Management is a process of accomplishing organizational goals. The process of accomplishing goals occurs at the corporate, business, and functional levels of an organization. Organizational goals are set in order to increase the value of the firm because the owners (the stockholders) expect growth on their investment on a continual basis. For example, if you have invested one thousand dollars in a business, as a rational investor you expect the value of your investment to increase each year. That is why managers must focus on creating value for the shareholders, and they do so by making choices (decisions) that will lead to an increase in the value of the firm.
The 5 P’s of management provide managers with a framework for making these good choices and for building a process which creates value for the shareholders. By contrast, the traditional management approach is to focus on functions of management in order to achieve the goals of the organization. In the global economy, where the competition is based on knowledge, the environment is changing rapidly. Employees, suppliers, and shareholders have more knowledge and information than ever before, and there is, therefore, a need for a framework which enables managers to make decisions which lead to value creation. The 5 P’s of management provide such a framework. The 5 Ps are: 1) Plan, 2) Process, 3) People, 4) Possessions, and 5) Profits.
Plan
Planning is the key to the success of an organization. It is necessary because businesses operate amid uncertainty and risk, and the managers do not have the opportunity of making decisions under a background of certainty. Planning involves setting clear and realistic goals, organizing business activity based on the revenues forecast, formulating strategies, preparing budgets, and implementing strategies, and evaluation and control systems.
Process
An organizational process includes both business process and operational process. The business process is based on the business model of the firm. The business process guides the firm in generating revenues, managing costs, and generating profits. Managers select a business model that has the potential of creating value for the shareholders.
An operational process consists of multiple inputs, outputs, and processes that result in an organizational output (product or service). In the operational process, inputs arise from all the basic business functions, including marketing, finance, operations management, human resources, and technology as required. Managers select the appropriate inputs and process modules necessary for the desired output. They structure the modules in the operational process to minimize cost, improve quality, increase productivity, and generate the desired output (product or service).
People
The people within an organization include employees, suppliers, customers, and shareholders. Managers motivate, prepare and assign the appropriate people to the appropriate positions in the operational process. They build long-term relationships with people who are able to deliver the resources required for the product or service. They listen to the people who are buying or will buy the product or service. They monitor organizational outputs to make sure they meet the needs of the people who will buy the product. They also understand the expectations of the people who have invested in the company and aim to create value that meets their expectations.
Possessions
Organizational possessions include assets and capital. Organization capital includes human capital, intellectual capital, economic capital, and marketing capital. Managers evaluate the organizational needs and the value of the organizational capital of the firm. They raise economic capital and invest in human, intellectual, and marketing capital. They apply organizational assets and capital in the operational process in ways that will generate maximum value for the firm.
Profits
Managing a business without concern for profits is not good management. Managers adopt management processes which have the potential of generating long-term profits. They make their decisions based on the understanding that the first step in business is to survive, the second is to generate profits, and the third is to create value for the shareholders. Managers evaluate organizational performance with both qualitative and quantitative measures.
Management is not about functions, but rather it is about the process of achieving organizational goals and creating value.
© 2014 Mohammed R. Ahmed
Ahmed, M.R. (2014). 5 Ps of Management (Working Paper No. 2).
FAQs
The 5 Ps are: 1) Plan, 2) Process, 3) People, 4) Possessions, and 5) Profits. Planning is the key to the success of an organization. It is necessary because businesses operate amid uncertainty and risk, and the managers do not have the opportunity of making decisions under a background of certainty.
What does the 5 P's stand for? ›
The 5 P's of marketing – Product, Price, Promotion, Place, and People – are a framework that helps guide marketing strategies and keep marketers focused on the right things.
What are the 5 P's of organization? ›
The Five Ps of an organization are Purpose, Philosophy, Priorities, Practices, and Projections. To clarify, this structure of organizational attributes offers a unique way to understand an organization.
What are the 5ps of operations management? ›
The constituents of the 5P model are: 1) Plan, 2) Process, 3) People, 4) Possessions, and 5) Profits.
What are the 5 P's of knowledge management? ›
People, Process, Platform, Partnership, and Problem Solving: The 5P Approach to Strengthening Knowledge Management Capacity and Culture | USAID Learning Lab.
What is the 5 P's of strategy? ›
Mintzberg's 5 Ps of Strategy include Plan, Ploy, Pattern, Position, and Perspective. Plan refers to a deliberate course of action that outlines the steps necessary to achieve a specific goal. Ploy refers to a maneuver or tactic used to gain an advantage over competitors.
What are the 5 Ps in work? ›
The Five Ps–Purpose, Philosophy, Priorities, Practices and Projections– is a model that depicts a system-wide view of an organization. Above all, you can use this model to understand your organizational culture and to use culture to manage change.
What are the 5 Ps of strategic leadership? ›
By considering each aspect - plan, ploy, pattern, position, and perspective - you can craft a more comprehensive, effective approach. So next time you're faced with a strategic challenge, break out the 5 P's and see how they can guide you to a winning solution.
What is 5P in organization? ›
The 5P strategy is a simple and effective approach that can help any organization to move in the right direction. By focusing on Purpose, Priorities, Projects, People, and Performance, an organization can create a clear path to success and ensure that all efforts are aligned toward achieving its goals.
What is the 5P model? ›
The methodology brings together five variables to improve organizations and their operations: Purpose, Principles, Process, People and Performance. The meeting of these supposedly different business disciplines seeks to increase the effectiveness of strategic implementation.
The 5 areas you need to make decisions about are: PRODUCT, PRICE, PROMOTION, PLACE AND PEOPLE. Although the 5 Ps are somewhat controllable, they are always subject to your internal and external marketing environments.
What are the 5 P's of people management? ›
The 5 P's of management provide such a framework. The 5 Ps are: 1) Plan, 2) Process, 3) People, 4) Possessions, and 5) Profits. Planning is the key to the success of an organization.
What are the 5 M's of management? ›
Production management's responsibilities are summarized by the “five M's”: men, machines, methods, materials, and money. “Men” refers to the human element in operating systems.
What do the 5 P's mean? ›
product, price, place, promotion, and packaging: the idea that in order to be successful, you must have the right product, sell it at the right price, in the right places, with the right advertising and support, and in an attractive way: The five Ps of marketing can help you improve your website.
What is the 5 P's approach? ›
This element uses the 5P Approach Problem-solving Pathway (the 5 “P”s) using the GREEN, AMBER & RED colours. For the individual this means looking at behaviour & why things are happening and creating a plan which aims to prevent (GREEN), to pre-empt (AMBER) and to manage (RED) issues which arise.
What are the 5 P's of change management? ›
We call this the 5 Ps of change and transformation; purpose, people, process, platforms, and projects. Taken together, the 5 Ps can assist leadership with a framework for how to successfully execute large projects.
What is the 5 P's saying? ›
The Five P's: “Proper Preparation Prevents Poor Performance.” is a quote by James Baker, former Secretary of State.
What are the 5 P's of success? ›
These include 5 Ps of Purpose, perspective, perceptiveness, pioneering, and persistence. Purpose: Sooner or later those who succeed have a sense of where they are trying to go and some clear goals. A star to steer by and outcomes to measure progress against.
What are the 5 P's personal? ›
The five Ps are: Personal, Pointed, Purposeful, Prioritized, and then ultimately (broadly defined, if you wish it to be) Profitable.
