Strategic Management And Leadership Semco Case Study Business

Table of Content

Executive Summary:

The intent of this study is to place the leading and direction manners adopted by Ricardo Semler and their impact on the strategic picks of Semco. This study will besides research assorted direction and leading theories and the attendant consequence on organizational and leading scheme.


The study intends to take a holistic position of the direction and leading manners and theories and their impacts on organisational leading and scheme in the background of Semco. Continuing farther, the study will measure and measure the leading demands of Semco and explicate a suited leading development program. A brief expression into the development of Ricardo Semler ‘s Semco is necessary to understand the organisation.

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Semco, despite disputing the traditional manner of corporate direction, has continued to turn by springs and bounds of all time since the legendary Ricardo Semler took charge. The organisation that was thought to hold adopted a direction manner frequently termed as “ a formula for catastrophe ” has been a title-holder of alteration with net incomes turning systematically. Semco had a multiplex addition in profitableness, growing and productiveness, which is singular sing the many old ages of economic melt-down and the volatile political scenario it was runing in.

Such an achievement requires full religion in employees and a committedness from the top direction, but it was non ever so. This advancement was gradual and methodical as will be demonstrated in the undermentioned subdivisions.

1: Leadership manners adopted by Mr. Semler and impact on scheme

Ricardo Semmler – The autocratic:

When Ricardo Semmler joined his male parent ‘s company in 1979, the company was involved in fabrication equipment for the transportation industry. The grosss were shriveling and despite Semmler ‘s insisting to diversify into other concerns, the direction stuck to the same industry. When Mr. Semmler was made in charge in 1980, his first action was to fire 60 % of the top direction which opposed his extremist thoughts.

An “ bossy ” manner of leading, as theorized by Kurt Lewin, is apparent from many actions taken by Semmler. This was combined with a traditional direction manner which involved following a rigorous policies and processs framework for about every undertaking. Reports and manuals were a norm. The focal point was on productiveness and accomplishment of ends. The direction performed the traditional functions, as described by Henry Fayol in his theory of 5 maps of direction, viz. ; planning, forming, commanding, organizing and commanding the organisation. This direction manner suited good to the reasonably autocratic manner of leading of Ricardo Semmler who held the power to make up one’s mind for the administration.

Impact on scheme

He changed the scheme of the organisation, switching the focal point from transporting industry merely to diversification into assorted industries. His vision was to cut down trust on one industry merely and spread out into different concerns.

This meant that the accomplishment of undertakings were the focal point of the scheme while the employees felt stressed and de-motivated. Invention seemed non-existent and steadily the staff turnover began to lift. Stress took its toll on Ricardo Semmler himself and his wellness status became worse. This was the clip for a alteration.

The Change:

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The direction grid by Blake and Mouton absolutely describes the manners of direction adopted by Semco. Initially, Semco was located in the bottom right subdivision taking for high production with low concern for people but bit by bit the displacement towards Team direction whereby the organisation is divided into little squads runing reasonably independently of others but in a co-ordinated manner with high productiveness while maintaining employees motivated and satisfied.

Ricardo Semmler – The Democrat:

This was when he turned the tabular arraies around, doing the alteration by affecting the employees in about every determination made in the company. The alteration was non a drastic one, it was gradual yet steady.

Ricardo Semmler had realized that employees ‘ engagement in the determinations related to the organisation was indispensable. They must be good cognizant of what the organisation wants to accomplish. Employees should give in their 100 % regardless of the accomplishments set they possess. For these grounds, Semmler transformed himself and adopted a leading manner that was indistinguishable to Kurt Lewin ‘s “ participative ” manner of leading. Reforms such as taking the formal line of authorization, flinging the organisation chart, allowing employees set their wages, choice work hours that suit them and even take their directors and gyrating the organisition into one where there are no cabins and where employees are involved in all major determinations made by the organisation are all groundss of the alteration in direction manner by Ricardo Semmler.

Impact on scheme

These actions have brought about a alteration in the overall scheme of the organisation. The employees are aligned with the strategic aims of the organisation. The organisation now operates with a scheme that promotes civilization of overall openness – sharing thoughts and supplying feedback. The scheme of Semco is now to affect employees in the organisation ‘s benefits through its alone profit-sharing strategy, actuating them to work for the growing of the company they can name their ain. The organisation ‘s construction has been re-defined, traveling from hierarchal to concern unit attack with squads at the nucleus. Teams reciprocally make up one’s mind upon what needs to be done and who will be responsible for what undertakings. For this to be achieved multi-tasking is polar and most employees are adept at bulk of the undertakings performed within the unit. This promotes thoughts of self-governance and self-management and incorporates duty among employees into the overall scheme of the organisation. The focal point has shifted from being undertaking oriented to more people oriented with high importance given to productiveness.

2: Link between direction and leading theories

2.1 Leadership and Strategic Management:

Leadership and direction are two distinguishable systems that must co-exist in any organisation. Directors tend to hold a short-run orientation and normally work out jobs as they appear. Leaderships on the other manus are more forward looking and do determinations that suit the long term involvements of the organisation.

Leadership and direction both shape up the organisation. While leaders decide on the way of the organisation, supply the resources and put the frame, directors guarantee that the aims are achieved within the allocated resources. Theoretically, directors and leaders are considered to be separate. However, directors will non be working entirely and will be pull offing a squad of persons for accomplishing the marks set for them. This will necessitate a grade of leading accomplishments excessively as this would name for act uponing the actions and ideas of other people.

Henry Fayol ‘s 5 Functions of Management ( 1916 )

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Henry Fayol devised a theory which suggested that direction is basically a combination of stepped activities, viz. ;

Planning: Plans are made, budgets are decided, restrictions are taken into history and parametric quantities of operations are established. This function is normally shared by both the leader and the director. A leader would normally be be aftering for the longer-term while the director ‘s point of view is reasonably shorter and focuses on immediate marks.

Forming: The 2nd stage constantly includes the allotment of resources that would be consumed for accomplishment of aims. Decisions about fiscal capital, human capital and the construction to be followed for achieving success are taken.

Commanding: This ensues deducing the optimal out of the resources. Directors communicate clearly what is expected from the employees and lead by illustration.

Coordinating: Teams will be endeavoring for their single marks and a balance needs to be maintained among all activities. Harmonization of activities is critical and so is direction of conflicting involvements. Leaderships would take the impulsive place.

Controling: Sizing up the benefits of activities is of import. Controlling is mensurating public presentation to be able to be after for the hereafter. Leaderships would once more be looking at the long-run deductions of the actions performed and make up one’s mind on the hereafter scheme. Directors on the other manus will be more concerned with what needs to be repeated and what is to be avoided.

To sum it up, Henry Fayol proposed a direction theory which describes the maps of direction but in consequence, it besides categorizes the traditional function performed by the leaders every bit good.

Peter Drucker ‘s 5 Management Processes ( 1954 )

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Peter Drucker, a celebrated direction theoretician had a similar point of view of the procedure of direction. Harmonizing to him, direction plays a predefined function in any context. These are:

Objective Setting: Leaderships provide the vision of the organisation as a whole and directors, for their portion, set the way of their single units.

Motivation: Employees need to be motivated if directors want to pull out their full potency. Leaderships and directors have a assortment of motivational tactics to utilize. Some could be fiscal inducements, while others are more humanistic in nature.

Undertaking Administration: A director needs to form the undertaking and form the activities for the smooth operations taking to realisation of aims.

Measurement: Performance demands to be measured in order to place any divergencies from the needed public presentation and to happen ways to make full any spreads in the coveted and existent public presentation.

Training and Coaching: Directors and leaders must develop their sub-ordinates. Directors and leaders have to develop and train their sub-ordinates in order for them to execute to the needed degree.

Transactional Management and Transformational Leadership

The transactional and transformational theories are another manner of depicting the inter-relationship and differentiation between directors and leaders. Harmonizing to this theory, directors are more involved with twenty-four hours to twenty-four hours activities of the organisation while leaders are concerned with the strategic vision. Directors follow the set rules while leaders challenge the position quo. Leaderships are more concerned with conveying about the alteration in the civilization while directors implant that alteration in the organisation. The primary function of a leader is to put the way while directors guarantee the organisation is kept on path.

Mckinsey ‘s 7S Model

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The theoretical account suggests that any organisation has 7 edifice blocks. The blocks are categorized as:

Soft Elementss: Shared Valuess, Skills, Style & A ; Staff

Difficult Elementss: Structure, Systems and Strategy

The theoretical account places highest importance to the shared values placed in the center. It re-iterates the fact that all other elements are derived from the vision for what the organisation wants to accomplish. The Difficult elements are determined by the leading manner chosen while the soft elements are drawn from direction.

Leaderships would ;

measure what set of accomplishments are possessed by the employees and what should to be developed

choose the staff taking into consideration their abilities and the demands of the organisation ; and

Decide upon The manner in which the organisation is taken frontward. The manner of leading would depend on fortunes

Directors on the other manus ;

Determine the construction of the organisation utilizing tools such as describing lines, organisation charts etc

Develop a program, allocate resources and make up one’s mind the class of action. In short, invent a scheme

Craft the policies and processs and criterions on how undertakings are performed.

Leadership manner may hold profound impact on the scheme of an organisation. A transformational manner of leading may stir up the endeavor, motivate and spur action. Such a leader provides an penetration into the hereafter, takes the enterprise, inspires followings, involves stakeholders, improvises, thoughtful about persons and implements successfully. This signifier of leading would take to an inspection and repair of the manner the organisation operates. A transactional leader on the other manus would hold a scheme of keeping the position quo and maintain the current operations.

Add Emotional Intelligence

3: Use appropriate techniques to reexamine Semco leading demands

3.1: Use appropriate methods to reexamine current leading demands

In order to wholly understand the demands of leading, it is necessary to understand the environment Semco is operates in, the stage the Semco itself is traveling through, what force per unit areas are exerted from an industry sector, what its construction is and what the strategic way it has assumed by the corporate parent.

Semco strives to develop a competitory advantage. This is achived by looking at four factors harmonizing to Porter ‘s Diamond. These are:

Firm scheme, construction and competition: scheme is what the organisation wants to accomplish. Structure of the endeavor should be developed to back up the scheme and competition serves as motive.

Demand Conditionss: portrays the demand of merchandises and services. Factor conditions would be developed harmonizing to these demand conditions

Related and back uping industries: an industry can non last without its associated industries. Semmler saw this when the transportation industry was agitating and Semco was severely hit.

Factor conditions: The resources of the state are the factor conditions. Education, mineral resources, capital goods all history for here. What we already possess and what needs to be developed.

Steeple: Semco is chiefly involved in production of heavy industrial equipment and development of intelligent systems nevertheless, it besides holds bets in an investing company and energy sector.A STEEPLE analysis is used to understand the environment that Semco operates in.

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Social factors: Semco has shown high concern for societal factors. It pays its staff good wages and keeps them motivated. Semco ‘s policy is to keep a work/life balance evidenced by enterprises such as “ Retire a small spot ” leting employees to make what they want.

Technlogical factors: Technoloical promotion is the demand of clip and organisations need to place and detect new engineerings to better efficiency and effectivity.

Economic: Semco operates in the fastest turning South American economic system. It is among the emerging economic systems that have shown revival marks. Growth is expected to be 5 % in 2010 as per the Central Bank. GDP composing by sector is:

Agribusiness: A 6.1 %

Industry: A 25.4 %

Servicess: A 68.5 % ( 2009 est. )

Environmental: Brazil is the seventh largest oil consumer in the universe and 10th largest when it comes to electricity. This is mostly because major portion of economic system is related to industry. This poses a menace to environment.

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Political: Semco operates in a political environment where, in the yesteryear, the authorities has frequently changed pecuniary, financial, revenue enhancement and other policies to act upon the class of Brazil ‘s economic system. Such actions are beyond control and Semco can non foretell what measures or policies the Brazilian authorities may take to act upon the economic system.

Legal: The legal construction in Brazil is one that welcomes foreign investing. There are no demands for authorities blessings or minimal investings.

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Ethical: Ethical motives is a major issue of concern in Brazil. It ranked among the 15 most corrupt states in the universe. There have been instances of corruptness in the populace sector.

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STEEPLE provides an penetration into the macro environment Semco operates in. It is besides of import to understand the stage that Semco is traveling through as an single organisation.

The organisation has taken a scheme of variegation by come ining new markets and developing new merchandises. This has been done by revolutionising the current patterns, regular reinvention and changeless reclamation. Semco operates in a complex environment although the environment provides plentifulness of chances that might fit its strengths. Semco needs to follow a scheme of planetary company and to spouse with international, well-reputed organisations to accomplish economic systems, vie efficaciously and take the market. It has to construct strong bonding between the sister concerns and develop strong webs within the group and with parties external to the group. It needs a leading that promotes amalgamations, acquisitions and confederations in order to go on its long tally of success.

3.2: Plan development of leading harmonizing to future demands:

Semco needs to develop leading that has the ability to anticipate the hereafter demands and have a strong sense of duty. Semco needs to do usage of the corporate parent theory to fruitfully use the construct of variegation through amalgamations and acquisitions. Strong communicating accomplishments are an indispensable property that must be developed to avoid ambiguities. The leader must be able to web good with inter-related parties and bid regard so that others may give to mind his thoughts. The leader should hold the strength to accept his errors and the humbleness to give recognition where it is due. Semco ‘s civilization is the nucleus competence that it has developed over the old ages. Its rivals have been unsuccessful at following the civilization, either because of deficiency of resources or deficiency of strong belief.

4: Produce a future leading program for Semco

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