Customer lifetime value

CLV means that the value of all the cash flows created by the relationship with a customer. ICLV suggests focusing on retaining customer rather than on acquiring customer. A firm’s value is improved by the increasing the value of the customer relationships.

Dimensions of CLV:

Time (longer relationships):

-Secure customer satisfaction (treating well)

-Regular meetings with the customer

-Frequent flier programs

-Tier program: silver, gold, platinum

Frequency:

-buy 3, get 1 for free

-buy 10, get one for free  Card

Share of wallet:

-up-sell and cross sell (burger and fries), (suggesting another type of a particular product)

Operation management

Operation management is overseeing all the activities involved in producing goods and services. Operations managers are responsible for a wide range of strategies and decisions from location production facilities to managing the supply chain.

In general, operations management uses mathematical approaches (quality control, forecasting techniques, capacity planning etc.) to find ways to increase productivity, improve quality, and manage or reduce costly inventories.

As operation management deals with managing production costs, it will affect pricing decision.

Supply chain

The lifeblood of every production operation is the supply chain. SC is a set of connected systems that coordinates the flow the flow of goods and materials from supplier all the way through to final customers.

Managing risks. SCM can help companies manage the complex risks involved in a supply chain, risks that include everything from cost and availability to health and safety issues.

Managing relationships. SCM can also coordinate the numerous relationships in the supply chain and help managers focus their attention on the most important company-to company relationships.

Managing trade-offs. SCM helps managers address the many trade-offs in the supply chain. These trade-offs can be a source of conflict within the company, and SCM helps balance the competing interests of the various functional areas. This holistic view helps managers balance both capacity and capability along the entire chain.

System is an interconnected and coordinated set of elements and processes that converts inputs to desired outputs. (Transaction Processing System, Decision Support system).

Value chain – all the elements and processes that add value as raw materials are transformed into the final products made available to the ultimate customer.

Just in time - inventory management in which goods and materials are delivered throughout the production process right before they are needed.

Motivation

Motivation is not about whether you can do something but about whether you want to do something. All human performance depends on both ability and motivation.

Survival needs: People are motivated to seek money

Growth needs: But people also seek to apply their potential, to make bonds with others.

Implication: If managers want to motivate people over the long term, they must enable them to grow.

People are motivated to satisfy needs: survival and growth needs

People respond when there are rewards they value, and when they feel they can do the job and have confidence they will be rewarded

Manager need to be aware of the importance of equity in pay systems and should aim to minimise perverse incentives.

Scientific management – management approach designed to improve employees’ efficiency by scientifically studying their work.

Maslow hierarchy – model in which a person’s needs are arranged in a hierarchy, with the most basic needs at the bottom and the more advanced needs toward the top. According to Maslow, needs on the lower level of the hierarchy must be satisfied before higher-level needs can be addressed.

Self-actualisation (leadership role)

Esteem needs (The need for a sense of self-worth and integrity)

Social needs (friends at work)

Safety needs (health insurance, pension plan)

Physiological needs (food, clothing salary)

Theory X

Managerial assumption that employees are irresponsible, are unambitious, and dislike work and that managers must use force, control, or threats to motivate them

Theory Y

Managerial assumption that employees enjoy meaningful work, are naturally committed to certain goals, are capable of creativity, and seek out responsibility under the right conditions.

Herzberg’s two factor theory – model that divides motivational forces into satisfiers and dissatisfiers. Hygiene factors such as working conditions and company policies can influence employee dissatisfaction. On the other hand, motivators such as opportunities for achievement and recognition can influence employee satisfaction.

Expectancy theory suggest that the effort employees put into their work depends on expectations about their own ability to perform, expectations about likely rewards, and the attractiveness of those rewards.

Equity theory indicates that employees satisfaction depends on the ratio of their inputs to the job and the outputs or rewards they receive from it.

Goal-setting theory is a motivational theory suggesting that setting goals can be an effective way to motivate employees.

Job enrichment

Making jobs more challenging and interesting by expanding the range of skills required.

Reinforcement theory

A motivational approach based on the idea that managers con motivate employees by influencing their behaviours with positive and negative reinforcement.

Management by objectives

A motivational approach that empowers employees and involves them in goal setting and decision making. This process consists of four steps:

Setting goals

Planning actions

Implementing plans

Reviewing performance

Because employees at all levels are involved in all four steps, they learn more about company objectives and feel that they are an important part of the companywide team. Furthermore they understand how their individual job functions contribute to the organisation’s long term success.

Being a manager

Management work is reached via promotion from specialist or technical roles

It is qualitatively different, involving greater responsibility and more challenging types of “people work”

Work experience and management development processes enhance our management skills.

Administrative management (Henri Fayol)

Fayol argued that if managers want to be successful, they need to perform five managerial elements: planning, organising, coordinating, commanding and controlling.

Discipline – clearly defined rules and procedures to ensure order and proper behaviour.

Unity of command – receive orders from just one boss

Remuneration – fair compensation

Order – there should no overlapping responsibilities

Equity – kind and fair treatment.

Human relations management

Human relations management defines people as more than just extensions of machines. They are valuable organisational resources. Their needs are important and their efforts, motivation and performance are affected by the work they do and by their relationships with their bosses, co-workers and work groups. Organisational success depends on threating workers well.