Market Based Management

Topics: Management, Charles G. Koch, Koch Industries Pages: 6 (1727 words) Published: February 11, 2013
Nova Southeastern University
H. Wayne Huizenga School of Business and Entrepreneurship
MGT 5012- Twenty First Century Management Practices

Assignment for Course: MGT 5012 Twenty First Century Management Practices

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January 27, 2013
Market Based Management

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The Market-Based Management philosophy was developed by Charles Koch 25 years ago while working in Koch Industries. The basic idea of the Market Based Management rely in improve organizational performance and profitability by applying free market principles by allowing employees to act on their own knowledge. Also, MBM allows organizations to evaluate the tools of total quality management and other ideas in order to mobilize the knowledge dispersed within all the employees in any organization. (Ellig, 1996) The principal theme of this paper is to understand the advantages for corporations to apply Market Based Management. Also, to get a better idea of the MBM principles that indicates that organizations in order to succeed need to decentralize decision-making throughout all the employees rather to move knowledge up. The concept that will be discussed in this paper will be Organization’s Culture and Values. The concepts of Values and Culture must work together in organizations to reach the necessary harmony between employees (at all levels) and customers. Market Based Management

The management philosophy was developed by Charles Koch, the CEO of Koch Industries, that is an oil and gas company based in Wichita, Kansas, and they have operations all around the world in a variety of areas. This idea came to him because he observed years ago that many companies that manage themselves in a decentralized way are more successful than others that are managed by just a group of people. According to Tony Woodlief (2009), president of the Market-Based Management Institute, in an interview about Market Based Management Philosophy: “Koch observed years ago, that just like you have prosperous societies that have features about them that make them different from very poor countries, you have companies that have a way of managing themselves that makes them very different from companies that aren’t as successful. So the basic idea behind market-based management is that, just as you see in a market — entrepreneurs flourishing and developing new products that we all can use and appreciate — you want to have that same entrepreneurial impulse inside your business”. Woodlief (2009) also stated that is really important to create the right incentives, a clear vision and measurement to get entrepreneurial behavior in your company. Companies or organizations that have decentralized management count with a team of people who can use their own brains. This not only leads to a more prosperous company because you have all the personal involved, but also allows the manager to be more proactive by coaching and helping employees to have a better performance in their activities. A manager should be the person involve in all the functions of the organization but not as somebody who has to solve problems that common sense ought to be able to solve. Market Based Management emphasizes the decentralization of authority. In other words, this concept enables a group of people working together to achieve results that exceed the...
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