Market-Based Management Principles Essay

Excerpt from Essay :

Market-Based Management Principles

Vision

The foremost principle of market-based management is vision. The vision helps determine strategies the organization implements in creating long-term value in market and customer management. The success of a company in the market lies in institutionalization of strategies that create value (Block, Wood, & Barnett II 2002).

Vision, provides guidelines for the company on how to create sustained value and adaptability in the dynamic market. Vision outlines strategies a company should take to improve market and product development. Critical analysis of the vision by the organization provides ways the company can use to meet and carry out activities efficiently and effectively.

Individual talents and skills can be harnessed to make the organization a market leader in situations whereby the vision is a motivator to the employees. The institution of visions that are morally accepted by the organization can increase employees' loyalty and productivity. Having clear visions necessitates employees to ensure they are well placed in positions that will utilize their skills and talents to increase the profitability and productivity of the organization. In addition, focusing on the accomplishment of the vision leads to easier realization of the vision.

Knowledge Process

A firm is likely to succeed by having useful knowledge of the market. Knowledge process entails the acquisition, creation and application of relevant employee skills and abilities to measure employee and organizational profitability. The use of market knowledge while accepting challenges increases the knowledge base of a firm in the market (Minkler, 1993). Basic markets mechanisms such as prices, profits and loses are efficient in creating useful knowledge of the market. Additionally, estimation of business productivity and enhancing organizational knowledge helps in increasing organizational market knowledge.

Furthermore, property rights are necessary parts in the creation of organizational market knowledge. Without clear and well defined property rights, it is a herculean task to access reliable information regarding market prices and conditions. For the business to have greater success in the market, they require extensive target market knowledge and strategies to use in capturing the market. Besides, customer reactions and profit mechanisms provide feedbacks that enable the organizations to analyze and improve their knowledge about the market performance. Having the right knowledge base about the market ensures prosperity of the organization in any competitive market.

Decision Rights

Giving first priority to individuals with the required professionalism and authority helps the organization make right decisions regarding organization requirements and needs. This ensures accountability of individuals in cases where the decisions made have negative impacts on the organization. Encouraging employees to take challenging tests involving organizational decision making helps them make good decisions.

Sautet in his book, An Entrepreneurial Theory of the Firm ascertains that investing in trainings regarding decision-making help employees make good decisions. Good decision-making facilitates the growth of the organization. In addition, organizations promoting the institution of fair rules regarding decision-making allow employees to air their plights leading to right decision making by the organization (Sautet 2000).

Advocating for equality in organizational decision-making may bring about good decision making among the company's employees. Having qualified individuals based on their interests, values, and capabilities may additionally. In particular, promoting fiscal responsibility of workers and removing communication barriers cultivates a culture of good decision making within the organization. Subsequently, conducting research and policy analysis, offers education to employees on how to make good decisions.

Incentives

Rewarding employees in accordance to their productivity and value they bring to the company is the other principle of market-based management. To increase employees' loyalty to the organization and general market society, the organizations is required to give out incentives to them (Taylor, 2000). Issuing incentives makes the employees feel valued by the organization which could increase workers morale and productivity. Incentives are great motivation to the workers and helps employees realize their full potentials and get work satisfaction. Providing financial measures such as variable charging, tax reductions, and other benefits to employees can lead to greater impacts in workers' productivity to the organization. The likely impact of giving workers rewards and incentives for exemplary performance is likely to increase workers contentment with their duties leading to reduced work challenges.

Virtue and Talents

Virtues are set standards for the estimation of polices, work conduct, norms of behavior and building values that guide individual worker action. These set standards help the organization employ individuals with the required values, talents and skills. Workers integrity by conducting all business affairs lawfully and with honesty ensures compliance with the set code of conduct. The compliance with the set code of conducts makes the organization have good work environment and safety procedures for all employees.

Allowing worker freedom and encouraging organizational integration of workers reduces threats likely to arise from lack of workers cooperation and misbehavior (Tullock, 1969). Improving workers welfare in the organization and training are possible ways to increase workers compliance with the stipulated organizational code of conducts. Adherence of workers to organizational regulations increases productivity and client satisfaction with organizational products.

Putting in place strategies to empower employees and improve their talent is an added advantage to the organization in the market-based management. Supporting employees to stretch their ideas to bring constructive organizational development increases workers loyalty and morale. This encourages workers to undertake activities that are quite challenging which may ultimately help in their talent development.

In addition, having employees with great talents help the organization achieve its vision and mission among other benefits to the company. Employees with libertarian thinking and policies can help an organization achieve great market base and improve productivity as well as management of organizational activities. Such employees are likely to formulate practical policy proposals that would enhance societal well-being of the organization.

Principled Entrepreneurship

Maximizing long-term profitability by creating real value is the greatest way of pursuing customers in the market. In this case, lawful acts and integrity can only be measured in a free market where consumers have choices and profits are meaningful measures of business performance. Martti (1992), alludes that leading companies in any industry are those that have sense of urgency, discipline, accountability, economic and critical thinking capabilities. These companies thus generate greatest contribution to the market and the entire society. Principled entrepreneurship in market-based management calls for companies to spend time anticipating and meeting consumer demand. And as such, client demand is beneficial to the organization rather than seeking non-market political favors such as special tax provision, cash subsidies and imposing restriction on close market rivals. Additionally, principled entrepreneurship enables companies to achieve greater success in the long-term by applying business ethics that allow for prosperity in the market.

Customer Focus

Successful companies are those that understand and develop relationships with customers to profitably anticipate and satisfy their needs. In addition, customer retention consideration must be given the first priority in the market since not all customers are the same. Apparently, there are different types of customers in market the organization is operating in. First, there is a core customer that acts as the brand loyal. The second customer is at-risk customer that is profitable but not fully loyal to the brand. The third is non-profit customer; satisfied and retained but not profitable to the firm. Finally, there is a spinner; a sales promotion driven customer (Hill & Deeds, 1996).

The rate customers enter a market depend on product attractiveness, customer characteristic and marketing effort of a company. Market development pattern can be projected based on market potential, market penetration and rate of consumer entry. To successfully access mainstream markets, companies should deliver complete solutions that are acceptable to customers. Recognizing customers as the primary unit of focus assist market-based business to expand the focus to customers and market besides product sales. Companies trading in the market can attract new customers, grow their market share and market demand by putting more focus on customers in the market. Furthermore, companies can enter new markets to ensure they have new sources of customers.

Change

Practicing considerable change incessantly is the best way an organization can achieve future prosperity. Companies that adopt change and exploit chances created by changes have greater levels of achievements in the market (Lewin & Phelan, 1999). A company or investor should always seek to find innovations and efficiencies before its competitors. By gaining experience or gathering additional decisions from the market, a company can grow and take a large share of the market.

Companies practicing decent market strategies should embrace new communication systems, improve contact centers and integrate customer service over the internet as well. This helps the organization enhance service experiences and build customer loyalty. A company should make changes based on potential and important market information. Companies additionally need to examine their market strategies and financial targets before making changes in their market. This necessitates a high quality change in a timely style. Matthews (2006) illustrates that, companies should not hold back on spending money for new investments. It is further recommended that if any business investment will change the future from the clear intent of strategy laid, then it is…

Sources Used in Document:

References

Block, W., Wood, S., & Barnett II, W. (2002). Austrian Economics, Neoclassical

Economics, Marketing, and Finance. Quarterly Journal of Austrian Economics, 51-66.

Hill, C.W., & Deeds, D.L. (1996). The Importance of Industry Structure for the Determination of Firm Profitability: A Neo-Austrian Perspective. Journal of Management Studies, 429-451.

Lewin, P. (1998). The Firm, Money and Economic Calculation: Considering the Institutional Nexus of Market Production. American Journal of Economics and Sociology, 499-512.

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