Letter M

MBO (Management By Objectives): It involves setting objectives and then breaking them down into more specific goals or key result areas. MBO is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. The principle behind MBO is to make sure that employees have a clear understanding of the aims, or objectives, of the organization, as well as awareness of their own roles and responsibilities in achieving those objectives.

Managerial Grid: A management and leadership tool introduced in 1964 by Robert R. Blake and Jane S. Mouton, the grid evaluates managers on two dimensions:

I. The Task Function or Concern for Production.
2. The Relation Function or Concern for People.

Managers must be able to strike the right balance between a task orientation and people orientation. The grid comprises a 9 x 9 matrix, capturing 81 different leadership styles, e.g. 'country club management', 'team management', 'organizational management', 'impoverished management' and 'authority-obedience management'.
(See Leadership)

Market Defense: The strategic moves that attempt to minimize or deter threatening actions by existing or potential competitors. Deterrence strategies include: signaling intentions to defend, building barriers to entry or mobility and reducing market attractiveness by lowering prices. If challengers cannot be deterred, then market defense moves can attempt to contain them and minimize the damage.
(See Market Signals)

Market for Corporate Control: This refers to the market in which mergers & acquisitions take place. A well functioning market for corporate control puts pressure on management to perform. Failure to perform, results in takeover bids. In countries like USA, where the financial system and legal framework are well developed, this market functions very effectively. Hostile takeovers are quite common. But in many parts of the world, including Europe, due to the intervention of the government/regulatory authorities, the market for corporate control does not function very efficiently.

Marketing Mix: How a firm implements its marketing strategy. Also known as the four Ps:
• product (including range of pack sizes and / or flavors or colors)
• price (long-term pricing strategy and pricing method)
• place (choosing distribution channels and seeking shop distribution)
• promotion (branding, advertising, packing and sales promotions)

The relative importance of the different Ps is highly contextual. A company must arrive at the optimum marketing mix to strengthen its competitive position. In the case of services, three more Ps can be added - People, Process, Physical evidence. This leads to the 7 Ps of marketing.

Market Power: The degree to which a firm exercises control over its market. Wal-Mart for instance has considerable market power, which it leverages while negotiating with suppliers. Hindustan Lever has a similar advantage while dealing with distributors and dealers.

Market Signals: Market signal refers to an action by a competitor that provides an indication of its intentions, motives, goals or internal situation. Market signal may be a bluff or warning or an expression of earnest commitment. Correct interpretation of market signals is important to compete effectively. Michael Porter has given an excellent account of market signals in his book, “Competitive Strategy”.

• A player can make a prior announcement of its moves to preempt competition, to threaten a competitor who is going ahead with an earlier planned move, or to elicit competitor reaction.

• A firm can announce sales figures, addition to plant capacity, etc., to influence the behavior of other firms. Often, misleading data may also be announced as part of a pre emptive strategy.

• A firm may discuss openly the industry, demand and price forecasts, future capacity projection, estimates of future raw material prices, etc. Through such announcements, the firm can try to influence the assumptions of competitors.

• A firm may discuss/explain the logic of the move to competitors. It may also communicate its seriousness and earnestness about what it is doing and what it is planning to do. This way, the firm may be able to preempt competition or prevent retaliation.

It is often useful to examine the historical relationship between a firm's announcements and its actual moves to understand whether the firm is a serious player or is only trying to “bluff” its way. Among the other issues which need careful examination are competitors' tactics relative to what they could have done, the divergence from past goals, industry precedent, etc. Strategy formulation is usually based on implicit and explicit assumptions about competitors. Market signals can add greatly to a firm's knowledge of its competitors.
(See Competitive Moves, Game Theory, Market Defense)

Maslow, Abraham: Well-known for his needs hierarchy theory of motivation. Unlike many other behavioral scientists of his time, Maslow did not analyze and study mental dysfunction. Instead, he tried to seek out and probe the healthiest minds and best-balanced personalities he could find. Maslow believed in the innate potential of human beings for goodness and recognized the importance of developing the human capacity for compassion, creativity, ethics, love, and spirituality. All people are born with such basic needs as food and shelter, as well as the emotional yearnings for safety, love, and self-esteem. But these needs are only the foundation of a pyramid of higher aspirations. Man yearns for bread when there is no bread. But when there is plenty of bread and the stomach is full, higher needs emerge. And when these in turn are satisfied, new and still ‘higher’ needs emerge, and so on. Maslow believed altruism resulted when lower order needs had been largely fulfilled, in childhood, leading to the development of a healthy character.
(See Motivation)

Matrix Structure: A type of structure, which attempts to combine the best of functional and divisional structures. The main advantages of a functional structure are technical specialization and efficiency. The main advantage of a divisional structure is sharp business focus. A matrix structure creates dual reporting relationships. Subordinates are assigned to both a functional area and a project or product group. Some matrix structures can be more complicated. For example, in a global corporation, a three dimensional matrix structure might involve a functional manager reporting to the business unit head, country head and the global head of the function simultaneously. Because of multiple reporting relationships, the matrix structure is inherently more difficult for managers to handle. So in recent times, companies like ABB have considerably simplified the complex matrix structures they followed earlier.
(See Divisional Structure, Functional Structure, Organizational Structure)

Mayo, Elton and Roethlisberger, Fritz : Mayo and Roethlisberger pointed out that, psychological techniques and social interaction held the key to managing the relationships within social systems and to improve employee morale and productivity.
Roethlisberger and Mayo insisted that behavior of employees was influenced as much by their role in a work group and their relationship to their colleagues as by the promise of economic gain. They were among the first to draw attention to the power of the informal organization.

Mayo traced the root of many problems in the work place to the shift from the skilled trades of the nineteenth century, with their strong community ties, to the rise of unskilled, migrant laborers. Industry had effectively destroyed the self-esteem of skilled tradesmen and was ill equipped to deal with the alienation and disaffection of blue-collar workers, most of whom had been uprooted from their communities.

Together Mayo and Roethlisberger conducted the famous Hawthorne experiments to study human motivation. The experiments exposed the inadequacy of the piecework system and challenged the assumption that there was a neat correlation between pay levels and productivity. The experiments also exposed the complex way in which the relationships between supervisors and workers could affect output.

In the first set of tests, known as the “illustration experiments,” workers were divided into two groups – a test group in which the workers were submitted to increasing amounts of light and a control group, which worked under a constant light intensity. Contrary to expectations, productivity increased in both groups. The workers seemed to be responding more to the attention they were receiving from management than to any actual change in working conditions. This response of the workers was called “the Hawthorne effect.”

In the last set of investigations, known as the Bank Wiring Observation Room experiments, the room was staffed with 14 workmen, paid according to a group piecework system. The more components they turned out, the more money they made. So it was logical to expect that the most efficient workers would put pressure on the slower workers to maintain a high level of output. This did not prove to be the case. Instead, the group established an unofficial output norm based on what was considered a “fair” production quota. Workers who violated the norm by producing either too much or too little, were looked down upon by their coworkers. The informal organization dictated the output of each worker based on its own standards of fairness and the position each worker occupied within the work group.

In many smaller organizations, many of the rules of the work place remained implicit, not only the operating rules and standards of performance, but also the rules of communication, that is, to whom one was supposed to go for help. People were bound together by relations that had nothing to do with what they were supposed to be doing. These relations seemed to be important, not only for achieving the objectives of the organization but also for obtaining the cooperation of people.
(See Motivation)

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McGregor, Douglas (1906-1964): An American psychologist whose book THE HUMAN SIDE OF ENTERPRISE categorized managers into two types: Theory X and Theory Y. Many managers assume people to be work-shy and motivated primarily by money. These are Theory X managers. In contrast, Theory Y managers assume that workers look to gain satisfaction from employment. If achievement levels are low, managers must ask whether they are providing the right work environment. In other words, the Theory Y manager assumes that the blame for poor workforce performance lies with the management rather than the workers themselves.

The Theory X manager assumes the following:
• Workers are motivated by money.
• Unless supervised closely, workers will under-perform.
• Workers will only respect a tough, decisive boss.
• Workers have no wish or ability to help make decisions.

The Theory Y manager assumes the following:
• Workers seek job satisfaction, no less than managers.
• If trusted, workers will behave responsibly.
• Low performance is due to dull work or poor management.
• People have the desire and right to take part in decision making.

McGegor was also against the traditional pay-for performance concept. He was convinced that money could not substitute an environment that was conducive to motivation. McGregor recognized the tremendous improvements in working conditions since the turn of the century, at all levels of the corporation. Drawing on Maslow’s hierarchy of needs, he argued that by satisfying the safety and security needs of its employees, companies had created higher-order needs. The focus had to shift to satisfying those higher needs.

McGregor’s work is not completely original. Theory X is derived from the work of F W Taylor and from Adam Smith’s notion of ‘economic man’. Theory Y stems clearly from Mayo’s human relations approach and Maslow’s work on human needs.
(See Motivation)

McKinsey 7-S Framework : The Seven-S framework developed by Mckinsey consultants, Pascale and Athos, looks at seven key aspects of an organization: strategy, structure, systems, style, skills, staff and shared values.

Strategy: The path chosen by a company to achieve its goals. How the organization allocates its resources to achieve its aims.

Structure: Describes the hierarchy of authority and accountability in an organization. These relationships are frequently indicated in organizational charts and include organization structure, level of centralization, authority and responsibility arrangements.

Skills: The core competences and capabilities of the firms that allow them to compete in the market.

Systems: Processes used to manage the organization, like customer satisfaction monitoring system, management information systems, budgetary and other control mechanisms.

Staff: The quality of a firm's human resources. It refers to how people are developed, trained and motivated.

Style: The leadership & operational approach adopted by the management. It also refers to the way in which the company projects itself to the outside world.

Shared Values: Also known as super-ordinate goals. The fundamental ideas around which a business is built and the things that influence a group to work together towards a common goal.
(See Purpose-Process-Principle Doctrine)

McNamara, Robert S: McNamara who presided over the restructuring of Ford, The US defense department, and World Bank, championed a new approach to management that emphasized sophisticated quantitative skills and financial controls. McNamara did more to advocate a rationalist, quantitative approach to management than perhaps any single individual since Taylor.

McNamara’s vision encompassed both the need for financial discipline and a belief in the corporate social contract. He was an earnest advocate of safety, environmental responsibility, utility, function, cooperation with government, and accountability to labor.

Thanks to McNamara, systems analysis became a popular late-twentieth-century tool of scientific management. It aimed at providing transparency by making both the analysis and the assumptions and calculations behind it available to all interested parties. Yet, as applied by McNamara, it concentrated power in the hands of a few analytical experts. McNamara’s bean counters wrested control of planning from operating executives in both auto manufacturing and the armed services.

As time passed, it became clear that tools and techniques could not make up for poor human judgment. Long after the Vietnam War had ended, McNamara admitted: “We failed to recognize that in international affairs, as in other aspects of life, there may be problems for which there are no immediate solutions.”
Merger: A merger refers to the combination of two companies into one larger company. Some mergers involve a cash deal while others involve exchange of shares. A combination of the two is also possible. In many instances a merger resembles a takeover but results in a new company name (often combining the names of the original companies) and in new branding. There can be various types of mergers:
• Horizontal mergers take place where the two merging companies both produce similar products in the same industry.
• Vertical mergers occur when two firms, each working at different stages in the production of the same product, combine. This is some kind of a vertical integration.
• Conglomerate mergers take place when the two firms operate in different industries.
Mergers must be planned and implemented carefully. Many mergers fail to create value for shareholders because the synergies identified before the merger fail to materialize.
(See Anti Takeover Strategy, Valuation)
Mintzberg, Henry: A professor of strategic management at McGill University, Canada, Mintzberg also holds a chair at INSEAD. A leading researcher in the area of strategy, his philosophy is based on how managers actually create and implement strategy, rather than how they supposedly should do it.

Mintzberg’s first major input came from studying managers at an everyday level. He found that whilst the theory was that managers should be reflective thinkers, the reality was that they were caught up in action most of the time.
Mintzberg has been a prolific writer with more than 140 articles and 13 books to his name. His seminal book, The Rise and Fall of Strategic Planning, criticizes some of the practices of strategic planning today and is recommended reading for anyone who seriously wants to consider taking on a strategy-making role within their organization. He has argued that conventional planning processes are inappropriate to the more fluid decision-making processes characteristic of most organizations.
Mintzberg along with Joseph Lampel and Bruce Ahlstrand has co-authored “Strategy Safari”, which likens the various schools of strategy to the different kinds of animals which one would literally see, if one were on a safari.

Mintzberg’s recently published book Managers Not MBAs outlines what he believes to be wrong with management education today and how obsession with numbers and viewing management as a science actually can damage the discipline of management.

Mission: The fundamental purpose that sets a firm apart from other firms of its type and identifies the scope of its operations in product and market terms. Mission embodies the business philosophy of the firm, conveys the corporate image and indicates the firm's principal product or service areas and the primary customer needs the firm will attempt to satisfy. In short, the mission statement describes the firm's business in product, market, and technological terms.

According to King & Cleland , a well-designed company mission must accomplish the following:
1. Ensure unanimity of purpose within the organization.
2. Provide a basis for using the organization's resources.
3. Establish a general tone or organizational climate.
4. Serve as a focal point for those who can identify with the organization's purpose and direction and weed out people who cannot do so.
5. Facilitate the translation of objectives and goals into a work structure involving the assignment of tasks to responsible people within the organization.
6. Specify the organizational purpose and the translation of this purpose into goals in such a way that cost, time and performance parameters can be assessed and controlled.

A mission statement ensures that all employees are working towards a common purpose, enables employees to identify better with the organization, and serves to state explicitly or implicitly the beliefs, values and aspirations of the organization. A vision is a broad indication of the organization’s intentions. The ideas and ideals embodied in the vision are often too lofty. Vision is often unwritten. A vision becomes tangible when it is expressed in the form of a mission statement.
(See Corporate Purpose, Vision)

Motivation: A motivated workforce holds the key to the success of any organization. Probably the most well known theory of motivation is the one developed by Abraham Maslow (Maslow), a behavioral scientist. He proposed the Hierarchy of Needs theory in 1954. According to Maslow, human beings are motivated by unsatisfied needs. Lower needs need to be satisfied before the higher ones become important. When "deficiency needs" are met, other higher needs emerge and when these in turn are satisfied, new (and still higher) needs emerge, and so on.

Physiological Needs: Physiological needs are basic needs such as air, water, food, and sex. When these are not satisfied, we feel pain and discomfort.

Safety Needs: Comfort and security come next. After the basic requirements of survival are met, we naturally want to preserve and enhance what we have. We think of the security of home and family.

Social Needs: Love and belongingness follow. All of us have a desire to belong to groups: clubs, work groups, religious groups, family etc. We want to be loved and accepted by others.

Esteem Needs: There are two types of esteem needs. First is self-esteem, which results from competence or mastery of a task. Second is the attention and recognition that come from others. Holding senior posts in organizations and an opportunity to lead initiatives are sources of self-esteem for most people.

Self Actualization: In this stage, people seek knowledge, peace, self-fulfillment and salvation.

The basic problem with Maslow's model is that people may be having different kinds of needs at the same time, instead of moving sequentially from one to the next. Moreover for many people caught in poverty, especially in third world countries, lower order needs may not be satisfied during an entire lifetime. So the question of self-actualization does not arise. Then there are people who are always greedy for more money, despite being very wealthy!

In 1969, Clayton Alderfer improvised on Maslow's Hierarchy of Needs, with his ERG theory (Existence, Relatedness and Growth). Alderfer put the lower order needs, physiological and safety, into the existence category. He fit Maslow's interpersonal love and esteem needs into the relatedness category. The growth category contained the self actualization and self esteem needs. According to the ERG theory, more than one need may be operational at the same time. People can move on to a higher order need without substantially satisfying their lower order needs. For instance, an artist may want to satisfy his basic needs like hunger and shelter but he may be simultaneously interested in his growth as an artist. If a higher-order need is frustrated, an individual may regress towards a lower-order need which appears easier to satisfy. This is known as the frustration-regression principle. Thus, if social needs are not satisfied, an employee might start concentrating on making more money. This might happen for example if a deserving middle manager is denied a promotion for a long time.

Another landmark in the body of knowledge about motivation is Herzberg’s two-factor theory of job satisfaction. Every organization has a set of hygiene factors like working conditions, salary etc. The absence of hygiene factors creates employee dissatisfaction but their presence does not improve satisfaction. Herzberg found five factors in particular that were strong determinants of job satisfaction: achievement, recognition, the work itself, responsibility and advancement. Motivators have a long-term positive impact on job performance. In contrast, hygiene factors produce only short-term changes in job attitudes and performance.

Another theory proposed by Vroom is that motivation depends on employee expectations about the outcome of their efforts. If people know what they want from an outcome and believe they can achieve it, they will be highly motivated to work towards the goal. This theory contrasts with Maslow and Herzberg’s emphasis on people’s needs.
(See Herzberg, Hygiene factors, Maslow)

Multi Domestic Industry: An industry in which the competition within the industry is essentially segmented from country to country. Competitive strategies in one country are largely independent of those in other countries. Typically, these are industries where economies of scale are less important and the need for local customization is more critical or where freight costs are significant. The cement industry is a good example.
(See Global Industry)

Murphy’s law: It is most commonly formulated as "Anything that can go wrong will go wrong." The law is named after Major Edward A. Murphy, Jr., a development engineer who worked for a brief period of time on rocket sled experiments done by the United States Air Force in 1949.