Current Trends in Business Development

In this chapter, we are looking at three issues that are of importance to business and
management:
1) Knowledge Management
2) Learning Organizations
3) Electronic Business

We will be looking at:

- new ways of structuring companies
- new ideas for managing staff
- new goods and services
- new processes in manufacturing and distribution
- new consumer demands that require changes to business

Knowledge management and the learning organization relate to new approaches to

management and organization in the workplace.

E-business is particularly observable because this refers to a developing type of

business and the associated management thinking.

1) Knowledge Management

Having knowledge means being informed, aware, being familiar with something.

It can be gained by experience, getting information or theoretical understanding. It is

opposed to opinion. If you know something, you have it in your mind and have
learnt it.

Knowledge management can be defined as:

the creation and distribution of knowledge in organizations through technological
novelties such as the Internet, intranet, and email.

Key characteristics to this explanation:

a) the acquisition of knowledge
b) the sharing of knowledge
c) the development of knowledge

Knowledge management is a response to the increase in new technologies and stream

of information that computers can handle.

It is a strategy to overcome the problems of flatter forms of organization structures.

The channels of communication and hierarchical connections that link employees in

more traditional organization structures are replaced.

Instead, in an organization with knowledge management based upon new technology,

more informal contacts and more autonomy to staff. Staff can act more flexibly, with
less physical contact between people.

The decline of manufacturing industries and the rise of the service sector, with more
positive relationship with increasingly innovative technology, are seen to contribute
to the increased emphasis on knowledge management.

The new term of knowledge management strikes the view that people as human assets
in an organization. It captures the essence of peoples experience and wisdom and
declares that companies need to use the knowledge available to them.

Five processes for an effective knowledge management system:

a) managing the generation of new knowledge through learning
b) capturing knowledge and experience
c) sharing and collaborating and communicating
d) organizing information for easy access
e) using and building on what is known

The success of these processes would depend on the culture of the organization and
its priority in sharing learning and knowledge.

Organizational Knowledge

Knowledge management focuses on the importance of knowledge, whether in regard

to the creation, storage or sharing of it. The knowledge that is being managed is
called organizational knowledge.

Organizational knowledge is defined as:

the capability members of an organization have developed to draw distinctions in the
process of carrying out their work, in particular concrete contexts, by enacting sets of
generalizations whose application depends on historically evolved collective
understandings

Therefore, organizational knowledge is concerned with the collective understandings

built up from the experiences of the members or employees.

It exists within the organization, rather than an individual, and it is the sum of these
individuals relevant knowledge being shared and developed together.
(**** see types of organizational knowledge, Study Guide Pg. 225)

Knowledge is not only vital for decision-making and innovation, different types of
organizational knowledge fulfill different functions.

Organizational knowledge is important for all organizations because it facilitates

responsiveness to environmental change, can promote innovation and increased
efficiency, and supports the decision-making process.

Management of Knowledge

The approach of knowledge management suggests that it can, and it offers several
methodologies and tools for doing this.

Knowledge can be managed in two ways:

1) Supply-side initiatives
2) Demand-side initiatives

Supply-side initiatives are concerned with allowing knowledge to flow through the
organization. The knowledge is already seen to exist but it is necessary to facilitate
the movement of it and access to it by the relevant parties.

Management activity will therefore involve the promotion of clear communication

channels and opportunities to share knowledge.

Demand-side initiatives aim to satisfy a need for knowledge. It will involve:

a) release of knowledge
b) search for knowledge
c) application of knowledge
d) exchange of knowledge
e) development of knowledge.

Knowledge management is an area that continues to develop as more companies are

seen to gain from it.

The idea of communities of practice links knowledge management to learning

organization.

These groups emerge from a desire to share knowledge and learn together.

The Learning Organization

Definition:
where organizations continually expand their capacity to create the results they truly
desire, where new and expansive patterns of thinking are nurtured, where collective

aspiration is set free, and where people are continually learning how to learn
together.

Another simple definition is an organization which facilitates the learning of all its
members and continuously transforms itself

The learning organization is seen as one that is:

a) highly flexible and open-ended
b) continually transform itself and learn from experience
c) taking advantage of changing external conditions
d) values individual development, open communications and trust.
e) Usually have flat, open and networked structures

Five basic principles:

1) Learning organizations can learn as much, if not more from failure as
from success.
2) Learning organization rejects the saying If it aint broke, dont fix it
as they are constantly finding better ways to get things done.
3) Learning organization assume that managers and workers closest to
the design, manufacturing, distribution, and sale of the product often
know more about these activities than their superiors.
4) Learning organization actively seeks to move knowledge from one
part of the organization to another, to ensure that relevant knowledge
finds its way to the organizational unit that needs it most.
5) Learning organization spends a lot of energy looking outside their
own boundaries for knowledge.

Models of the Learning Organization

Senge suggested five disciplines that must be practice:
a) Systems Thinking:
- businesses are seen as systems, so each part is not to be studied in isolation
but within the relationships it has to other parts.
- It is necessary for all parts of the organization to understand the consequences
that their behavior has for other sections.
b) Personal Mastery:
- this involves a commitment to continual development of an individual basis,
with mastery referring to proficiency in our skills.
- The concept of lifelong learning is important as it is used to describe an
enduring determination to pursue personal development.

c) Mental Models:
- there are the ways we see things. It is important to identify them so that they
can be scrutinized and deconstructed with others, to understand how others
see things and to facilitate adaptation.
d) Building Shared Visions:
- people cannot be told to share the same vision, it must be something they truly
wish to aspire to.
- This is significant as there needs to be a linking between the goals of the
individuals and the overall mission and goals of the business.
e) Team Learning:
- collective learning is another focus of the learning organization where
emphasis is placed on the development of positive relationships to foster
learning and development.
( For another model, please read Study guide Pg. 231)

Culture of Learning

To develop a learning organization, it will be necessary to change the mindset of

employees and managers, and this requires a major organizational change needing the
support of senior management.

A culture of learning is required between managers of all levels, including the top and
all other staff, down to the very bottom of the hierarchy

Few suggestions to create the culture:

a) willingness for senior managers to accept that learning occurs at all levels of the
organization
b) benchmark their company and to diagnose actions that need to be taken to become
learning organizations.
c) Focus on the outcome of learning and the value that is added to the business.
d) Redesign structure to encourage trust, openness, and creativity
e) Invest in communication systems and support networks.
f) Human resource policies to be realigned to encourage a learning climate.

ELECTRONIC BUSINESS (E-BUSINESS)

Definition:
Electronic commerce is a shorthand term that encompasses a complex of
technologies, infrastructures, processes, and products. It brings together whole
industries and narrow applications, producers and users, information exchange, and
economic activity into a global marketplace called the Internet

Four levels (including distinction between e-business and e-commerce)

Level 1 Internet/email: at this level, messages are sent and received electronically.
Level 2 World Wide Web (WWW): information can be published and accessed
around the world.
Level 3 E-commerce: goods and services are bought and sold over the Internet.
Level 4 E-business: processes, information, suppliers, and others are integrated so
as to enable the business to understand and respond more effectively to its customers.

E-business is a fast-moving environment and a significant new area for the study of
business and management.

Advances in Internet technologies, bank and finance systems and also increased
access to the Internet have all contributed to the growth of e-business.

Traditional business can benefit from the new developments as some processes can be
simplified and made more efficient, such as using email to contact customers, and for
e-business new markets and marketplaces are created.

Although the WWW process access around the world, there are still people in the
world that has not access to the Internet and do not have the knowledge to use it.

The success of e-business relies not only on people having access to the Internet, but
also on them using it. This involves changing consumer habits that are already
integrated into our culture. E.g the ways we shop, bank and communicate.

E-business Management

All e-businesses are relatively new and this affects the competitive environment.

Managers need to be constantly aware of changes in the environment, so that they can
be quick to respond to new opportunities and threats, and be aware of both
competition and advancements on technology.

Promoting a creative and dynamic culture would also be an aid to the manager to
ensure innovation and commitment from employee.

Benefits that can be experienced by e-business are:

a) reduced supply chain because they deal directly with consumers.
b) Ability to respond more quickly to changes in customer desires
c) Increased speed of delivery to consumers due to direct dealing
d) Wider market for goods and direct access to potential customers
e) Reduced overheads due to a reduced need for premises

Problems faced by managers of e-business:

a) initial outlay is high (technology infrastructure)
b) technological expertise in needed
c) technology continues to advance, so expertise, equipment and methods need
updating
d) legal issues with regard to privacy and copyright, remain unresolved
e) security problems need to be overcome so that customers can pay on-line in
confidence
f) issue of language and also culture may mean that products or marketing methods
are not applicable to all markets
g) delivery of goods has to be co-ordinated with technical operations
h) delivery options may again limit the markets that can be supplied

Knowledge management and the concept of the learning organization can also be
linked to the management of e-business, due to the need of e-business to react to
changes, particularly in the technological sphere, and its need for continual learning
and innovation.