise, to command, to co-ordinate and to control, the five areas that formed the foundation activities of management.

Peter Drucker (1909 – 2005) took management to new heights. He became one of the most influential pioneer management thinkers. His books were widely read, he was followed by numerous authors mostly academics from Business schools around the world. Referred to as Management Gurus they have continued to build the concept of Management into a sustainable force for achieving organisation.         

“We are beginning to realize that management itself is the central institution to our present-day society, and that there are very few differences between managing a business, managing a diocese, managing a hospital, managing a university, managing a research lab, managing a labour union or managing a government agency.” A quote from Drucker.

Business has been the most receptive to management practices and has achieved value creation through productivity.   

Perhaps the highest accolade to management comes from Rosabeth Moss Kanter:

“Good management is our best hope for world peace”

There are more accolades

The words of Gary Hamel in his book “The Future of Management.”

“Taken cumulatively modern management theories are one of humanity's greatest inventions - right up to there with fire, written language and democracy. Management has allowed society to draw maximum benefit from production capacity of the industrial age”.

What of the future of management, this is another quote from Gary Hamel.

 “No other innovation provides a greater return than management innovation. If you improve how, you manage work, the potential profit is unlimited because managing covers so many aspects of work.”

Wow! Now we know! The Japanese with their Kaizen practice of “continuous improvement in small steps,” quality circles, suggestion system and more. The just-in- time concept would have resulted from management innovation.

 THE CONCEPT of MANAGEMENT

The Concept of Management started after the First World War and accelerated after the Second World War. Up to this time the military’s command and control, with its hierarchical structure, ensured people carried out what they were told to do. In peace time, the management model took over from this autocratic model.

Management was characterised by being practical, facing reality, being able to make a collection of diverse and knowledgeable groupings and individuals productive in achieving objectives.

Planning, leading, organising and controlling were regarded as the initial building blocks of management. It has since gone beyond this, has embraced democratic value systems and uses science and technology in performing many different management functions.

Management together with business has played a major part in moving many nations out of poverty. This is well illustrated in Hans Rosling book “Factfulness,” with his four levels of income replacing  the binary divisions of countries into only developed or developing.  Achieving the ending of poverty worldwide, is certainly an aspiration for the enlightened leaders of the World. Nelson Mandela was one such leader, an enlightened strategist.  

MANAGEMENT and LEADERSHIP

Warren Bennis

Famous for his statement “Managers do things right; Leaders do right things.”  He was a New York born (1925) industrial psychologist.  He is best known for his leadership theory.  He is a writer and has done important research into leadership. In 1985 he studied 90 successful public figures and came up with four areas of ability that top leaders shared:

•  The management of attention. Forming a clear vision is an important bridge from the present to the future.

•  The management of meaning, e.g. communications – good skills in communicating are necessary to achieve results.

•  The management of trust – the emotional glue that bonds followers and leaders together.

•  The management of self – a prerequisite to leading – acquiring knowledge, taking up challenges.

One of his lasting impressions of leaders in his study was how leaders responded to failure………They simply don’t think about failure, don’t even use the word, using synonyms as such is a mistake and bungling.

I will in time make my article available on my blog titled “Leadership Insights,” and say more on this subject. In the practice of management, the manager must do both, doing the right things and doing things right.

I am also happy to see Warren Bennis including management of self. A prerequisite to leading.

VISION and VALVUES 

Vison:  You cannot aspire to greatness without ideals, stiving for excellence. More will be said on this subject in a later blog on strategic planning. Management does not neglect the emotional side of being inspired by the contribution business management makes to society. Purpose is important in the vision, as is sustainability, as is awareness of the environment, a SWOT (strengths, weaknesses opportunities, threats) analysis helps.  

Values: These can be divided into Moral Values and Competency Values. For greater emphasis and to be on founding statements of a business, the term Core Values can be used there should only be about three or four. 

Core Moral Values: to do what is right in relationships with others

 Example:

• honesty and integrity

• respect and empathy

•  Ubuntu            

Core Competency Values:

• accountability

• delivering on time

• innovative products

• environmentally friendly products

UBUNTU AND DIVERSITY

“Ubuntu teaches the value of inclusivity, cohabitation, harmony, and the search for reciprocal understanding. Respect for diversity is the first proof of genuine adherence to the principles of African humanism.”

Quote from the Foreword in “Let Africa Lead” by Reuel J Khoza.

THE SPIRIT of PERFORMANCE

To quote Peter Drucker. “The fact is that when a business is up there, aspiring to be excellent, they have a certain vibe – or spirit of performance, maybe “morale”.  You feel this when you visit businesses, hospitals, schools – there is a certain energy about them, a spring in the step.  You also feel it when the organization hasn’t got it”.  Drucker described this spirit of performance as arising from four areas.

1. The focus must be on performance – being productive.

2. The focus of the organization is on opportunities rather than problems.

3. The decisions that affect people must be based on true values, fairness, competitive conditions of service, reward system etc.

4. The one quality that managers must bring with them is integrity.

In these hard times, this spirit of performance will be tested. 

THE STUDY of MANAGEMENT

Business Schools at Universities in South Africa have a good record of teaching students, with MBAs (Master of Business Administration) and other degrees. At some schools certainly subjects as economics, bookkeeping and possibly business management maybe a choice. But what about our schools in poorer communities?

In ending this blog and wanting to bring the two parts together business and management it strikes me the individual is a good business model. After youths have finished with school, studies and skills training at tertiary institutions, be these professional or technical, they go out into the wide world.

They are like a business, they must market their skills and get a job, earn an income and manage their lives. It requires self-management to be a good business leader of oneself. Not to mention that later in life they might become a good leader and manager of a business entity.    

A host of authors have contributed to subjects allied to business management, this is where I learnt my management, I quote many of them in this series. These authors called management gurus, they have contributed to management evolving, building on the good and where necessary reinventing what is needed.

Professor Henry Mintzberg of McGill University in Montreal Canada is one such guru, regarded by many as the present-day leading thinker in this field. He has made a name for himself for focusing on the Practice of Management. This is the tile of my next blog. Mintzberg started a course IMPM (International Masters in Practicing Management). The degree is also given in South Africa at the University of Pretoria’s Gordon Institute of Business Science. I look forward to telling you more.

Neil Wright

Prologue to Business Management ………Part One “Business”

In this series of articles titled “Following & Leading in Business Management South Africa.”  This is the fourth blog in the series, it has in common with the first three, that of preparing the stage for the main event the Practice of Management, in summary so far.       

The first blog:

• “Getting our Thinking Right” the message was twofold, firstly, to think like a scientist and not like a prosecutor, a preacher or a politician and secondly more emotional, don’t build barriers by creating confrontation and conflict. Don’t blame people, when one is serious about change and where we must work together, listen and stay away from emotional conflict. This advice could not be better timed now that we have the GNU (Government of National Unity).

• The second blog discussed the environment in which businesses operate and how important our new government would be.

•  The third blog described the business entity, whether the business was a one person show or a huge conglomerate, it had to be seen as separate entity …….an artificial person with all the legal rights, ownerships, responsibilities, characteristics of a person including a name.

• This, fourth blog entitled Prologue to Business Management is the action and coordination that is needed to make the business come alive and to take its place in the community. This blog is and introduction and overview to business management.      

Business and Management

These two components in business management, the business can be looked on as the hardware and management the software.

Before we get into more detail, Google Gemini gave the following definitions. I did ask for the definitions to punchy and empathetic.

 Business: Business is the journey of building something you care about, from a spark of creativity to serving customers and making a difference. It's not always smooth sailing, but the rewards of creating something of your own can be amazing.

Marketing: Marketing is all about understanding what people need and crafting a compelling story to connect with them, heart-to-heart. It's about removing the mystery and frustration of getting your message heard.

Financial Accounting:  Accounting is your financial friend, helping you track your progress, understand your finances, and make informed decisions for a secure future. It's not just about crunching numbers; it's about empowering you to take control.

These answers are attractive for beginners going into business management and for veterans in business they might have forgotten that business can be fun as well as fulfilling. While on the Journey of creating this blog it made sense to have part one and part two, part one the business and part two management.    

The Business.

 Below I start the discussion on the business by posting Michael Porters Value Chain.

The Value Chain of Business.

Michael Porters Value Chain a simplified diagram of the major headings in a typical mature business. Companies are collections of discrete activities in which competitive advantage resides.

These words are taken from Porter’s description of his value chain. We are introducing our reader to the real thing, competitive business. As in sport competition provides the drive to greater achievement.    

We devote more time to this value chain in future blogs. In this short account below, I give something of the thinking and philosophy behind the value chain concept.

In the Primary activities above

·         First, it is a good framework for a business to adopt. It provides the major headings and can be used to develop a business plan. The headings in the primary activities can be changed to suit the organisation.

·         The margin: in a business this is profit, income over expenditure. We can also describe this as the money customers are willing to pay for the product or service.

·         Operations in any enterprise is the main activity; it could be manufacturing. The operations needs suppliers, linked to inbound logistics, then distribution of the finished product, outbound logistics.

·         Before operations or logistics, you need customers; this comes under marketing and sales. The margin is the necessary profit, income in excess of expenditure, this to sustain the enterprise and provide shareholders with a return.

·         The links in a chain provide the real lessons. All suppliers of services or goods are links in the value chain of the user – this may be a chain of retail stores, with all suppliers contributing to the value of the retailer. The transport company delivering the goods to the stores is an example. All add value to the retailer. 

·         Staff contribute to the value chain of the business – all the staff, from bottom to top. Awareness and appreciation of this is the beginning of a harmonious, dynamic and productive work environment.

·         The adding of value must ultimately give the user e.g. the retailer competitive advantage over its rivals.

Support Activities in the Value Chain

Firm’s Infrastructure

·         The CEO (Chief Executive Officer) heads the firm’s infrastructure, he may be the firm’s master strategist, or it may be delegated to someone else.

·         This infrastructure supports the whole value chain and provides leadership/ management of the business (general management, planning, finance, accounting, legal, governance affairs, quality management and strategic planning). Let us emphasize and Financial Accounting.

·         The board of directors and company secretary are also part of the infrastructure.

Human Resources Management

·         Human Resources Management is a critical success factor for South African firms because the multicultural nature of staff needs, good cross-cultural management is needed.

·         There is the need for skills development and a need to use the world’s best in employment practices, continuous learning, including staff appraisals.

·         The concept of the Value Chain should also be part of staff training including information on the Green Economy and the Circle economy.

Technology Development

·         Information Communication Technology (ICT) has been at the forefront of technological development in most businesses.

·          New technology is being discovered every day and decisions must be made on when and how to implement new technology. A policy on AI (Artificial Intelligence). Timing is important.

·          Does a firm wait before changing and risk the possibility of not being up with others, or does it have a first to be second strategy.

·         Real time information is crucial in controlling inefficiency and under-productivity.

·         Technology Developments would include the firm’s Research and Development R&D. This can also be crucial for many businesses.

·         All firms must be innovative to succeed.

Procurement

·         Procurement is not a narrow focus, as is the case with purchasing. Procurement is associated with “value chain activities” and is central to achieving strategies adopted by the firm.

·          The decision to outsource a non-core activity comes under procurement and is a strategic decision.  Subsequently there would be a need for close monitoring of an outsourced product or service. It becomes a supply management function.

·         As a result of increased outsourcing, companies have become more dependent upon their suppliers, thus making supply chain management a key success factor.” Insourcing is also an option.

Summary and conclusion

In preparing this blog I have become mindful that I am also on a journey and not a destination……. not yet anyway. I thought I could introduce both Business and Management in one Blog. I cannot, even though this is an introduction/overview……I did call it a prologue. I will handle management in the next blog. In conclusion, Marketing and Financial Accounting are key areas in business management ……...More within two weeks. 

Business Entity

THE BUSINESS ENTITY....also known as the firm or company. 

Quotation                                                                          20th May 2024

“Business is the backbone of a nation, the spine of a country. Without a strong economic and business structure, no nation can stand the test of time. It is the sweat of hard work, the ache of sacrifice, the drive of innovation that delivers the goods and services that make our lives better.”                                                                                 Quote by that famous British bulldog, Winston Churchill

Introduction

Business is also “A modern-day moral social phenomenon” is how businesses have been described. The social phenomenon has to do with the vast number of people employed worldwide by businesses. There are many other reasons, Read more.

The activity of a business is outside of the person.... most people want to belong to something bigger than themselves, it fulfils that role of belonging, but it does not compete with other organisations, like the church, the union, political party, or the family. Mostly the business is one of more than a few organisations, that individuals belong to.

The business provides a workplace, how important is that? Put food on the table for the family, all the necessities, and more. If they employ anyone, these business entities are responsible for attending to their well-being. More in later articles.     

Well-managed businesses are fulfilling and provide opportunities for advancement. Staff are happy, excited, and passionate and take pride in the products and services their business produces and sells. If you think I am wrong.......you need these series of articles on business management.

The Business Entity as an Artificial Person

• Business entities when they start up are mostly registered as separate entities. The analogy to an artificial person, the entity has a name, legal rights, power of contract, owning assets, employing people, opening a bank account, building up funds, and generally carrying out business like a person, generating income, making profits, and paying taxes. 

• These registered entities can be private companies, registered as Propriety Limited Companies (Pty Ltd) or Public Companies Limited (Ltd) where the owners are shareholders. Both are known as LLC Limited Liability Companies

• The business entity can also be an individual known a as sole trader/ proprietor,  and all legal requirements, tax, etc remain with the individual. The sole trader can register as a VAT (Value Added Tax) vendor. Sole trader, the individual is personally liable for all debt. SMEs( Small and Medium enterprises) as start-up businesses can be sole traders. For those starting a new business keep the business separate from yourself, start with its name.

• Other business entities are Partnerships, often used by professional bodies. Accountants, lawyers, and Doctors and other including commercial businesses.

• Trusts, Foundations, NGOs (Non-Government Organisations) NPOs (Non-Profit Organisations) there may be others.  All have to subscribe to statutes with laws, rules, and regulations.

• There are SOEs (State-owned enterprises). We enter an area that is not part of this article. It can become complex, we could include government departments, Clubs, Churches, Unions, Schools, Universities, Hospitals, and more...... They all should be managed like businesses.  The last to be added is PPP (Private Public Partnerships) this should be subject to a separate discussion.

  The Founders of Business Entities/Enterprises 

 Many businesses started from humble beginnings, Anton Rupert started his cigarette business by rolling cigarettes in his garage, and Steve Jobs with a partner also started off in a garage. From these humble begins, multinational companies grew, including the Rembrandt Group and Apple. Richard Maponya began by forming a milk delivery service in SOWETO.

Shareholders may change but the company, if it is financially sound and viable, goes on forever.  It can grow, open new branches both nationally and internationally, it can acquire other businesses, etc.  It has a strategy and a structure, its ethos and culture.  It develops a history, with personalities, and legends, all of which give it background and depth.

The founder of a business entity is often an entrepreneur and can go on to build a huge enterprise, even worldwide and in the process become very wealthy. There are many such people in America, the names Rockefeller, Carnegie, Bill Gates, Steve Jobs, Elon Musk, and Warren Buffet as well as many others.

In South Africa, too, many names come to mind. Raymond Ackerman, Richard Maponya, Patrice Motsepe, Christo Wiese. It is generally accepted that these top-flight entrepreneurs have exceptional talent, the same way that a famous sportsman, musician, or actor has an exceptional talent. It takes long hours of dedication and hard work.

 The wealth they generate is often a by-product of their prime purpose to create and produce something.  They benefit us all and should be celebrated, many new entrepreneurs are coming to the fore and many more wealth-generating centres are being created worldwide.  Entrepreneurship is not confined to individuals but also to established business entities. The longevity of these enterprises is often a product of the firm's vision and values and is embedded firm’s culture. Entrenching integrity, awarenes, empathy, pride and more tangible factors, quality, compliance and good management practices, social responsibility.      

 Michael Porter’s Five Competitive Forces that Determine Profitability

Business entities of any size operate in an industry and or in a segment of an industry. It is competition, we need that competition, keeps prices down and places emphasis on innovation.   

 Keeping the Score, Bookkeeping, and Audited Reports

 Big Six headings for business entities are marketing and financial administration, operations, logistics, technology, and human resources.  

 Businesses registered as legal entities have to comply with legislation, the Companies Act, etc., and financial records have to be audited.  There are minimum disclosure requirements, companies making maximum disclosures are a model of transparency and clarity, reading between the financial lines is not necessary, it is all there.

Governments, Unions....and Collaboration

Governments and the Unions play a huge part in the wellbeing of business. In the idealism of business management, trust, and reliability, plays a huge part between all stakeholders. Legislation can be a damper, trust businesses to do what is right and it will happen, transformation as an example. In a modern thinking business, there should be a shift in the relationship between management and workers – they are both part of the same value chain of the entity.  Collaboration is better than confrontation.

Corruption

In countries where corruption is endemic, paying bribes to have anything done, or where business contracts are given to friends or family, unfair practices together with high levels of crime are a big brake on the growth of business entities. It is a bad signal to potential investors.

 I am not sure the government is doing all it can to stop corruption. You want the President to draw a line in the sand, and say no more, and look the nation in the eye, and tell us of the Management Control Systems to be put in place. Tight controls that prevent innocent persons becoming criminals.                                        

 MANAGEMENT AUTHORITY/GURU  

Professor Henry Mintzberg

He is a Cleghorn Professor of Management Studies at McGill University in Montreal, Canada. Described by Tom Peters as “perhaps the world’s premier management thinker”, he follows in the mould of Peter Drucker.

Mintzberg says management has been pushed aside by leadership; it should be restored to its proper place, he firmly believes. One of Mintzberg’s major focuses is to describe management as a practice. He sees the practice of management as art, craft, and science. The practice can only be taught by experience. There are many functions in management taught at business schools – marketing, strategic planning, human resources, etc. But the practice of management comes from the experience of the manager, from actually managing.

Professor Mintzberg started the MBA course on the practice of management at McGill University. This has been extended to other universities. The degree is known as IMPM (International Master in the Practice of Management). Mintzberg is the author of 15 books. Some of the best known are The Structuring of Organisations; Managers Not MBAs; Mintzberg on Management; The Rise and Fall of Strategic Planning; Managing; and Simply Managing.”

Neil Wright

THE BROAD ENVIRONMENT FOR BUSINESSES

The focus is on the National elections on 29th May 2024 in South Africa   

The broad environment businesses operate under

ECONOMIC

POLITICAL

TECHNOLOGICAL

SOCIAL

CLIMATE (Change)

In South Africa, our national elections are a few weeks away they have been described as the most important elections since our first democratic elections in 1994. They are critical for the business environment. The tempo in the country is set to rise to what we experienced in The Rugby World Cup.... as tense as that.

Before continuing with the elections let us comment on the relationship business has with the government. 

·         Businesses use commonsense and are pragmatic (practical, face reality).  Businesses need to survive, even thrive, whatever the prevailing conditions are including political policies.

·         Sustainability and being in the game for the long haul … are important reasons businesses should be concerned and participate in our country's socio-economic and political direction and future.

·         Good governance is essential for businesses to thrive, the failures of the ANC government have all been written about in our press. A good summary is written by Moeletsi Mbeki in a paper titled “The Five Deadly Sins of the ANC government since 1994”.

In the build-up to the elections, the following should be understood:

·         The turning point in our social, economic, and political life was the banks subprime crisis between 2007 and 2010.

·         The economic world recession dropped SA's GDP growth to minus 2%. Inevitably the buzz of economic activity slowed down; more unemployment, deterioration in many areas, SOEs (State Owned Enterprises), and many government departments (police, health care, post office, home affairs, and more) battled with corruption and poor management.

·           Zuma was our President at the time of the subprime crisis, since then SA has not been able to grow more than about 1% GDP growth per annum. We need at least 6% to increase jobs and tax revenue to continue the prosperity that started with our becoming a constitutional democracy.

·         A dramatic event took place In the build-up to the end of the May elections. Zuma formed and registered his party – the MK (uMkhonto Wesizwe) Party.  A breakaway from the ANC. (Stop Press…a major battle between the two founders both Zuma and his second-in-command are calling for each other’s expulsion)

. What would this now mean for Cyril Ramaphosa and the ANC? After all, keeping the ANC party together and winning the next elections outright was a priority for Ramaphosa.

·         Zuma was never expelled from the ANC for bringing the organization into ill repute, it took the formation of MK for Zuma to be suspended from the ANC, later to face a hearing from the National Disciplinary Committee of the ANC for his expulsion.

·         Would the ANC be better off without Zuma and the RET (Radical Economic Transformation) faction? The perception is the Radical word in RET, meant tolerating much of the corruption even looting that went on in government.

·         The focus is on Cyril in these next few weeks. Will he now face the nation and admit the problems he has been having? The rumours that Putin may have been playing a double game, supporting both the ANC and MK.

·         Cyril could also build trust with the Nation if honest admissions are made about the real purpose of policies coming from the National Democratic Revolution (NDR).  I refer to the revelations written in Anthea Jeffery’s Book “Countdown to Socialism.” Has this legislation that forces businesses to racially discriminate come from the SACP……. and is it not undermining substantive transformation for some political cause? ( Some contestable statements here!)

·         The next news item to hit the Political headlines was Thabo Mbeki announcing his support for the ANC, he was seen canvassing for the ANC and answering questions. Mbeki took responsibility for the state of the ANC, he felt accountable to be part of fixing, not deserting the ANC.

·         Thabo Mbeki is likely to be joined by other senior ANC members who have made a decision not to desert. What does this do to the fortunes, of MK, ANC and EFF, and even other parties? How much was Mbeki influenced by Zuma forming MK 

·         With Mbeki on board the ANC, one cannot see the ANC joining a coalition with either EFF or MK. The ideologies are too far apart.  Thabo Mbeki published recently his account of the ANC’s 30 years in power. It is a good discussion document.

Contestable statements: These quotes below are from the beginning of my book; “One Race, The Human Race, Now!” Contestable statements assist when things get genuinely serious, effective outcomes need a debate and to think and communicate like a scientist. Re Adam Grant's book “Think Again”     

 Quotes from my book

“For the practice of management to be effective and work, and for it to be a force to transform our society, we must not have legislation that discriminates South Africans based on race. This is irrespective of our apartheid past. That we need Transformation is a foregone conclusion. However, there are better drivers for transformation than using the social engineering of legislation.”

“I read your remarks about BEE with interest, recalling disagreeing with one of your early books that you asked me to edit – I thought you were being much too politically correct in your support of it. To me it was blindingly obvious that there is no place for that sort of restorative discrimination in any sustainable economic system. If the government thought, it was a good idea at the time they should at least have put a sunset clause on it.”

– A view from outside South Africa

We can look forward to the possibility of new faces in parliament Songezo Zibi, of the Rise Mzansi Party, will raise the level of debates and enhance our confidence in Parliament.

Zackie Achmat is a well-known activist for what is right, now! He will help keep parliament honest and will help MPs to think of, and act for others and not themselves.

Neil de Beer, with his United Independent Movement (UIM). Formerly National Security Advisor to Nelson Mandela. Judging by his interviews on TV, he won’t let anyone get away with dragging the country down with impractical policies.   

I don’t represent any organised business association; I am a freelance business management activist. These next elections are an opportunity to get SA back on track. We know that what is right will always triumph, it always has and always will. It is about timing, and change coming from the next elections......this is urgent, our primary focus.

 A win for the Multi-Party Charter (MPC) with the help of other smaller parties and independents, or even a reborn ANC. A large coalition, like a government of National Unity NU, is needed to reform the causes of why the government has gone so wrong.  A multiparty with independents in a coalition would be a BIG WIN for our constitutional democracy in South Africa.  Like winning the World Rugby Cup?

 Chasing the Sun 2 the five-part documentary rugby series showing on SA TV highlights the drama of the Rugby World Cup win. It was emotional, the coming together of all South Africans...together we are strong. That is what we are when we all come together, we show the world there is one South Africa. In business management, there is also one South Africa. We must all work hard in these elections, the harder we work, the luckier we will be. Our Springboks and coaching staff worked hard, made their luck......and won.

Getting Our Thinking Right

The harder we work the luckier we become. South Africa has been a lucky country………only because we have worked hard. How often have we been at the crossroads of disaster………at the edge of a precipice? But it has not happened. We have worked hard and avoided Armageddon.

We need luck again, as we build up to the election at the end of May 2024. We are at the crossroads again and must work hard for that lucky outcome.

The first message in getting our thinking right is hard work. The next is the knowledge and information to make decisions. So much disinformation out there, fake news. Masses of information/disinformation come from the media on the internet. It can come from anywhere around the world, It can all be lies.

We have to be wary especially of politicians. Donald Trump told his many supporters the election was stolen from him, despite prominent judges’ ruling from sound evidence, it was not stolen from him. People believed it because Trump told them.

THINKING LIKE A SCIENTIST

Thinking like a scientist is one aid to keep us on the right track. Adam Grant in his book Think Again, The Power of Knowing What You ’Don’t Know, advocated that one should avoid 1) preaching 2) prosecuting 3) politicking. But when communicating one should think like a scientist.

 On any relevant subject, a question should be formulated. Scientists might call this a hypothesis it might be more understandable if we call it a contestable statement. It then needs to be debated with all the reliable information from different sources.

Factfulness

Another book to quote from is Hans Rosling’s book “Factfulness, The Ten Reasons We’re Wrong About the World – and Why Things are Better than You Think.” Rosling is critical of the Media for focusing on the bad news or news that is misleading.

The book confirms that despite all the uncertainties, the world has progressed, resulting in the improvement of the quality our life in most countries of the world. Not enough attention is paid to this, Rosling describes this in a chapter titled, “The Negativity Instinct.”

 In this chapter, he gives graphs of 16 Bad things that have decreased e.g. battle deaths peaked at 201 deaths per 100,000 people in 1942 (WW2) to one per 100,000 people in 2016. He also records 16 good things increasing e.g. Women’s right to vote. In 1893 only one country allowed women to vote, in 2017 this went up to 193 countries.  

The Gap Instinct is most revealing, we talk of rich and poor countries or developed or developing countries. It is dramatic to present things in simple terms, it can be misleading......Rosling calls this a mega misconception to divide the world in two. It heightens an image of conflict, it is binary, and it makes things right or wrong.

 In SA, Thabo Mbeki who served as President after Nelson Mandela, went public saying South Africa has two economies one black and poor the other white and rich. It was certainly a dramatic thing to say and received the attention of the media.

 Before returning to Mbeki, Rosling's first point on this subject goes back to 1965, then, you could divide the world into rich and poor, but not in 2017.

 Rosling proposed four levels of standards of living.

The four levels proposed by Rosling take into account a wider range of factors. These factors include life expectancy, literacy rates, child mortality rates, income per capita, and access to healthcare and education.

These levels are:

• Level 1: Very poor countries with low life expectancy, low literacy rates, and high child mortality rates.

• Level 2: Poor countries that are making progress, but still have a long way to go.

• Level 3: Middle-income countries that are becoming more developed.

• Level 4: Rich countries with high standards of living.

 The four levels can help us to understand the progress that countries are making. Moving from Level 1 to Level 2, making significant progress. This information can be used to make better decisions about how to help countries develop. Only 200 years ago 85% of the world's population was at level 1

Rosling’s Four Levels: each model above represents a billion people, 7 billion in 2017                                                                                                                      

 Four levels replace the world being split into developed and developing nations.

Each figure represents a billion people.   

Google Gemini provided the following figures on the progress of South Africa (see below) .

South Africa has made significant progress in moving people out of Level 1 and into Levels 2 and 3. There are still a significant number of people living in Level 1, and the country still has some way to go, before more people reach Level 3.

 The progress is encouraging, the ANC government can take credit for firstly reducing level 1 from 40% to 10% and increasing levels 2 and 3 combined from 60% to 85%.  

The percentage of South Africans that have moved up the levels from 1990 to 2023.

  Hopefully, Thabo Mbeki has read this book, he would see how helpful the four categories are compared to the generalization of only seeing the binary conflict of two economies. The figures above show the progress South Africa has made.

THE ROLE OF LEADERSHIP IN SOUTH AFRICA  

In these next elections, there is a huge responsibility,for both followers and leaders to base decisions on the correct information.

Tshilidzi Marwala in his book “Leading in the 21st Century” said.

“It became apparent to me that due to the complexity of problems that face humanity today, those that don’t know should not lead”.

 Marwala was Vice-Chancellor and principal of UJ (Johannesburg University).  He is South Africa’s foremost authority on AI and more especially on 4IR (Fourth Industrial Revolution).  Marwala is a leader in his field.

Leaders and politicians should know before they lead.  Subject political policies to scientific thinking, form a contestable statement and subject it to a debate. Science wants proof that statements are correct. It means often doubting what you hear.

Marwala also found the term politicism. Politicism is one of the reasons why our economy in South Africa is shrinking. Other countries in Africa have also gone through this. This happens because African governments focus on dominating their economies…...it shrinks the economy, resulting in governments running out of tax revenue to pay for services and development for the people. This instead of partnerships with the private sector and other means to support private enterprise., We will discuss this further in future blogs.

 NON-ADVERSARIAL CONFLICT

I turn to two other sages in our life:  Firstly, David Attenborough after spending a lifetime showing us our beautiful planet, on TV programmes. He has now been active working on documentaries and his books in particular “A Life on Our Planet”, “My Witness Statement, and “Vision for the Future”. He has informed us on Climate Change.

In a non-adversarial way, without blaming anyone and seeking conflict, he points out the threat to the whole planet.  What we are seeing now in climate change can only get worse unless we reduce the greenhouse gases, mostly carbon dioxide in the atmosphere.  He doesn’t even get angry with those who are in denial or those saying we can’t do anything so forget climate change.

  What he does is point out new developments, including business opportunities, in the Green Economy and the Circular Economy.......could this be the beginning of a new industrial revolution?

 The second sage is our own Nelson Mandela.  His approach to ending apartheid made peace happen in our country; his approach was non-adversarial. Imagine if Benjamin Netanyahu in Israel, after the horror attack by Hamas, had laid down his sword and made the courageous decision to negotiate peace. He would have had the support of the whole world. He has not learned anything from Nelson Mandela’s example.

 In South Africa sustaining peace created the opportunity to build up our country’s economy and start the journey to eliminate poverty including in Africa.  Other countries have done this – Germany, Ireland, Japan, South Korea, Singapore, Costa Rica and more.

 It is that decent life that business management can make happen for all.  We have to move away from thinking only politicians can make this happen.  Business has to be more assertive.

 In the next blog, I will cover the environment under which businesses operate in two articles. The first article will cover the huge impact that the National elections at the end of May are going to make on the business environment. The second will cover more of the universal environment of the world we live.