Market-Based Management Application Essay Example | Topics and Well Written Essays - 1250 words

Market-Based Management Application - Essay Example Moreover, the principles encourage employees to learn from their failures and always think in terms of opportunity cost. Therefore, MBM entails learning how to understand and deal with the human nature and apply the concepts in an organization to ensure that the products or services are viewed positively by the customer since they satisfy their needs. This essay focuses on the concepts of Market Base Management (MBM), overview of Koch Industries and how the company implemented the MBM, MBM relates to Values Theory, challenges involved in implementing MBM and possible Solutions. Concepts of Market-based Management In companies, individuals possess varying knowledge regarding the operations of the company. Therefore, managers are required to learn how to manage the varying knowledge to enhance the performance of the company. Previously, most organizations focused on hiring competent managers since they believed that the persons would be capable of understanding the situation in the org anization and make plans that would apply to the diverse employees. However, this approach has been unsuccessful in most companies since they failed to realize that a single individual could not possess all the skills required for apposite management. On the contrary, the skills are dispersed amongst the various employees. Understanding this led Charles Koch to develop varying concepts that he combined to come up with the Market Based Management, which is opposed, to centralization of management (Gable, Elllig, & Ellig, 1993; Koch, 2007). The philosophy entails setting clear vision and incentives in an organization and measuring the performance of the employees, which results in establishment of an entrepreneur behavior in organizations. The decision making power is distributed amongst employees and individuals do not have to consult the managers or superiors while making minor decisions. However, the company has a clear vision and the employees are encouraged to ensure that their d ecisions aim at ensuring the company’s vision is realized. Since the employees understand what they are required to accomplish, have integrity, and expect some incentives from their efforts, they become focused towards achieving their goals, which are in line with the companies vision (Kratzer, 2000). The incentives aim at ensuring that employees are compensated for their works as well as the value they create for the organization. Moreover, the philosophy emphasizes on having appropriate measures to quantity the individual performance, on time delivery, asset performance, as well as performance of the entire organization. Furthermore, the philosophy highlights the role of market principles in an organization (Gable, Elllig, & Ellig, 1993; Kratzer, 2000). Overview of Koch Industries Recently, Forbes magazine ranked Kochs industries as the largest privately held company in the world. Koch industries is an American multinational and is involved in activities such as trading, in vestments and manufacturing, refining and distribution of products such as petroleum, and manufacture of chemicals energy, polymers, fertilizers, fiber, paper and pulp. Fred Koch co-founded the company with other partners in 1940 but his sons Charles Koch and David Koch currently run it. The company is the best example of how the MBM philosophies have been applies since the