Introduction to Management

Organization a group of two or more people working together to attain a set of goals (for
example profit, discovery of knowledge, national defense social satisfaction)
Organization use four basic kinds of inputs or resources from environment
1. Human
2. Financial (capital of ongoing and long term operations)
3. Physical (raw materials, office and production facilities and equipment)
4. Information resources (usable data needed to make effective decisions)
The managers job involves combining and coordinating these various resources to achieve the
organizations goals
Management
Knowing exactly what you want to do, and do it in the best way.
A process of influencing behavior in organization such that common purposes are identified
worked toward and achieved.
A process of planning and decision making, organizing, leading, and controlling an
organizations human financial, physical and information resources to achieve organization
goals in an efficient and effective manner.
Manager - is someone whose primary activities are a part of the management process.
In particular someone who plans and makes decisions, organizes, leads, and control human,
financial, physical, information resources.
Functions of management
1. Planning
2. Organizing
3. Leading
4. Controlling
Planning and decision-making determining courses of action.
Planning means determining an organizations goals and deciding how best achieve them.
Decision-making is a part of the planning process, involves selecting a course of action from a
set of alternatives.
Organizing coordination activities and resources
Basic elements of organizing are:
1. Work specialization,
2. Departmentalization,
3. Authority relationships,
4. Spans of control,
5. Line and staff roles
Leading motivating and managing employees
Leading is the set of processes used to get members of the organization to work together to
further the interest of the organization.
The leading function consists of different activities:
Motivating employees to expend effort (giving employees opportunity to attain
individual goals and rewards),
Leadership which focuses on what the manager does to encourage organizational
performance, dealing with groups and communication.
Controlling monitoring and evaluating activities
We have to make sure the organization is performing in a good way and in the right time.
Controlling helps ensure the effectiveness and efficiency needed for successful management.
Managers
According to level
Top managers
Middle level
First line
Managers at different levels can work in various areas whitin the same organization. They may
be marketing, financial, operations, personnel, administrative and other kinds of managers at
all the levels.
Top managers relatively small group of executives who control the organization (president,
vice president, chief executive officer, CEO) they establishes th organizations goals, overall
strategy and operating policies, also officially represent the organization.
Middle level managers the largest group of managers in most organization (plant manager,
operation manager, division head) are responsible for implementing the policies and plans
developed by top managers, to supervise and coordinate the activities of third level the first
line of managers.
First line managers supervise and coordinate the activities of operating employees (foreman,
supervisor, office manager) they spend a lot of time supervising the work of subordinates.
Henry Mintzbergs categories of managerial roles
1. Interpersonal roles
2. Informational roles
3. Decisional roles
Interpersonal roles:
Figurehead representing the organization or unit in ceremonial and symbolic
activities: all managers are required to perform duties that are ceremonial and symbolic
in nature, example: factory supervisor gives a group of students a tour of the plan, takes
visitors to dinner.
Leader guiding and motivating employee performance: this role includes training,
motivating and disciplining employees
Liaison linking the organization or unit whit others: contacting individuals or groups
outside the managers unit
Informational roles:
Monitor seeks information that may be value by reading magazines, talking with
others: scanning the environment for information that can enhance organization or unit
performance.
Disseminator transmitting relevant back to others in the work place: providing
information to subordinates.
Spokesperson distributing information to people outside organization or unit,
spokesperson represents the organization to outsiders
Decisional roles
Entrepreneur voluntary initiator of change, initiate new projects that may improve the
organizations performance
Disturbance handle takes corrective action in response to unforeseen problem:
adapting the organization or unit to changing conditions
Resource allocator distributing resources within the organization or unit: responsible
for distributing human, physical and monetary resources
Negotiator discuss and bargain with other groups and individuals.
Managerial skills
Technical
Interpersonal
Conceptual
Diagnostic
Analytic
Management theories
Classical approach:
1. Scientific management Frederick Taylor
2. Bureaucratic management - Max Weber
3. Administrative management Henry Fayol
Behaviors approach
1. Human relations movement Elton Mayo
2. Theories X and Y Douglas McGregor
3. Motivation theories Abraham Maslow
Systems approach
1. System theory
2. Contingency theory
Quantitative management
1. Management science
2. Operations management
3. Management information system
Contemporary management
1. Theory Z William Ouchi
2. Excellence in management
Scientific Management
Focuses on increasing the efficiency of production processes in order to enhance
organizational profitability (emphasis on reducing the costs of production activities)
Principles of Scientific Management by Frederick Taylor (1856-1915)
Assign at all responsibility for the organization of work to managers rather than workers.
Use scientific methods to determine the one best way of performing each task.
Select the person most suited to each job to perform that job.
Train the worker to perform the job correctly
Monitor work. Performance to ensure that specified work procedures are followed
correctly and that appropriate results are achieved
Provide further support by planning work assignments and eliminating interruptions
Taylor s contribution:
job analysts, time and motion studies, standardization of processes efficiency techniques, and
productivity measurements. He also introduced the idea of training for both managers and
employees, he developed safer work methods. Abolished traditional random job assignments
and unrelenting hours of work.
Other contributors
Frank Gilbreth (1868-1924) - his motion studies (procedure in which jobs are reduced to their
most basic movements) led to more productive ways to accomplish tasks
Lilian Gilbreth (1878-1972) - was concerned with individuals and their performance at work
under stressful conditions; she advocated standard workdays, scheduled breaks, normal lunch
periods, child labor laws, regulations for protecting workers from unsafe conditions
Henry Gantt (1861-1919) - focused on control systems for production scheduling. Developed a
task-and-bonus wage plan that paid workers a bonus besides their regular wages if they
completed their work in an assigned amount of time. Each supervisor's bonus, was determined
by the number f subordinates who met deadlines. He also invented the Gantt chart - a bar
chart used by managers to compare actual with planned performance (identifies stages of
work and operational deadlines)
Bureaucratic Management
Bureaucracy - an idealized model of an efficient organization based on clearly defined
positions, formal authority, formal record keeping, and a regulated environment that includes
well- documented rules, policies and procedures.
Max Weber (1864-1920) - developed the bureaucratic model as a rational method of
structuring complex organizations.
Weber's Ideal Bureaucracy
1) Division of labor. Jobs are broken down into simple, routine and well-defined
tasks
2) Authority hierarchy. Offices or positions are organized in a hierarchy, each lower
one being controlled and supervised by a higher one.
3) Formal selection. All organizational members are to be selected on the basis or
technical qualifications.
4) Formal rules and regulations. To ensure uniformity and to regulate the actions or
employees, managers must depend heavily on formal organizational rules.
5) Impersonality. Rules and controls are applied uniformly, avoiding involvement
with personalities and personal preferences of employees.
6) Career orientation. Managers are professional officials rather than owners of the
units they manage They work for fixed salaries and pursue their careers within the
organization
Administrative Management.
Focuses on increasing the efficiency of administrative procedures
Seeks to establish universal principles of management
Henri Fayol (1841-1926) was the first to identify the four functions of management, and
first one to propose a list of administrative management principles - to help administrators
perform their jobs
Fayol's 14 Principles of management:
1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of Direction
6. Subordination of individual interest to general interest
7. Remuneration of personnel
8. Centralization
9. Scalar chain
10. Order
11. Equity
12. Stability of personnel
13. Initiative
14. Esprit de corps
Behavioral Approach
An approach that explains how managers influence others to achieve organizational objectives
through human relations and motivation
Emerged from research run by behavioral scientists who sought ways of improving
organization effectiveness by modifying individual and group behavior
Human relations movement
Presents how human relations affected productivity
Emphasizes increasing employee growth, development and satisfaction
Focused on individuals working in group environments
Managers were encouraged to be more cooperative with workers, to improve social
environment at work and to reinforce Individual employees self-images
Human relations theory contributor
Elton Mayo (1860-1949)- together with Harvard University research team conducted a series
of experiments (Hawthorne Studies) at the Western Electric Company's Hawthorne plant In
Illinois.
His results showed that human relations and behavior were far more crucial considerations for
management. First, recognition and attention to individual workers motivated them to work
harder. Second, group dynamics influenced work Substantially. Third and perhaps more
important ivfVdi1tl6rt by researchers created a perception by workers real or not that they
were doing something of value The act of intervention and its impact is now called the
Hawthorne Effect
After Hawthorne Studies organizations were viewed as social systems with both formal and
informal patterns of authority and communications. Mayo was the first to suggest that
managers needed interpersonal skills for counseling employees, diagnosing personal and
group needs and balancing technical needs for productivity with human needs for job
satisfaction.
Theories X and Y
Douglas McGregor (1906-1964)-brought fresh perspective to management and challenged
leaders to think of subordinate as responsible, capable and creative. He felt that leaders used
to treat subordinates as Irresponsible and lazy He called this approach to management theory
X and Y
Theory X assumptions
The average human being dislike work and will avoid it if possible
Most people must be coerced, controlled, directed, or threatened with punishment
before they win put effort toward the achievement of organizational objectives
The average human being prefers to be directed, wishes to avoid responsibility, has
relatively little ambition, and wants security above all
Theory Y assumptions:
Expending physical and mental effort at work is as natural as play and rest.
Extant control and the threat f punishment are not the only means to direct effort
toward organizational objectives People wilt exorcise self-direction and self-control in
the service of objectives to which they feat committed
Commitment to objectives Is a function of rewards. The most significant rewards
associated with achievement of organizational objectives are satisfaction and self-
actualization.
Avoidance of responsibility, tack of ambition. and emphasis on security are not Inherent
human characteristics-people teams not only to accept but to seek responsibility.
Imagination, creativity. Ingenuity are widely distributed among people
Motivation theories
Focused on employees' personal needs and how they influenced performance.
Contributions to motivation theory by several important scholars immediately after World
War 2 inspired greater efforts to understanding individual behavior in work environments -
this focus led to a field of study called organizational behavior
Abraham Maslow (1908-1870) - based his theory of human behavior on the Idea that
individuals work to satisfy unfulfilled needs.
Maslows Hierarchy of needs:
1. Self - actualization (self-fulfillment, growth, creativity, innovation)
2. Esteem (respect, prestige, recognition, esteem)
3. Social (love, affection, sense of belonging, friendship)
4. Safety (security, personal and economic protection)
5. Physiological (biological needs, food, water, sleeping)
Systems theory - characterizes every organization as a system that is open to the influence of
the surrounding environment
System - is a collective association of interrelated and Interdependent parts; organizations are
systems of divisions, departments and specialized activities. It is not the machines and facilities
we work with that define our systems but the relationships among human beings
The systems approach provides a frame of reference for managers who must make decisions
in a constantly changing environment.
The emergence of systems concepts during the late 1940s created new fields such as
management information systems (MIS)
Systems theory contributors
Daniel Katz and Robert Kahn - Identified essential to organizational growth and survival
process with the sequence of events INPUTS importing from environment (raw materials,
production equipment, human resources),
THROUGHPUT - production processes, administrative processes, OUTPUTS - goods or services
exporting to environment.
Organizations continue to grow only as long as they Import more material and energy inputs
from the environment than they expend in producing the outputs information inputs that
signal how the environment and organizations are functioning can help determine whether
the organization will continue to survive, negative feedback indicates potential failure and the
need of change.
Contingency perspective
Claims that no single theory procedure or set of rules is useful in every situation
An approach to management that suggests leadership behavior should be adapted to
accommodate different situations or alternatively leaders should be assigned to situation that
best fit their leadership styles
Rather to suggest "one best way" to manage, contingency management implies that there are
many effective ways to behave as managers, each depending on the circumstances of the
work environment
Quantitative management
An approach to management based on decision theory use of statistical techniques for
problem solving and application of mathematical models to organizational processes
Management science
An approach to management also called the quantitative school that relies on models and
mathematical analysis to improve decision making alternatively called operations research
Most applications of management science are reserved for complex situations requiring highly
specialized knowledge
Two important reasons for the use of mathematical models are: the ability to focus on
important details of a problem and the ability to use a computer to handle calculations.
Operations Management
the application of quantitative techniques in production and operations control using
analytical models to Improve organisation activities
Quantitative methods are not necessarily mathematically complex; most of them use simple
statistics and are easily understood. In this area of applied management, some of the more
useful techniques are inventory control models, material-handling procedures, purchasing
systems, production-scheduling systems and cost control processes.
The applications of operations management are in production environment but also service
operations (for example banks)
As a result of applications of operations management techniques productivity has improved
because managers are better informed about operational effectiveness - they can stimulate
operations, monitor results, reduce errors more effectively and make better decisions.
Management Information Systems
MIS are integrated networks of information that support management decision making often
through computer applications and data base systems.
It includes the vertical Integration of management functions from top level executives to first
line supervisors as wall as horizontal Integration of activities among functional areas such as
production, marketing, personnel end finance.
One of the main roles of MIS Is to recognize information as the resource and then use that
resource effectively to better achieve organizational objectives Using information resources
effectively requires MIS managers to consider how best to collect, store, process and transmit
data.
An MIS system includes people, hardware, software, data and processes. The ultimate aim of
generating management information systems In not to overwhelm managers with information
but to create systems that provide sufficient and accurate information in a timely fashion
Contemporary management
Interest in management theory has heightened in years, managers continued to strive toward
a better understanding of how they can better compete and lead their organizations toward
improved effectiveness
Management approaches have focused on national trends in productivity and how
organizations can improve their performance.
William Ouchi introduced Theory Z - an attempt to integrate common business practices from
the United States and Japan into one middle-ground framework.
Theory Z
William Ouchi Inlroduced Theory Z In 1861 to describe American adaptations of Japanese
organizational behavior.
Z type company endorsee collective responsibility, concern for employees and a commitment
to participative decision making.
These organizations recognize Individual end group needs, but simultaneously develop
exceptional quality control techniques end scientific work methods.
This style of management Incorporates classical principles, behavioral tenets.
end human relations concepts to emphasize quality and productivity.
American - Type A
Mobile employees
Personal decision making
Individual responsibility
Rapid advancement
Specialization In careers
Explicit control mechanism s
Focused concern on employees
Japanese- Type J
Lifetime employment
Collective decision making
Group responsibilities
Slow and systematic Advancement
General career perspective
Implicit control system Holistic concern for employees.
Excellence in management theory
Originally presented by Thomas J. Peters and Robert H. Waterman, suggests that certain
"excellent" companies, or those with a long-term history of success, do things in a systematic
fashion that sets them apart from other firms
The basic set of characteristics that presumably lead to excellence Include;
getting things done on time
staying close to the customer
promoting autonomy and entrepreneurship
maximizing productivity through people
doing what the company knows best
maintaining a simple, lean organizational structure
promoting both centralization and decentralization simultaneously
Planning
Organization plans
Strategic plan a general plan outlining decisions of resource allocation, priorities and action
steps necessary to reach strategic goals.
These plans are set by the board of directors and top management, generally have an
extended time horizon and address questions of scope, resource deployment, competitive
advantage.
Kinds of organizational plans
Tactical plan a plan aimed at achieving tactical goals and developed to implement parts of
strategic plan.
Tactical plans involve upper and middle management and compared with strategic plans have
shorter time horizon and more specific and concrete focus. They are concerned more whit
actually getting things done than with deciding what to do.
Developing and executing tactical plans
Developing tactical plans
Recognize and understand overarching strategic plans and tactical goals
Specify relevant resource and time issues
Recognize and identify human resource commitments
Executing tactical plans
Evaluate each course of action in light of its goal
Obtain and distribute information and resources
Monitor horizontal and vertical communication and integration of activities
Monitor ongoing activities for goal achievement
Kind of organizational plans
Operational plans focuses on carrying out tactical plans to achieve operational goals.
Developed by middle and lower level managers, have short-term focus and are relatively
narrow in scope. Each one deals with a fairly small set of activities.
Types of operational plans
Single use plan developed for nonrecurring situations, developed to carry out a course of
action that is not likely to be repeated in the future. Forms of single use plans are programs
(singe use plan for a large set of activities like opening a new facility) and projects ( single use
plan of less scope and complexity than a program; may be a part of a broader program)
Standing plan developed for activities that recur regularly over a period of time; standing
plans can greatly enhance efficiency by routinizing decision making. Kinds of standing plans are
policies ( standing plan specifying the organizations general response to a designated problem
or situation). Standard operating procedures (standing plan outlining steps to be followed in
particular circumstances so it is more specific than a policy) and rules and regulations (
standing plans describing exactly how specific activities are be carried out).
Time frames for planning
Long range plan - a plan that covers many years perhaps even decades; common long
range plans are for five years or more (10 20 years)
Intermediate plans - a plan that generally covers from one year to five years. They are
especially important for middle and first tine mangers
Short range plan - has a time frame of one year or less. They greatly affect the
managers day-to-day activities. There are two basic kinds of short range plans: an
action plan - used to operationalize any other kind of plan, a reaction plan - developed
to allow the company to react to an unforeseen circumstance (the firms reacting to a
condition created by its environment)
Contingency planning
the determination of alternative courses of action to be taken if an intended plan is
unexpectedly disrupted or rendered inappropriate (it means that we have to prepare at least
two alternative plans for example optimistic and pessimistic one - high development rate or
recession in the economy).
Contingency planning is important especially for organizations operating in complex or
dynamic environment. It is a useful technique for helping mangers cope with uncertainty and
change.
Barriers to goal setting and planning
inappropriate goals
improper reward system
dynamic and complex environment
reluctance to establish goals (because of lack of confidence, fear of failure)
resistance to change
constraints (lack of resources, government restrictions, strong competition, lack of time
- I will do it tomorrow)
Overcoming the barriers
understanding the purposes of goals and planning
communication and participation
consistency, revision and updating (goals should be consistent horizontally - across the
organization, from one department to next, and vertically - consistent up and down the
organization - strategic, tactical and operational goals must agree with one another)
effective reward systems
Management by Objectives MBO - a widely used method for managing the goal setting and
planning processes concurrently to ensure that both are done effectively.
MBO is the process of collaborative goal setting by a manager and subordinate; the
extent to which goats are accomplished is a major factor in evaluating and rewarding
the subordinates performance
The purpose of MBO its to give subordinates a voice in the goal setting and planning
processes and to clarify for them exactly what they are expected to accomplish in a
given time span. Thus, MBO is concerned with goal setting and planning for individual
mangers and their units or workgroups.
Management by Objectives MBO
Identify an employee's key job tasks
Establish specific and challenging goals for each key task
Specify the deadline for each goal
Have the employee actively participate Prioritize goals
Rate goals for difficulty and importance
Build in feedback mechanism to assess goal progress
Link rewards to goal attainment
A strategy -comprehensive plan for accomplishing an organizations goals
Strategic management -a way of approaching business opportunities and challenges, a
comprehensive and ongoing management process aimed at formulating and implementing
effective strategies
DECISION MAKING - the act of choosing one alternative from among a set of alternatives
Decision making process - recognizing and defining the nature of a decision situation,
identifying alternatives, choosing the best alternative, and putting into practice
Types of decisions
Programmed decision - a decision that in fairly structured and/or recurs with some
frequency
Nonprogrammed decision - a decision that is relatively unstructured; occurs much less
often. Managers faced with such decisions must treat each one as unique, Investing
enormous amounts of time, energy and resources into exploring the situation from all
perspectives. Intuition and experience are major factors in nonprogrammed decisions.
Decision making conditions
State of certainty- a condition in which the decision maker knows with
reasonable certainty what the alternatives are and what conditions are associated
with each alternative
State of risk - a condition in which the availability of each alternative and its
potential payoffs and costs are all associated with probability estimates
State of uncertainty - a condition in which the decision maker does not know all
the alternatives, the risk associated with each or the consequences each
alternative is likely to have. Intuition, judgment and experience play major roles in
the decision-making process under conditions of uncertainty
Rational perspectives on decision making
Classical model of decision-making - a prescriptive approach to decision making that tells
managers how they should make decisions. It assumes that managers are logical and rational
and that their decisions will be in the best interests of the organization
Classical model of decision making
When faced with a decision situation, Manager should...
Obtain complete and perfect information (about situation arid possible alternatives)
Eliminate uncertainly (to achieve a decision condition of certainty)
Evaluate everything (all aspects of the decision situation) rationally and logically
... and end up with a decision that best serves the interests of the organization
Steps in rational decision making ( )
Behavioral aspects of decision making
The administrative model of decision-making - a model that argues that decision makers have
incomplete and imperfect information, are constrained by bounded rationality and tend to
satisfice when making decisions
Bounded rationality - a concept suggesting that decision makers are limited by their values and
unconscious reflexes, skills and habits
Satisficing - the tendency to search for alternatives only until one is found that meets some
minimum standard of sufficiency
The administrative model of decision making
When faced with a decision situation, managers actually...
Use incomplete and imperfect information
Are constrained by bounded rationality
Tend to satisfice
...and end up with a decision that may or may not serve the interests of the organization
Behavioral nature of decision making
Political forces - a coalition - an informal alliance of individuals or groups formed to achieve a
common goal. This common goal is often a preferred decision alternative.
Intuition - an innate belief about something without conscious consideration
Escalation of commitment - a decision makers staying with a decision even when it appears
to be wrong
Group decision making in organizations
Interacting groups - a decision making group in which members openly discuss, argue about
and agree on the best alternatives. The most common form of decision-making group. An
advantage of this method is that the interaction between people often sparks new ideas and
promotes understanding.
Delphi groups - a form of group decision making in which a group is used to achieve consensus
of expert opinion
Nominal groups - a structured technique used to generate creative and Innovative alternatives
or ideas
Advantages of group decision-making
More information and knowledge are available
More alternatives are likely to be generated
More acceptance of the final decision is likely
Enhanced communication of the decision may result
Better decisions generally emerge
Disadvantages of group decision-making
The process takes longer so it is costlier
Compromise decisions resulting from indecisiveness may emerge
One person may dominate the group
Groupthink may occur
The components of strategy
Distinctive competence - is something that organization does exceptionally well; an
organizational strength possessed by only a small number of competing firms
Scope - when applied to strategy, it specifies the range of markets in which an
organization will compete.
Resource deployment - how an organization distributes its resources across the areas in
which it competes
Types of strategic alternatives
Business level strategy - the set of strategic alternatives that an organization chooses from as
it conducts business in a particular industry or market. Such alternatives help the organization
focus its competitive efforts for each industry or market in a targeted and focused manner.
Corporate level strategy - the set of strategic alternatives that an organization chooses from
as it manages its operations simultaneously across several industries and several markets.
Most large companies today compete in a variety of industries and markets. Thus, although
they develop business-level strategies for each industry or market they also develop an overall
strategy that helps define the mix of industries and markets that are of interest to the firm.
Strategy formulation and Implementation
Strategy formulation - the set of processes involved in creating or determining the strategies
of the organization; it focuses on the content of strategies
Strategy implementation - the methods by which strategies are operationalized or executed
within the organization; it focuses on the processes through which strategies are achieved
Using SWOT analysis to formulate strategy
Evaluating an organizations strengths and weaknesses
Evaluating an organizations opportunities and threats