Successful managers achieve organizational goals in an effective and efficient manner, and implement core management principles: planning, organizing, leading and controlling. Each of these functions of management is vital to the organization. The purpose of this essay is to analyze organizing function of management and its relation to organizational resources (assets, financial, human, knowledge resources and technology) within a chosen company. The organization considered in this paper is Lowe’s Companies, Inc., and the focus of the paper is on such resources as physical assets, knowledge and technology.
Organizing function of management
According to Bateman and Snell (2009), organizing is “assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals”. Classical activities of management with regard to this function are to identify core activities, allocate resources, organize them into units or departments, attract talented people, classify powers and maintain coordination between authority and responsibility. Nowadays organizations have to be “flexible and adaptive, particularly in response to competitive threats and customer needs”(Bateman & Snell, 2009). Therefore, organizing function evolves into the process of building a dynamic organization, creating synergy basing on all types of resources and on viewing people as the most valuable recourse.
Description of the organization
Lowe’s Companies, Inc. was founded in 1946 and has since evolved into a powerful chain of home improvement and appliance stores. Lowe’s is the second largest hardware chain in the US, with Home Depot being its main competitor. These companies have formed a virtual duopoly at the market of home appliances. Core values of the company include providing products which would help their customers to build, improve and enjoy their homes; the mission of Lowe’s is to out-service competition and to become the first-choice chain of stores for home improvement and appliance products.
The company operates in US and Canada, and is planning to expand to Mexico and Australia. Core advantages of Lowe’s include customer service, unique choice of items, possibilities of customizing order online, availability (many stores are located at very convenient places) and efficient distribution. Currently the company is developing its technology and knowledge base in order to make their distribution and sales more effective, and to provide more opportunities for the customers.
Evaluation of organizing function
It is important to note that organizing function of management implies linking all organizational resources in order to reach the company’s goals in a most effective way. Thus, in most cases actions of management team relate to several resources simultaneously. Within the paper, the discussion is classified according to the types of resources (physical assets, knowledge and technology), with relations to other resources explained in each particular case.
In 2010, Lowe’s expanded the number of competitive pricing zones from 90 to 210 within their “go local” strategy (Lowe’s 2010 Annual Report, 2011); this allows the company to optimize pricing within each market. In addition to more effective allocation of assets, this decision also links knowledge resources: the “patch areas” (Lowe’s 2010 Annual Report, 2011) were identified basing on analysis of competition and geographical features of these zones; moreover, new knowledge regarding competition and approach to customers will be generated due to restructuring of the pricing zones.
Lowe’s have also identified four key roles for their stores: “destination, core, project completer and opportunistic” (Lowe’s 2010 Annual Report, 2011), and refined their supply chain by improving trailer utilization and reducing transportation expenses. As a result, merchandising portfolio of the company in every target zone, allocation of assets and distribution of merchandise can be organized in the most effective manner.
Lowe’s utilized technology in order to enhance all components of organizing. For example, the company recently launched a mobile site, thus proving even more convenient access for customers. They also developed a new staffing technology allowing to make “detailed scheduling forecasts based on each store’s customer traffic patterns, incorporates each store’s penetration of specialty business into that forecast and provides managers with improved visibility to daily staffing needs by department” (Lowe’s 2010 Annual Report, 2011). The latter solution also involves knowledge about the competitive position of each store and analysis of customer behaviour. In the future, the company is planning to get customers’ orders in the process of shopping and transmit them dynamically between the stores or warehouses, thus making shipping more time and cost effective.
Lowe’s Companies Inc. emphasizes the importance of knowledge and it can be regarded as one of learning organizations. According to Bateman and Snell (2009), “a learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights”. Several examples of generating and using knowledge at Lowe’s are their implementation of Base Price Optimization, creation of a CRM solution, Integrated Planning and Execution framework, etc.
The Base Price Optimization concept allows to select the best price by item and competitive pricing zone. IP&E system (Integrated Planning and Execution) will be used to make pricing even more effecting basing on knowledge about customer preferences, demographics, market trends, etc. IP&E will also provide opportunities for product clustering and assorting.
New CRM solution which will soon be launched is a knowledge management framework combined with order management system and enhanced automated contact center. This system is expected to increase customer satisfaction. Finally, after-sale services are now included into the Lowe’s package of customer experience; analysis has shown that such approach attracts customers to return to Lowe’s again and again, increases satisfaction and generates more purchases.
It is possible to see that Lowe’s Companies, Inc. utilizes all organizational resources – human, financial, physical resources, knowledge and technology – in order to create a better experience for the customers, to reach a cost-effective distribution, shipping and to optimize pricing. Moreover, Lowe’s can be considered a true learning organization since all activities related to organizing function involved deep knowledge and detailed analysis of the situation. Such innovative approach and extensive use of technology allow Lowe’s to create sustainable competitive advantage and create unique customer experience.
Bateman, T.S. & Snell, S. (2009). Management: leading & collaborating in a competitive world. McGraw-Hill/Irwin.
Lowe’s 2010 Annual Report. (2011). Available from http://www.lowes.com/AboutLowes/AnnualReports/annual_report_10/executing_on_our_promise.html