Iran is a country with numerous comparative advantages, as well as ample natural resources which differentiate it from other countries: Regarding the reserves of oil, gas, copper, zinc, iron ore, etc, Iran has an excellent position throughout the world. Apart from these resources, work force in Iran is educated and economical, and the country’s infrastructure is developed. However, despite all these advantages, Iranian companies have not been able to achieve a superior position internationally and in many cases, in comparison to their international opponents domestically. There are several reasons that explain this issue, which can be summarized in one word: management. Here we imply the management of various parts within one company as well as the management of the entire system: management in superior, intermediate and operational levels, and in another view in various sections including production management, marketing management, financial management, etc. Presently, management in Iranian organizations and companies is a combination of various management methods for instance scientific management, systematic management, Contingency management, which do not generate a suitable outcome. Due to their incompatibility to the society’s realities such as economy, culture, ethnicity, and legislative system or in other words as a result of non-integration of these methods into the society and duplicating patterns without taking into consideration the right variables, these management schemes cannot have the desirable effectiveness. A brief examination of Iranian companies reveals the fact that many of these companies are in the process of compiling and editing the recommended standards in scientific management: companies emphasize highly on quantity, they have low efficiency, their salary and reward system has many problems, they have excess work force, their production and inventory systems are inconvenient, the utilized technologies are obsolete and unsuitable, they do not take environmental changes into consideration and so on, all of which lead these companies to use scientific management, However, an important point that was previously brought into light was that these models are not quite adjusted to the companies internal atmosphere and settings. Moreover, pure utilization of scientific management models without any attention to the complex external environment that surround these companies will also lead to non-effectiveness of these methods. The complex surrounding including the existence of international opponents, domestic and international laws and regulations, providers and consumers, etc, rejects using scientific management. Using systematic and Contingency management relevant to the above mentioned factors can pave the way for Iranian organizations and companies.
In addition to management methods discussed above, company ownership is another subject that has been a culprit in the weakness of management: In Iran many companies are owned by the government or quasi-governmental organizations and private ownership is more observed in small companies. In most governmental base economies the efficiency of companies is low and connections prevails criteria, which eventually weaken the systems and companies. In addition to the big governmental economies that result in the weakness of organizations and companies, the oil based economy has aggravated these inefficiencies. Despite the abundant oil revenues, many companies and organizations have not been attentive to their expenditures and as a result many of the companies expenses are ineffective in the companies efficiency.
The problem of inflation in Iran’s economy is another source of mismanagement in this country. In an inflationary economy, despite the LIFO accounting method or proportionate average, the cost of goods sold of the companies are low and in practice companies are gaining the profit originating from inflation and they show a high accounting profit. Evaluating managers based on accounting profit is not right and companies do not allocate appropriate economic profit to their shareholders in practice. This is while managers performances are remunerated this way. In fact, shareholders wealth does not increase this way. A decline in Iran’s inflation will put company management in this country to test.
Big government economy and inappropriate usage of management methods and their non-conformity to society’s realities has led to the creation of a cycle in which, companies despite their numerous advantages cannot compete with their international counterparts and will remain in a weak position.
In later discussions we will address management weaknesses in different industries.