Scientific Management Theory

Representative: Frederick Taylor (1856-1915)

  1. Propose scientific operating methods for workers to effectively utilize work hours and improve efficiency. Study the rationality of workers' movements, eliminate unnecessary movements, improve necessary ones, and specify standard times for completing each unit operation, establishing labor time quotas.
  2. Scientifically select, train, and promote workers. Choose suitable workers for appropriate positions, and train them to use standard operating methods so they can gradually grow in their work.
  3. Develop scientific process specifications, standardize tools, machines, materials, and the working environment, and fix them in written form.
  4. Implement an incentive piece-rate wage system. Pay workers who meet or exceed work quotas at a higher wage rate; pay those who fail to meet quotas at a lower rate.
  5. Separate management and labor. Managers and workers cooperate closely to ensure work proceeds according to standard design procedures.

Organizational Theory

Representative: Max Weber (1864-1920) Weber outlined an ideal bureaucratic organizational model with the following characteristics:

  1. Personnel in the organization should have fixed and formal duties and exercise authority according to law. The organization is established according to legal procedures, has clear goals, and relies on a complete set of rules and regulations to organize and regulate member behavior, effectively pursuing and achieving organizational goals.
  2. The organizational structure is a hierarchical control system. Within the organization, command and obedience relationships are defined according to status.
  3. Relationship between people and work. Relationships among members are only task-oriented, not personal.
  4. Selection and security of members. Each position is filled based on qualifications (seniority or education), according to free contract principles, through public examinations, ensuring the right person for the job.
  5. Division of labor and technical training. Reasonably divide work among members, clarify each person's scope and responsibilities, then improve efficiency through technical training.
  6. Salary and promotion. Pay salaries according to position, establish reward, punishment, and promotion systems to make members work with peace of mind and cultivate their career commitment.

General Management Theory

Representative: Henri Fayol (1841-1925) Taylor's research started from the 'worker at the lathe', focusing on the efficiency of specific internal operations. Fayol's research started from the 'general manager at the desk', taking the enterprise as a whole as the research object. Fayol distinguished between operation and management, considering them different concepts, with management included in operation. Through analysis of all enterprise activities, he extracted management activities from operational functions (including technical, commercial, financial, security, and accounting functions), making it the sixth operational function. He further derived a general definition of management: 'Management is a universal and separate activity with its own body of knowledge, composed of various functions, and a process by which managers achieve goals by completing various functions.' Fayol also analyzed the relative requirements of various abilities for managers at different levels. As enterprises grow from small to large and positions rise from low to high, the relative importance of management ability increases, while the importance of other abilities such as technical, commercial, financial, security, and accounting decreases. Fayol proposed 14 principles of general management:

  1. Division of work; 2. Authority and responsibility; 3. Discipline; 4. Unity of command; 5. Unity of direction; 6. Subordination of individual interest to general interest; 7. Remuneration; 8. Centralization; 9. Scalar chain; 10. Order; 11. Equity; 12. Stability of tenure; 13. Initiative; 14. Esprit de corps.

Human Relations Theory

Representative: Elton Mayo (1880-1949) The outstanding representatives of classical management theory, Taylor, Fayol, etc., made significant contributions to management thought and theory in different aspects and had a profound impact on management practice, but they commonly emphasized the scientific, rational, and disciplined nature of management without giving sufficient attention to the human factor and its role. Mayo's nine-year experimental research at the Hawthorne plant of Western Electric Company—the Hawthorne Studies—truly initiated the study of human behavior in organizations. The results of the Hawthorne Studies negated traditional management theory's assumptions about people, showing that workers are not passive, isolated individuals; their behavior is not only stimulated by wages; the most important factor affecting production efficiency is not treatment or working conditions, but interpersonal relationships at work. Based on this, Mayo proposed his views:

  1. Workers are 'social men' rather than 'economic men'.
  2. Informal organizations exist in enterprises.
  3. New leadership ability lies in increasing worker satisfaction.

Hierarchy of Needs Theory

Representative: Abraham Maslow (1908-1970) This theory is based on three basic assumptions: 1. People need to survive, and their needs can influence their behavior. Only unmet needs can influence behavior; satisfied needs cannot serve as motivators. 2. Human needs are arranged in a certain order of importance and hierarchy, from basic (like food and shelter) to complex (like self-actualization). 3. Only when a certain level of need is minimally satisfied will people pursue the next higher level, rising step by step, becoming the internal driving force for continued effort. Maslow proposed five levels of needs:

  1. Physiological needs: basic needs for personal survival, such as eating, drinking, and shelter.
  2. Safety needs: including psychological and material security, such as protection from theft, prevention of dangerous accidents, job security, social insurance, and retirement funds.
  3. Social needs: as social beings, people need friendship and a sense of belonging; interpersonal interactions require mutual sympathy, help, and approval.
  4. Esteem needs: including being respected by others and having self-respect.
  5. Self-actualization needs: through one's own efforts, realizing one's expectations for life, thereby feeling that life and work are truly meaningful.

X-Y Theory

Representative: Douglas McGregor (1906-1964)

  1. The average person does not inherently dislike work; the expenditure of physical and mental effort in work is as natural as play or rest. Work may be a source of satisfaction and thus voluntarily performed, or a punishment and thus avoided if possible. It depends on the environment.
  2. External control and punishment are not the only means to motivate people to work toward organizational goals. They can even be a threat and hindrance, slowing down personal growth. People are willing to exercise self-management and self-control to accomplish goals.
  3. There is no conflict between the need for self-actualization and the requirements of organizational behavior. If given the opportunity, individual and organizational goals can be unified.
  4. Under proper conditions, the average person learns not only to accept responsibility but also to seek it. Avoiding responsibility, lacking ambition, and emphasizing security are usually results of experience, not inherent human nature.
  5. Most people, not a few, can exercise a high degree of imagination, ingenuity, and creativity in solving organizational problems.
  6. Under modern industrial life conditions, the intellectual potential of the average person is only partially realized.

Managerial Grid Theory

Representative: Robert Blake This theory advocates using a grid to represent and study leadership styles. The vertical and horizontal axes represent the leader's concern for people and production, respectively. In the managerial grid, 1.1 orientation indicates impoverished management, with little concern for production or people; 9.1 orientation indicates task management, focusing on production tasks with little attention to people; 1.9 orientation indicates country club management, focusing on people with a relaxed, friendly atmosphere and little concern for production; 5.5 orientation indicates middle-of-the-road management, neither biased toward production nor people, with unremarkable task accomplishment; 9.9 orientation indicates team management, with high concern for both production and people, ideally and effectively combining organizational goals and individual needs.

Study of Effective Managers

Representative: Peter Drucker He believed that to become an effective manager, one must cultivate five thinking habits:

  1. Know where time goes. Managers should be aware that their controllable time is limited and must use it systematically.
  2. Effective managers focus on external results, directing efforts toward achieving results rather than the work itself.
  3. Effective managers build on strengths—their own, their superiors', colleagues', subordinates', and situational strengths—that is, on what they can do. They do not build on weaknesses.
  4. Effective managers concentrate on a few major areas where excellent performance will produce outstanding results. They set priorities and adhere to them. They know they must do the first things first and not do secondary things; otherwise, they will accomplish nothing.
  5. Finally, effective managers make effective decisions. They know that effective decisions are often judgments based on 'disagreement' rather than 'consensus'.

Z Theory

Representative: William Ouchi In his research on Z Theory, Ouchi selected typical Japanese and American companies for study. These companies had subsidiaries or factories in both countries and employed different management styles. Ouchi's research showed that Japanese management methods were generally more efficient than American ones, consistent with Japan's aggressive economic performance from the late 1970s. The author therefore proposed that American companies should learn from Japanese management methods while adapting to their own characteristics, forming their own management style. He termed this Z-type management and elevated it theoretically as 'Z Theory'. Z Theory holds that the success of all enterprises depends on trust, sensitivity, and intimacy, and therefore advocates 'democratic management' based on frankness, openness, and communication.

McKinsey 7-S Model

In the model, strategy, structure, and systems are considered the 'hardware' of corporate success, while style, staff, skills, and shared values are considered the 'software'. The McKinsey 7-S model reminds managers worldwide that software and hardware are equally important. The two scholars pointed out that human factors long ignored by companies, such as irrationality, stubbornness, intuition, and preference for informal organizations, can actually be managed and are closely related to success or failure, and must not be ignored.

Flexible Work Hours

Flexible work hours were proposed by German economists in the 1960s, mainly to solve the problem of traffic congestion during commutes. From the 1970s, this system developed steadily in Europe and America. In Europe, in 1975, about 700,000 workers in the UK; in 1977, an estimated 40% of industrial workers in Switzerland; and about a quarter of workers in Germany adopted this system. In the US, flexible work hours were also implemented in industries where mental work is important. By the 1990s, about 40% of large companies, including DuPont and Hewlett-Packard, had adopted flexible work hours. In Japan, Hitachi implemented this system in 1988, allowing 40,000 employees, excluding production line workers, to freely choose their working hours. Fuji Heavy Industries, Mitsubishi Electric, and other large enterprises also made similar reforms with this goal.

Change Management

The core of enterprise change is management change, and the success of management change comes from change management. The success rate of change is not 100%, or even lower, often causing a fear that 'change is death, and no change is also death'. However, due to market competition pressure, frequent technological updates, and the need for self-growth, 'change may fail, but no change will definitely fail'. Therefore, knowing how to change is more important than knowing why to change and what to change. Change management means that when organizational growth slows, internal problems arise, and the ability to respond to changes in the business environment diminishes, the enterprise must formulate organizational change strategies, making necessary adjustments and improvements to internal hierarchy, work processes, and corporate culture to achieve successful transformation. Three basic methods of change management are:

  1. Unfreezing: Acknowledge that the current situation is not good, release previously hidden negative organizational information.

  2. Changing: Use communication and introduce learning organizations to gradually make members accept that change is a positive value.

  3. Plan and then act: First determine the change strategy, set clear goals, environmental assessment, action plans, and various supporting measures.

The HP Way

Profit is the first goal; products are sold for cash, no credit sales; expand market share by providing quality products and services rather than price cuts. Reinvest most profits, plus funds from employee stock purchases and other cash income, as development capital, rather than relying on long-term debt. Since 1959, HP has implemented an employee stock purchase plan, allowing employees to buy HP stock at a preferential price (the discount is covered by the company) based on a percentage of their salary, raising substantial development funds. This self-financing policy requires a high profit level and careful management of inventory and accounts receivable, differing from the industrial practice of raising funds through stock issuance and long-term debt.

Matsushita's Dam-Style Management

Matsushita believed that maintaining stable growth of the enterprise is a natural duty, and to ensure stable development, dam-style management is an important concept. The purpose of a dam is to block and store river water, maintaining necessary water usage according to seasonal or climate changes. Enterprises also need such a mechanism for adjustment and utilization to develop stably. If every department of the company is like a dam, it will not be greatly affected by external changes and can maintain stable development. This is the concept of 'dam-style management'. In enterprises, there must be dams in equipment, funds, personnel, inventory, technology, planning, or new product development, and they must function effectively. In other words, in all aspects of management, there should be ample flexibility.

Boston Matrix

Most companies operate multiple businesses simultaneously. To achieve a practical fit between company development and ever-changing market opportunities, resources must be reasonably allocated among various businesses. In this process, one cannot rely solely on impressions, investing resources in whichever business seems promising; instead, the position of each business in the enterprise should be determined based on potential profit analysis. The Boston Matrix is a famous effective model for evaluating a company's investment portfolio.

CI Strategy

CI is the abbreviation of Corporate Identity, sometimes referred to as CIS, which stands for Corporate Identity System, literally translated as corporate identity recognition system, and freely translated as corporate image design. CI refers to the enterprise's conscious and planned display and dissemination of its various characteristics to the public, enabling the public to have a standardized and differentiated impression and understanding of a specific enterprise in the market environment, for better recognition and leaving a good impression. CI is generally divided into three aspects: Mind Identity (MI), Behavior Identity (BI), and Visual Identity (VI).

ERP

ERP (Enterprise Resource Planning) is an advanced enterprise management concept that fully allocates and balances all aspects of enterprise resources, providing multiple solutions to help enterprises gain competitive advantage in fierce market competition. 80% of Fortune 500 companies use ERP software as their decision-making tool and for managing daily workflows, demonstrating its effectiveness. ERP projects are a huge systematic project, not just buying software with money. ERP is more of an advanced management philosophy; it has wide scope, large investment, long implementation cycle, high difficulty, and certain risks, requiring scientific methods to ensure project success.

Little Swan's 'Doomsday Management'

'Doomsday management' means that business operators and all employees must face the market and competition with a sense of crisis, understanding that enterprises have a doomsday and products have a doomsday. They cannot use macroeconomic downturn as an excuse for poor performance, nor should they be intoxicated by temporary 'excellence'. Because our enterprises are often accustomed to surviving in the cradle of a planned economy, they seem to adapt easily to rapid market economy development, but find it difficult to develop steadily. In fact, the market is limited and unlimited; at a certain period, the market for one of Little Swan's products is limited, but the market for an enterprise can be infinitely expanded. Even though Little Swan has developed in recent years, it is still full of crisis awareness. Little Swan's success today does not guarantee success tomorrow; the best time for an enterprise is often the beginning of the worst.

Haier's International Star One-Stop Service

Haier's high quality has rich connotations; it is not just meeting factory or national standards, but adapting to market demand and using high technology to create high quality. In 1996, Haier Group launched 'International Star One-Stop Service' to the society. Its core content is to continuously meet new user requirements from product design, manufacturing, and purchase, from door-to-door design service to installation, from product use to follow-up service, and to institutionalize and standardize the six links of development, manufacturing, pre-sales, in-sales, after-sales, and follow-up through specific measures.

Handan Steel's 'Cost Reversal Method'

Establish an internal management mechanism of 'simulated market accounting, cost veto', that is, using simulation methods to introduce market mechanisms into internal enterprise management. While maintaining the advantages of modern industrial enterprises' specialized, scientific division of labor and highly centralized management (i.e., unified planning, unified procurement, unified sales, only one bank account, secondary plants not independent, not legal entities), seize the key of cost, and use the 'reversal' method based on objective value laws, starting from the price accepted by consumers in the market, working backward, comparing with advanced levels to tap potential, calculating the target cost for each process, then decomposing and implementing layer by layer down to every employee.

Strategic Alliances

The concept was first proposed by J. Hopland, president of DEC, and management scientist R. Nigel. They believed that strategic alliances refer to a loose cooperation model formed by two or more enterprises with common strategic interests and equal operating strength, through various agreements and contracts, to achieve strategic goals such as jointly owning markets and sharing resources, with complementary or mutually reinforcing advantages, shared risks, and horizontal two-way or multi-way flow of production factors. Forms are as follows:

  1. Joint ventures: Two or more enterprises jointly invest, share risks, and share profits to form a new enterprise; this is common in developing countries, especially in Asia and Africa. Partners invest their respective advantageous resources into the joint venture, enabling it to achieve benefits that a single enterprise cannot.
  2. R&D agreements: For a new product or technology, partners sign a joint development agreement; pooling strengths greatly increases the chance of success, speeds up development, and shares development costs, reducing costs and risks.
  3. OEM production: If one party has a well-known brand but insufficient production capacity, and another has surplus production capacity, the latter can produce for the former. The latter can fully utilize idle capacity for profit; the brand owner can reduce the risk of investment or acquisition.
  4. Franchising: Form a strategic alliance through franchising, where one party has important intangible assets and can sign franchise agreements with others, allowing them to use its brand, patents, or proprietary technology, forming a strategic alliance. The owner not only gains revenue but also can use scale advantages to strengthen the maintenance of intangible assets; the licensee naturally benefits from expanded sales and profits.
  5. Cross-shareholding: Partners hold a certain amount of each other's shares to strengthen mutual ties; in such alliances, the relationship is closer, but personnel and assets need not be fully merged.

Five Forces Analysis Model

The Five Forces model was proposed by Michael Porter in the early 1980s and has had a profound global impact on corporate strategy formulation. Used for competitive strategy analysis, it effectively analyzes the competitive environment of customers. The five forces are: bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitute products, and intensity of rivalry among existing competitors. Different combinations and changes of these five forces ultimately affect industry profit potential.

Delphi Method

Also known as the expert survey method, it is a decision-making method that uses communication to send the problem to be solved separately to each expert, solicit opinions, then collect and summarize all experts' opinions, and compile a comprehensive opinion. Subsequently, the comprehensive opinion and the prediction problem are fed back to the experts separately, and opinions are solicited again. Each expert modifies their original opinion based on the comprehensive opinion, and then it is summarized again. This is repeated multiple times to gradually achieve a relatively consistent prediction result. In 1946, the RAND Corporation first used this method for forecasting, and later it was rapidly and widely adopted.

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