Management Tools and Models
Here is a brief summary of the sections in this topic.
If you want to see the full topic, you can get a free trial here.
1. Which model do I need?
There is a wealth of models available to help users to analyse different aspects of business and organisations and reach good decisions. There is no one-size-fits-all option, so you need to find which model or combination of models may be of use in your particular circumstances.
The models outlined in this topic are here arranged – roughly – according to category, but be aware that many of them can be used or adapted for other purposes.
2. Ansoff’s Box
Ansoff’s box is a two-by-two matrix which provides the options for growth for a company.
- Different strategies are required, depending on whether you plan to stick with your current products or develop new products and upon whether you are going to remain in existing markets or move to new ones.
- Ansoff’s Box is frequently used to analyse strategy development and business growth.
3. Balanced scorecard
The balanced scorecard is a tool for measuring business success. It works on the assumptions that financial targets are not the only indicators of success and that targets should be set under the following headings:
- Internal business processes
- Learning and growth.
This tool is a method by which companies can set themselves strategic objectives that will help the firm progress in a more thoughtful and balanced way.
4. BCG matrix
The BCG matrix is a two-by-two matrix which helps the user to understand the relative importance of various products that the organisation produces. Products are categorised as
- Question marks
- Cash cows
The model is used for strategic analysis of a company’s product portfolio.
Benchmarking is a technique that allows your organisation to compare itself to other organisations performing the same task.
It is a way of examining other options for ways to do things that may be more efficient and are sometimes better than the way you are performing tasks.
6. Break-even analysis
Break-even analysis is a method for determining how costs, profits and revenues are linked with volumes of sales.
Break-even point occurs when total revenues received are equivalent to the total costs associated with creating and selling a product: when it stops costing you money to produce a product and you start making money.
This model is used for budgeting purposes.
7. Economies of scale
Economies of scale are the increasing returns that are accomplished when the average costs decrease as output rises. This assumes that production becomes more effective when output rises. Reasons for this are
- Fixed costs
- Bulk buying
- Better equipment
Economies of scale occur when long-term average costs decline and costs of production per unit fall as output rises.
8. Force field analysis
Force field analysis is an approach for looking at change and how it should be handled. It can be applied to any type of change.
This tool is designed to assess how difficult it will be to make a change that you wish to implement.
Using this model, it is possible to assess what the forces for and against your change are, and how strong each pressure is.
9. Internal rate of return (IRR)
The Internal rate of return (IRR) is a method for deciding whether to make a capital expenditure which is related to discounted cash flow.
It is used for calculating whether particular projects will be good investments and helps users to understand the level of risk and return involved in new ventures.
10. Kotter’s eight-stage change model
Kotter’s eight phases of change is a model that defines the eight main problems that can occur within any change management programme.
The model is used to plan and lead organisational change effectively.
This model works on the assumption that there are four stages involved in getting organised to effectively carry out business. These are encapsulated in the MOST acronym:
The MOST tool is used to define the direction and purpose of the organisation. It is also possible to employ it to assess company performance or to consider where best to focus resources and how to prioritise.
12. Net present value (NPV)
Net Present Value is a method for assessing the likely success of capital expenditure projects and whether to invest in them or not.
It is a mathematical tool for calculating whether particular projects will be good investments and helps to understand the level of risk and return involved in new ventures.
PEST or PESTLIED is an acronym that is used to analyse the business environment by looking at the following areas:
Sometimes, only the first four factors are considered, hence the name PEST. Other times all eight are analysed. The model is used for assessing the business environment.
14. Porter’s diamond
Porter’s diamond is a model used for assessing the potential of a country for a business. The model includes four factors that are essential to competitive advantage in a country:
- Firm strategy, structure and rivalry
- Factor conditions
- Demand conditions
- Related and supporting industries.
15. Porter’s five forces
Porter’s five forces is a tool that analyses the forces that work in opposition to a company being successful:
- Potential entrants
The model is used to better understand potential threats that may manifest themselves and to assess the balance of power in the industry. It can be used to identify where it is necessary to strengthen the position of the company
16. Product life cycle
The product life cycle is a model, usually in the form of a graph, which explains how a product will perform over time.
The model assumes that every product has a lifecycle and will change and develop over time. The stages in the lifecycle are
17. The seven S framework
The seven S framework is a model that shows seven factors that are closely interlinked and work together to shape organisational effectiveness:
- Shared values.
This tool is used for
- Assessing the potential for success of the organisation
- Analysing why organisations are ineffective
- Prioritising what is important at any given time
- Coordinating all organisational attributes toward goals and deciding how to manage situations of change.
18. Situational leadership
Situational leadership is a theory which defines which leadership styles should be used in which circumstances. According to this theory, there are four leadership styles:
19. Standard specimen strategies
Specimen standardised strategies are nine different strategies that can be adopted, depending on market characteristics and corporate strengths.
The model can be used for deciding between different types of strategies depending on corporate strengths and market attractiveness. It can be used to review company or business unit strategies, or review product portfolios.
20. SWOT analysis
A SWOT analysis is a strategic tool used to determine:
It is most commonly used to determine the current position of a company, business unit or team. This information is then often analysed to decide which opportunities should pursued and against which threats the company should defend itself.
21. The value chain
The value chain is a model that helps with looking at all aspects of an organisation to better understand how competitive advantage can be gained.
It works on the assumption that all parts of a company can create or reduce value for customers. All factors of a company form the value chain of each organisation.
The model is divided into primary activities and support activities.
Brief descriptions of lots of other models can be found here.