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11 University of Cassino Faculty of Economy BUSINESS MANAGEMENT A.Y. 2008 -2009 Prof. Francesco Polese Business Organization.

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Presentation on theme: "11 University of Cassino Faculty of Economy BUSINESS MANAGEMENT A.Y. 2008 -2009 Prof. Francesco Polese Business Organization."— Presentation transcript:

1 11 University of Cassino Faculty of Economy BUSINESS MANAGEMENT A.Y. 2008 -2009 Prof. Francesco Polese Business Organization

2 2 Growing up of business dimensions, developing of business relationships with the market, and the nowadays management procedures have lead to assume for Direction and Organization functions more importance and strategical remarkable contents. Business Organization Premises

3 3 The function of Business Direction demands the simultaneous assumption of decision actions, of employment of resources, of leading of workers and of appraisal of the performances, according to an integrated cycle that previews for each activity the development of different moments (phases, stages) closely and mutually interdependent. Business Organization Business Directional Process

4 4 Evaluation Actions Control Guide Actions Leading Direction Actions Organization Decisions Actions Planning Business Organization Business Directional Cycle

5 5 Every cycle is carried out, in its several moments, by means of the finding, the management and of the communication of informations that flow inside of the enterprise and that must necessarily be integrated with those coming from the outside; in this sense we can speak also about an informative cycle. Business Organization Business Directional Cycle

6 6 Internal Control Data Executive Results Executive Guidelines Environmental Informations Business Organization Informative Cycle for Direction

7 7 The Enterprise works as a system, constituted from several elements that act for a common purpose, coordinated by means of the accomplishment of specialistic functions and oriented to the attainment of a final (survival) goal. Business Organization Organizational Function The study of the Organization can be carried out by means of the analysis of the Structural aspect related to the ordering of tasks and responsibilities, and of the Behavioural aspect of the organizational system, considered as a whole.

8 8 The planning (or re-planning) of the Organization demands the assumption of a set of decisions: Business Organization Organizational Decisions Definition of the Objectives Definition ofvertical integration degree (efficient border) Characterization of the Functions (inside the Business System) Construction of the Organizational Structure Analysis of the complex of existing ties (Professional abilities, Investments, Structural costs) Characterization of the strength elements and valorization of the main meaningful potentialities

9 9 To define an Organizational Structure it is necessary the definition of an outline of connections between the several organizational positions finalized to the activation of authority relationships, of cooperation, information around which the business life is developed, as well as it concerns the “vertical” development, the “horizontal one”, the “cross- sectional one” and “functional one” (of lines or staff). Business Organization The planning of the structure demands also the definition of procedures (organizational routines) that establish the adoptable behavioral rules for the solution of periodical (or extraordinary) problems; they come planned in starting phase, enriched in itinere for effect of the accumulation of knowledge and experience, and they translate in decisional and operating rules. Therefore we distinguish operative, of control, informative and decisional procedures Organizational Decisions

10 10 Several models of Organizational Structure exist to define the inner articulation of the relationships, the roles and the existing responsibilities in an enterprise: Business Organization Structural Models for Organization What is the main principle: the principle of specialization of each operating areas, and of sub-division of the managerial process in connection with the different nature of the problems to train, approaching the responsibles competences according to the kind of task to carry out The definition on which it is based: the function consist of a set of complementary and interdependent tasks and duties (functions) in relation to an aim To who it is apt: to enterprises with greater operating stability What it is the limit: possible difficulty of coordination between the different Responsibility Area Functional Pattern: Its characteristic: the subdivision of the areas of responsibility for groups of tasks in terms of management functions

11 11 Top Government Business Management Business Direction Marketing Management Human resources Management Production Management Administration and Financial Management Accounting Office Finance Office Public relations Office Planning Office Sales Office Customer care Office Supplies Office Systems and Methods Office Plant Office Controll Office Production Office Purchase Office Planning Office Business Organization Functional Structural Model

12 12 Business Organization What is the main principle : the subdivision of the business (enterprise) in more parts, considered distinct centers of profit (and cost) with elevated autonomy, above all operative. The definition on which it is based: the business focuses its attention on the result rather than on the tasks and stimulates the assumption of responsibilities (decentralization) To who it is apt: to mainly dynamic enterprises in the (entrepreneurial) managerial behaviors What it is the limit: possible creation of inner conflicts (often it’s due to not the convergence of the specific interests) Divisional Pattern: Its characteristic: the division of the management responsibilities for groups or various families of products, each entrusted to a divisional director, who is the only responsible of economic and operating result (also geographical meaning) Structural Models for Organization Several models of Organizational Structure exist to define the inner articulation of the relationships, the roles and the existing responsibilities in an enterprise:

13 13 Top Government Business Management Business Direction Alfa Product Division Gamma Product Division Beta Product Division Production Division Plant Division Marketing Division Business Organization Multi-divisional Structural Model Human resource Finance and accounting Production Division R&D Division Marketing Division Production Division Planning Division Marketing Division Public relation Division Sales Division Budget Division Sales Division Studies and plan Division Sales Division

14 14 Business Organization What is the main principle: the definition of the amplitude and the limits of the delegation of the directional powers according to the degree of decentralization realized in the government of the business system The definition on which it is based: the requirement of > of the job and the responsibilities To who it is apt: to the enterprises highly (deeply) dynamic in the managerial behaviors What it is the limit: the processes of information and decision can be carried out with a minor tie of institutionalized hierarchical filter Matrix Pattern: Its characteristic: the corporate structure introduces a reticular character, with interlacing of functional competences, flexible form and interconnection of responsibility (institutionalized evolution of the Organizational plan) Structural Models for Organization Several models of Organizational Structure exist to define the inner articulation of the relationships, the roles and the existing responsibilities in an enterprise:

15 15 Top Government Business Organization Matrix Structural Model Production Manager Administration Management Mkt Manager Human resources Management Technical Manager Head accountant Sales Manager Human resources Responsible Technical Manager Head accountant Sales Manager Human resources Responsible Technical Manager Head accountant Sales Manager Human resources Responsible Alpha Products Beta Products Gamma Products

16 16 Business Organization Themes Business Functions ProductionQualityMarketingLogisticsR&DPurchases/Supply Definitions Evolution Purchase Mkt Make or buy Suppliers Relationship Suppliers Integration Supply Chain Supply Chain Management

17 17 Definition the set of the activities turned to stipulates contracts for the supply of the necessary assets/ services the set of the activities turned to guarantee a regular standard flow of goods and services according to a predetermined business planning Purchases Supplies Business Organization Purchases/Supply Relevance in decisional process General Framework operating tasks (even if the managed amounts can be also much considerable) and moderated decisional autonomy The short run trend, with a “passive” attitude to answer the demands for the production greater discretion and delegation The long run trend, with a “proposal” guidance for plans

18 18 The purchases office must, at first, comprise the requirements of production (quantity, quality and timing) according to: It’s not necessary to put more suppliers in competition and to choose lower purchase price. Risks and opportunities estimation of the only supplier (single sourcing) Choosing between open contracts or orders spot. Quality and delivery time turn out critical. The acceptance or test control can be made from the supplier It’s the more delicate phase because the anomalies can have origin from problems of the supplier or inner problems of the plant. In the great enterprises the center purchases function only takes care of the heavy supplies addressed to several plants while the little ones purchases are managed from local offices. Business Organization 2) To deal and to define the conditions: 3) To speed up the deliveries and to define the anomalies: 1) To estimate and to choice of the suppliers Purchases/Supply

19 19 The supplying function has acquired during last years an increasing importance and strategic relevance regarding: Purchases relevance, It’s expressed as an added value for line of product, or costs percentage of raw materials on the total costs complexity of the supply market, It’s linked to lack of supply, technological development in new materials, entrance constraints, cost / complexity of logistic factors, any condition of monopoly / oligopoly. Business Organization Purchases/Supply

20 20 through materials management, in relation to the recognition of the costs of purchase (more frequently); through the management of the supplying sources, with regard to the strategic or technological criticality of the purchases. Business Organization Purchases/Supply There are two paths in the development of the supply function:

21 21 It’s based on the systematic study of the supply market in order to consider and manage suppliers as a resource. Product: = all decisions relating to materials supplied. The product policies are linked to critical state of economic situation and risk of supply. Sources supplying = the monitoring of the market supply is finalized to the identification of potential suppliers, their evaluation, selection and qualification, and to verify suppliers related to critical performances Price = the negotiation of economic conditions and issues related to quality and deliveries impacting on the total cost of supply. Communication = promoting the corporate image towards potential and consolidated suppliers, through financial and technical assistance and through lightness in production schedules Business Organization Purchases/Supply Il marketing purchase It’s based on procurement mix:

22 22 Non-critical Items: No important intervention Business Organization Leverage Items: to optimize costs through the analysis of value and the search for new sources Bottleneck Items: Reliability, deliveries to guarantee also to higher costs Strategic Items: cooperation with the suppliers Purchases/Supply Kraljic Matrix

23 23 The search of elasticity margins according to fluctuations in demand; The exploitation of cost differentials; The need to cope with insufficient production capacity; The outsourcing of stages characterized by low crucial degree; The outsourcing working on bulky and weight materials; the outsourcing of parts to be carried in small quantity. The outsourcing choices are due to : - a "positive" attitude of search for greater flexibility, productivity and cost - a “precautionary” attitude link to the will to to relegate outside risk and impediment factors Business Organization Purchases/Supply The outsourcing choices are due to :

24 24 Internal costsExsternal Costs the cost of the direct materials; the cost of the direct labor; other variable costs; changes in fixed costs amortization of specific investments; any start-up costs, understood in a broad sense purchase price; services charges, if not included in the price, such as transportation (logistics) costs, packaging, insurance and so on; the cost of plants, specific equipment and so on, however charged on customer; financial charges on specific equipment; any increased costs related to initial development Business Organization Purchases/Supply The evaluation of outsourcing choices considers:

25 25 In the relationships with suppliers different requirements must be distinguished: Specialty sub-supply It’s the result of a constant and structured relationship Suppliers are regarded as business assets : - Investing in suppliers relationship - Consolidating long-term relationships Capacity sub-supply Permanent sub-supply Occasional sub-supply It’s the result of episodic relationship and linked up contingent requirements It is incremental and not internally available, it brings technological expertise not possessed from the purchaser It provides elasticity to the production process in terms of production volumes Business Organization Purchases/Supply

26 26 Through centralization of same category purchases Standardizing the components and subset Buying units/subunits rather than individual components Business Organization Purchases/Supply The enterprises reduce the number of their suppliers:

27 27 The development of consolidated suppliers relationship and the sharing of the information on the production plans is finalized to reduce total costs, and to manage efficienlty the storage Business Organization Purchases/Supply

28 28 organizational integration: to common interbusiness procedures computer science integration: to invest in innterorganizational systems for the exchange/sharing of the data cultural integration: to invest in an acculturation /understanding process Levers of integration Operational Technological Organization - Quality control integrated procedures, sending orders, invoicing, transport, planning and production control -Uniformity of language (for example, materials tagging) - New products integrated developing procedures (for example materials and common processes tagging) - Uniformity of language Information technology - Integrated management systems - EDI for launch orders, forecasts, invoices - Integrated planning information systems (CAD-CAM) - EDI for project data communication Culture -Uniformity in strategic guidelines on manufacturing (Production flow) - Uniformity of values (Manufacturing excellence, service orientation) - Uniformity in the product design (Modularization, standardization) - Uniformity of values (eg., Technological excellence) Business Organization Purchases/Supply The consolidation of suppliers relationship requires:

29 29 The reduction of time to market increases through the establishment of new monitoring tools on the entire supply chain. Business Organization Purchases/Supply

30 30 Objective of a supply chain SUPPLY CHAIN What is Supply chain? Supply Chain Management Business Organization Purchases/Supply

31 31 Consists of all parties involved, directly or indirectly, in fulfilling a customer request SupplierManufacturerDistributorRetailerCustomer What is Supply chain? It refers to the distribution channel of a product, from its sourcing, to its delivery to the end consumer (also known as the value chain). The supply chain is typically comprised of multiple companies who are increasingly coordinating activities via an extranet Business Organization Purchases/Supply

32 32 When is Supply chain effective? Manage Product, Information and Fund flow Profit Revenue generated from customer - costs incurred along the entire chain (e.g. manufacturing / storing / distributing the product) Maximise overall profit Objective of a supply chain Business Organization Purchases/Supply

33 33 Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost Business Organization Purchases/Supply

34 34 Supply chain management is the integration of key business processes from end user through original supplier that provides products, services, and information that add value for customers and other stakeholders. SUPPLY CHAIN MANAGEMENT Business Organization Purchases/Supply

35 35 Supply chain management is a set of approaches used to efficiently integrate suppliers, manufacturers, warehouses, and customers so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize system wide costs while satisfying service-level requirements. Business Organization Purchases/Supply

36 36 Business association Cluster secretariat Education and research organisations Distribution Marketing Packaging Technical/technology demonstration centre Technology transfer centre Specialised services and closely-related industries (certification, etc.) Producers Supply Chain Management Business Organization Purchases/Supply

37 37 Sourcing COMPANYSUPPLIERS INTERMEDIATE CUSTOMERS Operations FINALCONSUMERSFINALCONSUMERS FINAL CONSUMERSFINAL CONSUMERS Information/Demand Flows Value Delivery (Order Fulfillment) Process Value Creation (Product/Service Development) Process Value Maintenance (After Sale Service & Support) Process Logistics Business Organization Purchases/Supply

38 38 Enterprise Organization Topics Business Functions ProductionQualityMarketingLogisticsR&DSupply Definition Production process Inferences on Strategy Process Organization Production programs and plans Control Production cycle centrality Supply chain, outsourcing

39 39 Production The production function deal with the transformation process of goods, and with all the operations with which the acquired resources (input) are converted into finished goods (output) for the market Definition INPUT Market OUTPUT Transformation process Enterprise Organization

40 40 The production cycle is central in every business, proceeded by the supplying process and followed by distribution, continually interconnected with marketing, design, finance, human resources, R&D Marketing Outgoing logistics Incoming logistics Production Function Supplying and raw material management Distribution and products delivery and management Human resources Finance R&D Marketing mix etc. Jobs organizations and resources management Mng and planning of financial necessities Design, new products development Production cycle centrality Enterprise Organization Production

41 Production chain Rappresents the system of enterprises involved and participating to the transformation of inputs into finished products, contributing to deliver into final market Production de-centralization Growing trend leading to great enterprises transformed in a central unit as controlling and dispatching outside processes and activities, maintaining internally market distribution and overall management and coordination. Outsourcing Enterprises sometimes need external support in logistics, production, finance support, etc., in order to became more flexible in costs (from fixed to variables), financial need decrease, know-how concentration, networks support fulfillment, core business focusing 41 Enterprise Organization Production

42 Strategies Differentiation Price-competition Quality Costs Focus Mix, Quality, Quantity Plants definition Dimensional targeting, technologies, external services Mix production definition Choices Logistics determinations Vertical integration, production de- centralization FocusChoises 42 Enterprise Organization Production

43 Production organization typologies Distinct units/goods ProductionOperating processCycle characteristics Differentiated mass production Standard mass production Homogeneous products Intermittent Mix Continuous Lab (job shop) Batch Line production Continuous flow production 43 Enterprise Organization Production

44 44 Design c) Flexible automation b) Tech and economical flexibiliy a) Lay out d) Capacity Plant capacity to remain competitive under sub- utilization Plant capacity to adapt to different products with low switching costs Production plants Economic flexibility Technical flexibility Enterprise Organization Production

45 45 Stocks as a balance between production and selling Enterprise Organization Production

46 I. Production system’s Reporting II. Production control systems III. Reactive production systems Production function organization 46 Enterprise Organization Production

47 I. Production system’s Reporting A.Production orders B.Material invoice C.Operation master lists D.Material requests reports E.Work timing reports F.Resources availability reports G.Production status report 47 Enterprise Organization Production

48 A. Production orders Production orders authorize every production unit to process their job B. Materials invoices List of materials composing each product C. Operation master lists List of operation sequence of human resources and machinery necessary for each product D. Material requests reports These requests prepare materials and authorizes their release from stocks for production purposes 48 Enterprise Organization Production

49 E. Work timing report Useful to document production timing and work management of every production order F. Resources availability reports Detailed stock availability report of materials/products necessary to operations G. Production status report Details completed productions vs orders and how these relate to global production. Orders are monitored and registered 49 Enterprise Organization Production

50 Production control systems 3 2 1 Production control 1 Order to production 2 Order to production N 2 Production order completed Production reports Journal Voucher Journal Voucher Overal cost of production Costs production status To Management 50 Operating unitsProduction control Stocks controlCosts accounting General register 2 Production order completed

51 Just-In-Time Production  JIT system is different for limited stock levels in all production phases 51  Just-in-time Production (JIT) describes a production systems in which parts (Components and mid- products) are produces only if requested by following production phases Enterprise Organization Production

52 III. Quick response production systems A.Definition of reacting production systems B.Physical production systems (CAD, CAM) C.MRP systems D.MRP II systems E.Internal control 52 Enterprise Organization Production

53 A. Definition of quick response production systems CIM system integrates CAD and CAM) with MRP II (manufacturing resource planning) A quick response manufactoring system is a CIM system integrated by ICT. 53 Enterprise Organization Production

54 B. Physical systems production 1.Computer-Aided Design (CAD)  CADD system uses SW to define production functions.  Designers may store products descriptions on a database, in order to manage them consequentially 2.Computer-Aided Manufacturing (CAM)  CAM systems are useful in production processes planning and management  Statistical process control systems let output monitoring and control on possible deviations from planned production, in order to act and minimize out of control processes 54 Enterprise Organization Production

55 C. MRP systems Material Requirement Planning (MRP) systems include these 4 sub-systems: 1.Production planning 2.Production Scheduling 3.Costs accounting 4.General Production Reporting 55 Enterprise Organization Production

56 Marketing Production planning 1 1.Requests on production depend upon selling orders and previews Materials invoices Operations list 56 Enterprise Organization Production planning

57 Marketing Production planning 1 2. Previewed selling should be coherent with stocks of finished products Stock control 2 Materials invoice Operation list 57 Enterprise Organization Production planning

58 1 3. Raw material availability necessary to production purposes is communicated with a specific report 2 3 58 Enterprise Organization Production planning Marketing Production planning Stock control Materials invoice Operation list

59 1 4. Technical and human resources availability necessary for production is due upon available factors reports 2 3 Production units 4 59 Enterprise Organization Production planning Marketing Production planning Stock control Materials invoice Operation list

60 1 5. Production processes orders are reported into production scheduling 2 3 Production units 4 5 60 Enterprise Organization Marketing Production planning Stock control Materials invoice Operation list Production planning

61 2. Production Scheduling It indicates the sequence of operational phases necessary for production in every production unit, the process timing, the expected performance in every task, etc. 61 3. Cost accountability Production reports evaluation with reference to expected costs (direct and indirect) 4. Reporting Specific data about every production order, including stock levels changes (raw materials and products) Enterprise Organization Production

62 D. MRP II Systems Manufactoring Requirement Planning (MRP II) systems the goal is not only the identification of materials to buy (as in MRP), but involves the quantification about resources needed for production (human, technical, machinery, etc) and the evaluation of the feasibility of production programs planned with MRP. 62 Enterprise Organization Production

63 E. Internal control Quick response production systems internal control may be a problem due to transactions, eventually solved with a strong human resources role. With ICT controls are to be integrated within the productiuon process and cannot be at the end of the pipe! 63 Enterprise Organization Production

64 64 Enterprise Organization Themes Functions ProductionQualityMarketingLogisticsR&DSupply Definition Marketing Process Focus Strategies Politics 64 Critical factors Relational Marketing Limits

65 65 Process with which a business studies its market, trends, concurrency searching for opportunities and hints for production related to potential buyers, creating demand for new products and delivering these through the new selected distribution flows. Marketing Definition Enterprise Organization

66 The Marketing Process Context analysis Marketing Strategy Marketing Mix Action and control Marketing 66 Enterprise Organization

67 –Enterprise –Partner –Clients –Concurrents –Phisical Context Marketing 67 Enterprise Organization Context analysis Marketing Strategy Marketing Mix Action and control

68 Segmentation Targeting Positioning Value Proposition Segmentation Targeting Positioning Value Proposition Marketing 68 Enterprise Organization Context analysis Marketing Strategy Marketing Mix Action and control

69 Product Price Place Promotion Product Price Place Promotion Marketing 69 Enterprise Organization Context analysis Marketing Strategy Marketing Mix Action and control

70 Marketing Plan Product introduction Marketing Plan Product introduction Marketing 70 Enterprise Organization Context analysis Marketing Strategy Marketing Mix Action and control

71 71 Selling Cycle deal Product delivery client research invoice Financial rulestechnical assistance clients relationships management Marketing Enterprise Organization

72 72 Marketing policies orientation CUSTOMER RETENTION (Fidelity) CUSTOMER SATISFACTION (Quality) TIME – BASED COMPETITION Marketing a) Time to market Reduction b) Time to customer Reduction c) Flexibility (upon changes in clients needs) Enterprise Organization

73 73 Consumer behaviour Buying impulses Buying process - concurrent needs - concurrent goods/services - concurrent brands - rational - emotive - irrational Mind the relation between price and available financial resources Marketing Enterprise Organization

74 74 MARKETING STRATEGIES - DIFFERENTIATED MARKETING: Is targeted towards several great market segment with different marketing programs - INDIFFERENTIATED MARKETING : Considers market being homogeneous - CONCENTRATED MARKETING: Is targeted to one, os just a few, market segment with a unique marketing program Marketing Enterprise Organization

75 75 Strategical issues on product policies Differentiation of assortments Choices variety (products, brand, packaging, etc) Offer width Productions innovation and originality Marketing Enterprise Organization

76 76 Depth, range and choice Range Settore “B”Settore “A”Settore “C” Choice Linea 1 Linea 2 Depth MOD 11 MOD 12 MOD 13 MOD 21 MOD 22 Linea 3 MOD 31 MOD 32 MOD 33 Linea 4 MOD 41 MOD 42 MOD 43 Linea 5 MOD 51 MOD 52 MOD 53 Linea 6 MOD 61 MOD 62 Linea 7 MOD 71 MOD7 2 MOD 73 Linea 8 MOD 81 MOD 82 Marketing Enterprise Organization

77 77 Product life cycle Incomes and profits Time DevelopmentDeclineMaturity Incomes Profits Introduction Marketing Enterprise Organization

78 78 Rivitalized Product life cycle Incomes Time Marketing Enterprise Organization

79 79 Characteristics MARKETING approaches in different product life cycle IntroductionDevelopmentMaturityDecline Incomes Low incmesGrowing incomesIncomes peakDecreasing incomes Costs High cost for client Fare cost for clientLow cost for clientLow cost fol client Profits NegativeIncreasingHigh Decreasing Clients InnovatorsEarly adoptersMajorityLate entrant Concorrents FewIncreasingStableDecreasing Marketing Enterprise Organization

80 80 Pubblicity Product knowledge among retailers and early clients Diffuse product knowledge among mass market Brand differences and advantages Reduce maintainance costs for loyal clients Promotion Intense promotion to favor product selling Reduce, to benefit from growing demand Increase to limitate brand change Riduce to minimum Marketing Strategies IntroductionDevelopmentMaturityDecline Marketing approaches in different life cycle stages Enterprise Organization

81 Price 81 Marketing Enterprise Organization

82 Product 82 Marketing Enterprise Organization

83 Promotion 83 Marketing Enterprise Organization

84 Place 84 Marketing Enterprise Organization

85 People 85 Marketing Enterprise Organization

86 Process 86 Marketing Enterprise Organization

87 Physical Environment 87 Marketing Enterprise Organization

88 88 Traditional Marketing limits Marketing Traditional marketing is too much focused on produtc, interpreting clients as consumers (just capable of giving input for strategies definition). Marketing Mix (4P) doesn’t grant enough importance to clients and to stabel relationships with them, thus missing to consider clients as a pillar of value creation process (Value Constellation, Relational Marketing), as a strategic resource for competitive advantage. This has been referred to as Marketing Mix “Miopia”. Enterprise Organization

89 89 Marketing Mix Passagge from… Internal Marketing Relational Marketing Integrated Marketing Total relational Marketing Enterprise Organization

90 90 Marketing Transactional Marketing Client Passive, anonimous, target Relational Marketing Time Short run Marketing Mix Interactive Marketing Client Strategic actor Time Long run Strategic issues Mkt Mix Strategic issues Client interaction Client participation to production process Quality produced Quality perceived Enterprise Organization

91 91 Relational Marketing Marketing Marketing goal becomes to keep clients loyal, rather than to increase the market, not caring about the offered service quality. Business capacity to stabilize relationships with clients thought a reciprocal exchange and fulfillment of promises. Enterprise Organization

92 92 Marketing Long run relationships with clients may be interpreted as relationships’ life cycle: Relational Marketing First contact phase. To create the interest of potential clients, thus actions are limited to traditional marketing mix (with focus on communication). Purchase phase. The attention switches from purchase to service promises definition: traditional marketing mix tools (publicity and promotions) are coupled with interactive marketing ones (direct communication with potential buyers). Consumption phase. Enterprises have to mainain promises. Relational marketing comes to the fore. Enterprise Organization

93 93 Internal Marketing Marketing Since quality depends so much on the participation of everyone among the producer organization, to strenghten service cultre in employees and to foster relational marketing approaches internal marketing programa are to be done (i.e. training, communication, focus groups, etc.). Internal marketing focuses on the increase about client attention both of managers and employees. The first client of every organization, in fact, is the internal one, thus he is the first to be satisfied! The clear determination of roles, hierarchy, methods, activities strongly influences perceived quality of clients. Enterprise Organization

94 94 Marketing Integrated Marketing Il external marketing: traditional mkt management, focused on creating expectations delivering promises to market. Internal marketing: focused on the creation and maintainance of service culture and client orientation within the organization, necessary to create the premises to fulfill the promises. Relational marketing: relational management among employees and clients, to stabilize relationships and fulfill promises. Enterprise Organization

95 95 Total relational Marketing Marketing Total relational Marketing is marketing based on relations, networks and interactions; it is based on win win interactions with clients and stakeholders, and value is co-created jointly among involved parties. Businesses in contact with their clients in value co-creating logics deliver a new concept of marketing. Enterprise Organization

96 96 ORGANIZING ENTERPRISE Themes Business functions ProductionQualityMarketingLogisticsR&DPurchases/Supplies Model EQA Process control Organization TQM Evolutionary ladder Route quality Model EFQM


98 ISO 9000 To facilitate the achievement of the objectives for quality, have been identified eight principles of quality management: Customer-oriented organization Leadership Involvement of staff Approach to processes Systems approach to management Continuous improvement Decisions based on facts Relationships of mutual benefit with suppliers ORGANIZING ENTERPRISE Quality

99 Note 1: The elements entering into a process generally come from elements in output by other processes. Note 2: The processes in an organization are generally planned and executed under controlled conditions in order to add value. Note 3: A process must be validated (qualified) when the compliance of the resulting product can not be readily or economically verified. Process 1 INPUT Process 3 Process 2 OUTPUT Process 4 PROCESS ORGANIZING ENTERPRISE Quality A set of related activities or interacting elements that transform into elements in output

100 The customer may be internal or external the person or organization which is intended output of a process For a process (ex. providing a training course) may be needed more subprocesses (identifying needs, planning, promotion, collection of entries, selection, delivery...... Final exams..... billing....) Process Loop (for each process) Process Loop (for each process) identification of customer needs and PI design setting requirements provision under controlled conditions ORGANIZING ENTERPRISE Quality



103 THE PROCESS INPUTTHE PROCESSOUTPUT materials instructions information documents people processing (added value) POINT OF MEASURE ORGANIZING ENTERPRISE Quality materials instructions information documents people

104 Organization oriented TQM The activity of defining the objectives and strategies (strategic planning) division of labor, guidance, coordination and control (leadership, management and personnel management and system) is geared to the principles of quality ORGANIZING ENTERPRISE Quality The culture of listening and comparison (involving all internal and external partners), effectiveness and efficiency, planning and systematic, prevention, diagnosis and verification as continuous improvement


106 The ideal of an organization geared to TQM Organic structure flexible managed to processes and / or small groups or teams a "pyramid" reversed with great development of communication (computerized) internal and external ORGANIZING ENTERPRISE Quality

107 Globalization Price Pressure Integration of areas Removal of geographical barriers Legislative changes CHANGES WITHOUT PRIOR ORGANIZING ENTERPRISE Quality A world in Network


109  Management responsibilities  Quality system  Procedures  Tests, inspections, testing  Corrective and preventive actions  Measures, analysis  Summit responsibility  Quality system  Customer focus  Processes  Resources  Continuous improvement  Leadership  Policies and Strategies of organization  Development and justification of people  Resources  Quality System  Processes  Learning and Research best Practices  Continuous Improvement  Challenging targets  Results  Customers  People  Impact Company  Products, Processes, Economics and Finance  Benchmarking ISO 9001:1994 ISO 9001:2000 MODEL for excellence Model EFQM for Excellence and the rules ISO9000 ORGANIZING ENTERPRISE Quality


111 The Foundamental concepts of excellence (EFQM) Oriented to results Attention to Customer Leadership Process management People involvement Innovation and improvement Partnership Public responsibilities The EFQM Excellence: The basic concepts ORGANIZING ENTERPRISE Quality

112 112 BUSINESS FUNCTIONS ProductionQualityMarketingLogisticsR&DPurchases/Supplies Definitions Collaborations Self-development Choice methods Team Work Research and Development Business Organization

113 113 The research and development (R&D) is defined as the combination of creative work undertaken in a systematic way to increase the range of knowledge (including know- how, culture and society) and to use this knowledge for new applications Definition Source: Manuale di Frascati, OECD, 2002 Research and Development Business Organization

114 114 Types Basic Research: experimental or theoretical work undertaken primarily to acquire new knowledge on the fundamentals of the phenomena and facts that might remark, not intended for a specific application or use. Applied research: original work undertaken primarily to acquire knowledge and aimed at a practice and a specific application or use. Experimental development: systematcal work, based on existing knowledge gained through research and practical experience, led to complete, develop or improve materials, products and production processes, systems and services. Research and Development Business Organization

115 115 Innovation Tecnology "Activities related to technological innovations of product and process cover every scientific, technological, organizational, financial and trade effort to make or made available on the market versions characterized by a significant improvement in functional or content respect to previous versions, or an alternative solutions aimed at solving the same problems / satisfaction of those needs " Source: Oslo Manual, 2004, OCSE Research and Development Business Organization

116 116 Input indicators - Expenditure on R&D -Employees in R & D -Intensive R & D = (Expenditure on R & D/Turnover)*100 Output indicators - Scientific publications and citations - Patents and patent citations - New products / services launched on the market - Turnover (profits) generated from new products launched on the market Research and Development Business Organization

117 117 - Trends in industrial R&D Restructuring of corporate R&D by the largest companies worldwide The increasing orientation towards the activity of applied research and technological development (at the expense of basic research) The increase in the propensity to patent and increasing attention to the commercial exploitation of technology Specialization in process steps of innovation and growth of technology outsourcing The role and contribution of small enterprises for technological development and economic growth Research and Development Business Organization

118 118 Sometimes the development of a project requires complementary activities to those undertaken by an enterprise, without which it would be difficult transformation of a core of technological knowledge into a marketable product. Many times, companies must then choose whether to pursue its innovative activities either alone or in collaboration with partners. The collaboration could allow the company to achieve more ambitious goals more quickly and with less cost and risk. Through collaboration with other companies, an organization access to a wealth of knowledge and skills not supplied, which could cost time and money (in case of internal development). The cooperation strategies, however, involve a sharing of power control and distribution of profits, in addition to having to pay for the risk of unfair and opportunistic behavior of partners. Collaborations in R & D Research and Development Business Organization

119 119 - Collaborations nella R&S: Why? Issues related to the company functioning –Scale economies –Purpose economies (differentiated resource exploitation for various commercial applications) –Distribution costs and risks –Enlargement resource base and internal expertise Structural characteristics of competitive contest –Specialization economies and the role of complementary resources –Network economics –Allegations of markets for technology Environmental characteristics –Evolutionary characteristics of scientific-technological progress –Practice communities –Risks of inefficient duplication of investments Research and Development Business Organization

120 120 - The different forms of cooperation Depending on the type of relationship –Vertical agreements –Horizontal agreements –Transversal agreements According to the legal nature of the agreement –Contractual collaboration (non-equity) –Company collaboration (equity) According to the purpose of the competitive agreement –Non-competitive agreements –Pre-competitive agreements –Competitive agreements Research and Development Business Organization

121 121 Joint venture: is a particular form of covenant that requires participants to adopt a formal structure, almost always a new entity legally separate, with equity. Licensing: is a contractual agreement that gives an organization (or individual) the rights to use intellectual property of another organization, usually in exchange for a royalty. Outsourcing:is a formula under which a company moves outside certain processes rather to achieve its own. Research organizations: are organizations formed to promote collaboration among a group of players, for example, companies and public research institutions. The different forms of cooperation Research and Development Business Organization

122 122 The choice of partners Compatibility of resources: in which measure the potential partner is consistent with the resource requirements of the project? Compatibility strategic: see if the objectives, styles business, organizational behavior of the partner are consistent Impact on the opportunities and threats in the competitive environment: what influence will hold the strategy of cooperation on the bargaining power of customers and suppliers, the degree of competitive rivalry, the threat of new entrants or substitutes? Impact on the forces and weaknesses of organization: the collaboration will strengthen the powers of? And it will be able to balance its weaknesses? You can create a competitive advantage? Impact on strategic cooperation: will support the company in achieving its strategic intent? Research and Development Business Organization

123 123 - The pilot customer Representativeness Dimension Degree of priority Past reports Location Contractual power Research and Development Business Organization

124 Options for development of new technologies and new business Licenses; Acquisitions; Educational acquisitions; Venture capital; Internal venture; Joint-venture; Strategic alliances; Research consortia; Internal development Research and Development Business Organization

125 125 The advantages of self-development The strategic of technology developed may suggest to not share their know-how. If the efforts of an organization have produced technological knowledge hardly imitated in short, the development extends autonomy in the position of competitive advantage over competitors and other businesses, including goods and services. The autonomous development also allows control over the trajectory of technological development to give that, then may be to support the competitiveness of business in relation to the market, resources, skills and expertise. There are also companies that aren’t culturally inclined relational opening, and have skills and knowledge that are difficult to share in developments of partnerships with other companies. Even if it is more costly and difficult the selfdevelopment, infact, capitalize and maintain the wealth of knowledge and skills of corporate researchers, sometimes keeping the company competitive in terms of distinctive competencies. Sometimes companies believed to have sufficient skills, capabilities and resources to pursue autonomously the development of a complex project. Can happen that is not a suitable partner to support a possible deficiency, and enterprise finds itself forced to fill internally the gap capacity and / or skills necessary for the development project. Research and Development Business Organization

126 126 To evaluate a technology innovation project the management offers a wide variety of methods, informal instruments with sophisticated techniques based on qualitative data or based on assumptions strictly quantitative. Choice of Innovation Projects In most cases, use a combination of methods in order to provide more adequate assessment of the opportunities and risks of an innovative project. Research and Development Business Organization

127 127 Most companies have limited resources and capital constraints and they are therefore forced to select only some of the appropriate projects. Many companies adopt the methods of 'rationing' capital, which initially set a budget for R&D activities and then establish a ranking of projects to choose those that could be financed.  Budget is sometimes set in terms of share of turnover determined in the prior year.  This percentage is based on sector parameters (industry benchmark) or historical indicators reported by corporate performance (historical benchmark). The development budget Research and Development Business Organization

128 128 Quantitative methods Discount Cash Flow Real options Qualitative methods Questions filter Q-Sort PortfolioR&D Mixed Methods Conjoint Analysis Choice methods Research and Development Business Organization

129 129 Choice methods Techniques discounting cash flows (DCF = discounted cash flow) NPV = the expected cash flows are discounted incoming and compared with the present value of cash flows in output The most popular methods for the quantitative assessment of innovative projects are based on techniques discount cash flow and on analysis of real options. VAN = ∑ F t /(1+r) t t = 0 …. N F Net cash flow a year t N economic life r discount rate (capital cost) Internal rate of return = is the discount rate that makes the net present value of zero. Research and Development Business Organization

130 130 The real options methods It is a valuation technique that applies the model of option rights (stock options) on shares in an investment project The call option allows the investor to reserve the right to purchase future by a certain date (maturity) at a set price (strike price). If in future the value of the action exceeds the strike price the holder may exercise its right and purchase the action (if the surplus value of absorbing the cost of the buyer earns). Otherwise may withdraw losing the value of option, or he can buy the same if the value exceeds the strike price, but doesn’t cover everything (action + stock option). Choice methods In the case of a program of r&d: The cost of R&D program can be considered the price of an option to buy (call option). The cost of the investment future to support and fund the program is the operating cost (strike price). The return on the investment in terms of present value of expected cash flows from the r&d project correspond to the value of an acquired with right of option. Research and Development Business Organization

131 131 The most important factors in choosing the projects are very difficult to evaluate in quantitative terms. For this reason, almost all companies using qualitative methods. Applications filter, for example, are used to investigate and evaluate the main dimensions that influence the choice, such as: The customers role (market, product use, compatibility and ease of use, distribution and pricing strategies) The skills and organizational skills role (ability and skills possessed and future, ability of competitors) Project times and costs Choice methods Research and Development Business Organization

132 132 Q – Sort is a simple technique for the classification of ideas or objects based on a variety of parameters. ideas or variations of the project are described in a paper for each of the selected parameters, the cards are sorted according to the response capacity of each project a series of confrontation rounds between the different classifications, accompanied by a discussion among the participants, should allow to lead to an assessment shared Choice methods Research and Development Business Organization

133 133 The management can use a map where to place development projects (Portafolio map R&D), distinguished for example needs financial resources and skills to be used. Choice methods The basic research or experimental projects: arise along the frontier of technological innovation and test prototypes that don’t offer an immediate commercial application. The breakthrough project: provide for the development of products that incorporate technology product and revolutionary process. The draft platform: are profound improvements in cost, quality or performance technology than previous generations of product. Projects derivatives: provide only incremental changes of products or processes, sometimes simply extending the range of varieties. Research and Development Business Organization

134 134 Portafolio map R&D Choice methods Research and Development Business Organization

135 135 Quantitative methods and qualitative methods provide valid information to management in the selection of development projects, especially when the techniques are used in combination. Sometimes it is useful to convert qualitative information in quantitative variables. For example, the conjoint analysis estimates the value that a customer attaches to certain factors of choice and importance on product attributes, so as to enable the management to take decisions on the final configuration of the project. Choice methods Research and Development Business Organization

136 136 Many companies constitute team to lead and manage the develop project of a new product. The composition and working methods of the team depend on the strategies of firms and nature of projects. Team work Team dimension The team may be composed of a very small core or by hundreds of members. The large size is not always an advantage, because it can lead to increased operating costs and communication problems. With the increase of dimension tend to increase the risk of social inertia (social loafing), associated with the phenomenon that brings the components of the team to not receive the just recognition for its contribution. Team composition To promote coordination and cooperation between organizational units, many businesses entrust the development of new products to team composed of experts with complementary skills and from different functional areas Research and Development Business Organization

137 137 - The organizational structures of internal R & D Research and Development Business Organization

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