Trigger 3

Learning objective 1. What is value chain?

A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The product passes through each activity in the value chain and gains some value at each stage. It is a powerful tool for strategic planning. The concept comes from business management and was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.

Sources:

1. Value chain, Wikipedia - https://en.wikipedia.org/wiki/Value_chain 
2. Porter Value Chain - http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/2516-porter-value-chain.html 

Learning objective 2. How to develop functions as company grows?

History has many examples of small companies that started from a brilliant commercial idea but which were not able to match the organic growth with a solid structure that would develop or even maintain the early achieved success – overgrowth eventually led to organization collapse and end of business. Growing from a small organization to a larger organization requires a good planning, setting of realistic goals and discipline to follow the agreed strategy. Usually the organization would grow from several people having many roles (the extreme would be one man company where the person would fill all the functions including sales, marketing, logistics, etc) to a more complex organization where the functions would be well defined and communication between the departments could only be done in a formal way.

Organizational structure is the way in which a company divides its activities among separate units and coordinates activities among those units. The more a company’s organizational structure is appropriate for its strategic plans, the more effective the organization will be in working toward its goals.

Types of organizational structure:

• International division structure – separates domestic from international business activities by creating a separate international division with its own manager
• International area structure – organizes a company’s entire global operations into countries or geographic regions
• Global product structure – divides worldwide operations according to a company’s product areas
• Global matrix structure – splits the chain of command between product and area divisions.

Sources:

1. John J. Wild, Kenneth L. Wild - “International Business – The Challenges of Globalization”, 8th Edition

Learning objective 3. How does size affect the management of a company?

There could be more points of view regarding the management of a company: hierarchy, amount, styles, etc. My focus here was on the styles of leadership and the way the size of the organization impacts on these.

Leadership is the process where one person influences the aid and support of others in the accomplishment of a common task. Of the many factors that has an impact on leadership style and effectiveness, group size plays an important role.

N. Nayab identifies in his article “Modern Leadership Styles in the Changing World” the following styles:

• Charismatic Leadership - is leading by dint of personality and charm, instead of relying on any external power or authority. Charismatic leaders seek to fulfill organizational goals by instilling devotion.
• Transformational leadership - is one of the most popular leadership styles in the changing world and focuses on effecting revolutionary change in organizations through a commitment to the organization’s vision.
• Visionary Leadership - a visionary leader dreams about the future and translates such dreams into specific, achievable goals and is able to articulate them with great inspiration to instill the commitment of others. They also back up such words with action.
• Transactional leadership - bases itself on getting things done through a clear chain of command and works on the assumption that rewards and punishment will motivate people. Transactional Leaders negotiate a contract with subordinates that creates clear structures, makes explicit the requirement, and installs a formal system for rewards and discipline.
• Servant Leadership - bases itself on the premise that leaders are servants first and leaders second. They depart from the traditional leadership style of dominating subordinates and telling them what to do, and rather empower the subordinate and act proactively to inspire them to perform. Such inspiration leads to collective efforts, the results of which turn out to be more than the sum of individual efforts.

The size of the group influences the leadership styles in organizations. Participative leadership styles require the leader’s individual attention to each team member and consulting with them before taking decisions. The higher the group size, the more difficult and time consuming this becomes.

Leaders with large groups and wide span of control adopt an autocratic style leadership out of compulsion if not out of choice, finding no other effective way to manage such a large group. Large groups are generally populated with people having comparatively lesser education, reinforcing the application of the autocratic style of leadership. Practical applications of such autocratic leadership style owing to a large group are in situations such as assembly line plant, political parties, and others.

Again, adopting a laissez faire or servant leadership style becomes possible only in small groups. Application of the same in wide groups or where the leaders have a wide span of control might result in chaos and hold ups.
One leadership style suitable for all group sizes is situational leadership where the leader makes decisions based on the capability of the followers and the leader, with the leader adjusting and adapts to the limitations laid out by the team members and the situation.

Sources:

1. How Does Group Size Affect Leadership? by N. Nayab - http://www.brighthubpm.com/resource-management/92552-how-does-group-size-affect-leadership/ 
2. Modern Leadership Styles in the Changing World, by N. Nayab - http://www.brighthub.com/office/home/articles/73968.aspx