KARACHI, Nov 13: Management practices in business firms are constantly updated to face challenges posed by a fast changing economic environment and growing competition.
A good management requires strategic planning, enlightened corporate governance and human resource development (or empowerment of the employees to think and act). It is the quality of corporate culture that differs from firm to firm, on which much of the success of big corporates depends.
IBA Director Danishmand says that the productivity in Pakistan can be raised by about 60 per cent in 2-3 years time if the managements have a fresh look on the whole production process with a view to saving on labour and material costs. It means making big gains by wide-ranging small measures. Cutting costs, shedding fat and remaining agile is a major management objective.
Management theories are under constant watch of researchers looking at various ways of improving efficiency. And presently, the role of the chief executive of companies is under constant scrutiny, more so because of corporate fiascos in industrialized countries. Who should be a head of a business concern - one who is groomed for what is described as "relay succession" or should that person be an outsider.
A recent study on American manufacturing firms published by the Academy of Management Journal demonstrates that companies perform better under a new leader if he has been groomed for the post within the organization.
The outsider lacks intimate knowledge of the firm, its management and work culture. The "relay succession" was adopted in Engro after the employeesâ€(tm) take-over of the company.
But management expert Jim Collins quoted by a local publication "Money" says: Making the transition from good to the great does not require a high profile CEO, the latest technology, innovative change management or even a fine-tuned business strategy.
The study reveals that at the heart of the rare and truly great companies was a corporate culture that rigorously found and promoted disciplined people to think and act in a disciplined manner.
In the formula based on best business practices for the MAPâ€(tm)s Annual Award, the highest number of marks, 250 out of a total of 1,000, are set apart for human resource development followed 230 for strategic planning and 160 for corporate governance. Leadership carries 60 marks.
Since corporate culture differs from company to company, 90 per cent of the mergers the world over are done through acquisition. Mergers of two independent companies have not been always successful despite a lot of trimming and redundancies.
But the style of management changes completely in the new economy. In old type industrial enterprises, the economies of scale are rewards for the efforts put in by a given unit to out space competition. In the new economy, networked increasing returns are created and shared by the entire network. The value of gains resides in the great web of relationship.
Many multinationals have set up supply chains and integrated production networks that tend to locate each stage of production in the country with the lowest cost. Affiliates of a multinational in one country often exports to another for eventual sales to a third country market. East Asia is a major participant in this global supply chain and produces parts and components for a variety of manufactures.
