Management and Organizational Behaviour - Essay Example

Management and Organizational Behavior Asses the three plants managers leadership styles, and critically evaluate which one would you adopt for the riverside plant with special attention to each. The unique leadership style employed by managers in any business organization is essential in attaining organizational goals and objectives. Recognizing that no single management style can be efficient in managing all situations and types of workforce, it is deemed important that leaders should always be flexible, open-minded, and willing to cope by shifting to different leadership styles that different situations require. The three plants in Riverside site exemplifies three differing leadership styles anchored on different management philosophies. 1. James Eradour at the Carbon Plant Having earned his position by developing his skills and sound knowledge, James Eradour can be characterized as both bureaucratic and task-oriented leader. It should be noted that as bureaucratic leader, he has set out specific procedures and guidelines which should be strictly followed by his subordinates. Being task oriented, his main concern is efficiency, which he strongly believes to be attainable only by following the preset work directives. In his aim of having ultimately control of the plant, he even devises a system where all the administrative processes supporting craftsmen still needs his approval. He has little or no concern that his employees are demoralized by his behavior. His only interest is to get work done through people. He ultimately treats workforce as resources which should be used in order to attain organizational goals without considering the issues of motivating and retaining them. Eradour should be commended in his recognition that efficiency is the top priority of his plant. As previously discussed, production cost of aluminium is relatively high which necessitates the focus on efficiently utilizing organizational assets in order to reduce wastage thereby reducing production cost. Being a plant which operates on highly technical processes, the carbon plant thus needs to be guided with procedures to ensure that processes are being carried out as they should. The most important issue in the Carbon Plant is the lack of employee empowerment. The organizational structure is very centralized noting that Eradour is in control of almost everything through his establishment of guidelines which should be followed at all times. The manager should look into giving more autonomy in making some decisions. The fact that problems still arise amidst the strict guidelines signal that there are inevitable situations which should be left at the discretion of the employee. Giving enough empowerment leaves the workforce more motivated as this communicates that his insights are valued. More empowerment should be given most especially to the craftsmen. Intervention in this department should only be done if targets are not being met. This change is also expected to eliminate the faction within the plant and promote good working relationship among peers. 2. Mr McCallen at the Pot Rooms Mr McCallen is the extreme opposite of the almost autocratic leadership style of Eradour. The manager in this plant employs what is referred to as a laissez-faire leadership style indicated by his insufficient or even lack of control to his subordinates. Cautious of the union’s actions when he tried to implement organizational changes, McCallen recognized that it is best to leave everything to the supervisors and do nothing. Laissez-faire leadership can work if the supervisors all perform well and the manager communicates with them frequently. It also works well with employees who are very skilled and self-starters. However, leaving the subordinates to tackle their daily jobs the way they want will hinder a business organization in implementing essential changes that can enable it to become more efficient. Having no involvement in the work of his subordinates imply that the plant is not operating at full efficiency since no ample monitoring and control is exercised. It is important that McCallen negotiate with the union in order to establish better work practices. With the rapid improvement in technology, it is expected that changes in production process will be inevitable. By remaining inactive, the manager will not be able to establish changes necessary to instill new technology which will enhance production capacity. With this, it is expected that the company will always lag behind more efficient competitors and is very dangerous in the long run. 3. Craig Ellachie at the Casting Room The casting room seems to be an embodiment of the perfect leadership style because it prioritizes instilling the required skill to the workforce through various trainings in order for them to be most efficient in their positions. The leader gained respect not just through his achievements but because of his personal relationship with his subordinates. He pushes for efficiency yet he also recognizes the importance of employee motivation and empowerment. Though he met some initial resistance, transition in his plant has been well-managed. Aside from being a task-oriented leader, he also proves to be relationship-oriented. The case highlights three leadership styles which the managers for the Riverside site employ to cope with their teams. It is recommended that each manager should aspire to develop their workforce and introduce the best working practices within their plants. However, situational leadership style should be considered in bringing in the desired results recognizing that each team has different characteristics and issues. MARKETING AND MARKET ANALYSIS Create an awareness program which Aluminco can boost its image as an environment friendly company. I. Situation Analysis The most pressing concern of AluminCo is the creation of a corporate image through the establishment of a more appropriate corporate branding strategy. The pressures from its external environment and the evolution of a hypercompetitive business arena all pushes AluminCo to stand-out as socially responsible company which takes care of the society where it operates and promotes sustainable development. Thus, an awareness program which will be closely monitored will be established. Internal Environment Strengths. Being an old player in the aluminium industry, AluminCo has already acquired the skill and techniques in the manufacture of aluminium. The company is also able to gain the patronage of well known brands in the food and beverage sector. Weaknesses. During the recent years, AluminCo posts significant financial losses which eventually led to massive downsizing. This resulted into low employee morale. The company also faces hindrances in implementing the much needed changes in production processes because of resistance from unionized employees and poor communication. External Environment Opportunities. Rapid technological advancement posts opportunities for the aluminium industry to promote production efficiency through lower labor costs and shorter work hours. This new technology can also help business organizations to control pollution during and after production. Threats. There has been a shift towards corporate social responsibility as business organizations recognize the change in consumer buying behavior. In contrast to the typical buyer whose main considerations are price and product quality, customers are now keen on the externalities which a manufacturer makes in a society where it operates. Social changes bring about this change in consumer attitude which companies take advantage by launching their own corporate social responsibility programs. AluminaCo is threatened by the high profile campaigns raised against it because of the negative externalities of its operations. The company is facing oppositions from the residents of Riverside as well as GEP. Having customers in the food and beverage sector which are known for their environment friendly image, its relationship with its clients is also at risk. II. TARGET AUDIENCE The creation of a corporate brand is targeted in influencing the various stakeholders of AluminaCo including its employees, residents of Riverside, its customers, and stockholders. This wide range of target audience are considered because of their huge influence in the success and even mere survival of AluminaCo. III. OBJECTIVES The main objective of the creation of a corporate brand is to establish the image of AluminaCo as a socially responsible business organization. The following specific objectives should be attained: 1. Establish a harmonious relationship with the Riverside community; 2. Identify waste management technique for each stage in the production process; and 3. Promote recycling of aluminium. IV. IMPLEMENTATION The creation of a new corporate brand which showcases the commitment of AluminaCo in promoting social corporate responsibility and sustainable development requires a turn-around for the whole business organization. The company is not just dealing with a functional area but for its entire organization. In so doing, this suggests a change in the overall culture and strategy necessitating the participation of all employees from executives to laborers. 1. The company can start its organization wide effort of becoming an environment friendly company by establishing an ad-hoc committee which will plan and oversee its creation of a new image. This committee will draw up a slogan which embodies its campaign in changing the way it does business. This effort will clearly communicate to stakeholders its ardent desire in promoting social responsibility. 2. Communication of the proposed changes to the lower level employees will be important since image creation is the concern of everyone in the organization. One problem area which will be addressed is the relationship of employees to the company. Efforts will be made in order for them to become more open to their supervisors about their concerns. Benefits of being environment-friendly will be communicated. 3. The problem with the residents of the Riverside would be remedied by having negotiations with the local government. AluminaCo will adhere to the attainment of environmental credentials by evaluating its production processes. The company will be looking at each process to identify areas where there is wastage and pollution. Through the use of technology, the company will aim to minimize and eliminate these. Aiming to reduce pollution will go hand-in-hand with the installation of more efficient machines. Waste products and materials will also be recycled in an effort to minimize their harm in the environment. After these, AluminaCo will aim for certification from environment friendly organization in order to emphasize its adherence to environment-friendly processes. 4. In the national level, AluminaCo will spearhead the recycling of aluminium in order to help in the disposal of these solid wastes. This will be supported by a national campaign of collecting aluminium products such as beverage cans. The company will design a plant which will enable the re-melting of these metals and using them for the re-manufacture of cans. V. CONTROL The company’s plan of creating a corporate brand which embodies AluminaCo’s concern for the environment and the society where it operates will be accompanied with specific schedule for all activities. In order to ensure that objectives and schedules are being met, the business organization will require a specific time frame where activities should be fully accomplished. The ad-hoc committee will be given sole responsibility in monitoring the progress of the campaign. FINANCAL STATEMENT ANALYSIS AND ACCOUNTING Analyze the financial performance of AluminaCo using financial ratio analysis and compare it with its competitor Chalco. Financial ratio analysis is a very essential tool in assessing the financial health of a business entity. It enables a financial analyst to spot trends in a business and to compare it with the performance of similar business enterprises within the same industry. This tool is currently utilized by business managers, investors, creditors, suppliers, and other decision makers in order to determine the financial performance and well being of a business organization. Financial ratios are grouped into five categories, each showing a different aspect of a company’s financial operations. These are profitability ratios, financial leverage ratios, liquidity/solvency ratios, efficiency ratios, and investor ratios. Profitability ratios measure the ability of the company to generate income from its investments less the costs incurred. The computed operating profit margin, which is the ratio of operating income to sales measures as a percentage of sales, the excess revenue from sales over cost of normal operation excluding financing. Net profit margin, on the other hand, is the ratio of net income to sales. Logically, higher profitability ratios indicate a healthier financial condition. From the computed ratios above, it becomes apparent that Chalco lags behind in terms of profitability. AluminaCo is able to translate 14.4% of its sales into operating profit margin while 8.7% are turned into net profit. This is higher than Chalco’s 9.4% operating profit margin and 3.4% net profit margin. Through this, it can be generalized that AluminaCo is able to manage its expenditures more efficiently than its competitors. Financial leverage ratios provide an indication of the long-term solvency of the firm. Gearing is the long-term debt to equity ratio which assesses the balance between liabilities and equity in the firm’s long term resource structure. Another is the interest coverage ratio which measures the extent to which earnings cover the interest obligation of the company. Chalco and AluminaCo are pursuing different strategies in managing their cost structure. In Chalco, assets are funded mostly by creditors. It should be noted that each dollar of equity that stockholders invest has a corresponding $3.42 from creditors. This gives the company a resource structure of 23:77 in favor of debt. On the other hand, AluminaCo relies on its stockholders for financing. In 2007, AluminaCo has a resource structure of 34:66 in favor of equity. This different strategy results into a huge disparity in interest coverage ratio. Since Chalco pays higher interest, the ratio is smaller. Liquidity or solvency ratios are used as measures of the company’s ability to finance its short-term obligations by its cash and near cash items. Current ratio expresses the “working capital’ relationship of current assets available to meet the company’s current obligations. Quick ratio is an indicator of the extent to which a company can pay current liabilities without relying on the sale of inventory. Higher ratios indicate more liquidity. In both measures, Chalco appears to have higher liquidity than Aluminaco indicated by the computed ratios. During 2007, Chalco’s current assets is more than three times its current liabilities. Its relatively low percentage of inventory is manifested in the small gap between the quick and the current ratio. On the other hand, AluminaCO maintains a lower level of current assets compared to its competitor. If all current obligations become due, AluminaCo can more than pay off through current assets. However, it will only be able to pay 97.9% when inventory is taken out. Activity ratios are operating efficiency measures, which determine the ability of a company to maximize its output given a certain level of resources. Ratios under this category are average debtor’s collection and average trade credits collection. The computed ratios above indicate that Chalco is better at collecting accounts receivables than AluminaCo but the latter pays its trade creditors earlier. On the average, it takes 46 days for AluminaCo to collect receivables from customers while Chalco is able to do so in 44 days. Chalco pays its creditors within 24 days, one day later than AluminaCo. Investor ratios are financial ratios especially designed to covey to investors the asses the profitability of the company’s stock as an investment. Earnings per share shows the return to common stock shareholder for each share owned. Return on equity is a variant of return on investment. The return on common equity assesses the rate of return on the investments of common stockholders in the company. Return on equity is sometimes considered as the ultimate measure of the company’s financial performance in recognition that the primary financial goal of a company is to maximize shareholder’s wealth. During the fiscal year 2007, AluminaCo appears to be a better choice for stockholders because of its higher computed return on equity. For every dollar invested in its stocks, the company is able to create a $0.130 return for its shareholders. This is much higher than the $0.027 recorded by its competitor Chalco. Read More