Warren Buffet Case - Mgt 330 Principles of Management

Warren Buffet

MGT 330 Principles of Management

Table of Contents

Type chapter title (level 1) 1

Type chapter title (level 2) 2

Type chapter title (level 3) 3

Type chapter title (level 1) 4

Type chapter title (level 2) 5

Type chapter title (level 3) 6

INTRODUCTION

Warren Buffet is a legend in his own time. He is nicknamed "The Oracle of Omaha" (warrenbuffetbiography.net). His remarkable financial success and long time record of hitting the nail on the financial head has led to this nickname. His financial intelligence, leadership style, personal experiences and ethics have been the groundwork for his success. Studying these aspects of his life can help teach and improve this writer's management style.

After briefly looking at what management is, this paper will address the various aspects of management found in Contemporary Management by Jones and George.

This paper will use Warren Buffet's management style to explore these areas. The conclusion will address some of the issues and challenges in the coming years. Warren Buffet is "passing the baton" (at least to an extent) to his son, Howie, (www.forbes.com) so this writer's recommendations will not be specific to Warren Buffet, himself, but to management in general.

MANAGEMENT

Definition of Management

The organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of defined objectives.

Management is often included as a factor of production along with machines, materials, and money. According to the management guru Peter Drucker (1909-2005), the basic task of a management is twofold: marketing and innovation. Practice of modern management owes its origin to the 16th century enquiry into low-efficiency and failures of certain enterprises, conducted by the English statesman Sir Thomas More (1478-1535). As a discipline, management consists of the interlocking functions of formulating corporate policy and organizing, planning, controlling, and directing an organization's resources to achieve the policy's objectives. (Business Dictionary)

Basically, management is the means to accomplish the ends in an organization. Jones and George define it to include "the leading and controlling of human and other resources to achieve organizational goals" (Jones and George)

Behavioral Management Theory and Organizational Culture

Buffet has a clear policy with newly acquired companies of not interfering in the running

of the company (warren buffet.com). In that way he conforms to Cialdini's principle of consistency in that "people tend to do what they are personally committed to do". (Kiniki/Kreitner) According to Cialdini's principles, people tend defer to and respect experts. Warren Buffet is unquestionably a global economics expert. His position and authority are at the top of the business world. He is an unquestioned expert and has charisma. These power bases and principles generally have a positive effect on the job performance of those working under him. (Kiniki/Kreitner, Jones/George) Buffet, while not micromanaging, does keep his hands firmly on the reins. Even though he is in the process of passing the leadership of his company, Berkshire Hathaway, to his son, Howie Buffet, Warren Buffet still holds the reins. (www.forbes.com)

THE ENVIRONMENT OF MANAGEMENT

Ethics and Social Responsibility

The statement of ethics of Buffet's company, Berkshire Hathaway, further reflect on Buffet's personal as well as business code, leadership and management. "I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper..." Buffet says. (www.BerkshireHathaway.com) Many of the foci of Buffet's statements and articles display a strong sense of social responsibility. An example of that is his August 14, 2011 article "Stop Coddling the Super-Rich". In that article he addresses tax breaks that are provided to the wealthy while he points out that the poor and middle class are unfairly burdened with the greater tax burdens. He also points out that tax breaks for the rich lower employment, not raise it. Warren Buffet is noted for his frugality, if not stinginess (The Economist). It is therefore not for his personal wealth that he is motivated. That has helped him and his company to avoid the "dirty dealing" that can be the downside of organizational and managerial politics. Despite the responsibilities that Buffet and his management team have to the various stakeholders in his company Warren Buffet is neither shy nor easily intimidated. "A public opinion poll is no substitute for thought," is one of his sayings.

The General Environment and Diversity of the Workforce

Warren Buffet's company, Berkshire Hathaway, is a holding company that is made up of many companies primary among them insurance businesses such as Geico. Research of these companies fairly across the board indicates that hiring takes into account equal opportunity employment practices and, as mentioned previously, are allowed to manage independently. The main Berkshire Hathaway Inc., however, is another story. The main company is under Warren Buffet's control. There is no way to apply to the main company that this writer could find nor any job listings. As a matter of fact, it is noted that it is "virtually impossible" (www.vault.com). Also, as noted in vault.com's tips from the inside, "...dead wood doesn't float in Buffet's ocean. Employees, particularly managers, are expected to get results wherever possible, whenever possible, even against industry trends." This doesn't exactly pair up with the "Grandpa