MNGT 2100 Management Theory and Practices

Mid-term examination

 An ability to define management.

Management can be defined in different ways, but essentially it involves the process of
reaching organizational goals by working with and through people and other organizational
resources in an effective and efficient way.

 An ability to describe the three views of management encountered

- An understanding of management roles (Reading Mintzberg - role based
approach)

 Interpersonal roles: figurehead, leader, liaison

 Informational roles: monitor, disseminator, spokesman
 Decisional roles: entrepreneur, disturbance handler, resource allocator, negotiator

- An ability to list & define the basic functions of management (functional

approach)

Fayol`s classic definition of management (1916)

1. to forecast and plan – examining the future and drawing up a plan of action
2. to organize – building up structure, material and human, of the undertaking
3. to command – maintaining activity among personnel
4. to coordinate – binding together, unifying and harmonizing all activity and effort
5. to control – seeing that everything occurs in conformity with established rules and expressed
commands

- An understanding of basic management skills & their relative importance to

managers (skill based approach)

 Working definitions of managerial effectiveness & managerial efficiency

The managerial effectiveness refers to man`s use of organizational resources in meeting
organizational goals.

Organize resources Production finished products

People inputs → process outputs→ products
Money goods
Raw materials services

The managerial efficiency is the proportion of total organizational resources that contribute to
productivity.
a. Inefficient – small proportion of total resources contribution
b. Efficient – large proportion of total resource contribution

 An ability to explain and illustrate the transformation model

Transformation of organizational resources into finished products through the process of combining
and using resources as well as designing and assigning activities.

 An ability to describe the following approaches (theories) to management encountered

 - An understanding of the classical approach to management

 Frederick Taylor, Frank and Lillian Gilbreth, Henry Gantt

 Desire for increased efficiency of labor intensive operations
 Approach that stresses efficiency in the organization through task structuring
 The task structuring involves the analysis of the task to determine the “one best way” to
perform the task
 Limitations: doesn`t adequately emphasize human variables + conflict, communication,
leadership, and motivation are merely glanced over, and, for the most part, ignored

- An appreciation for the work of Frederick W. Taylor, Frank and Lillian Gilbreth,
and Henri Fayol

Frederick Taylor (1856 – 1915):

 Father of scientific management
 Primary goal: to increase workers` efficiency by scientifically designing jobs
 Develop a science for each element of work
 Scientifically select and train workers
 Ensure that all work is done in accordance with scientific principles
 Divide work and responsibility between workers and management
Frank and Lillian Gilbreth:
 Contributors to the scientific method
 Primary investigation tool: motion study – reducing each job to the most basic movements
possible)
 Facilitate and speed effective motions
 Adopt most favorable motion sequence
Henry Fayol (1861 – 1919):
 Concerned with making the overall organization more effective
 Developed theories of what constituted good management practice
 Proposed a universal set of management functions – planning, organizing, commanding,
coordinating, and controlling
 Published Principles of management related to these functions

- An understanding of the behavioral approach to management

 Hawthorne studies – series of studies 1924-1932

 Importance on human factors in the organization (Organizational success from an
understanding of people)
 Human variable could directly decrease or increase production levels (Production is increased
by understanding the people in the organization and adapting the organization to them)
 Managers recognize that they had to understand the influence that human factors could exert
in an organization in order to maximize the positive effects and minimize the negative effects
(Workers have needs and desires that organizations have to accommodate)

- An understanding of the studies at the Hawthorne Works and the human

relations movement

 Human relations movement: result of Hawthorne

studies; the social situations of the workers, not just the
working conditions, that influence behavior at work; people-
oriented approach to management; enhance organizational
success through building appropriate relationships with people
 When management stimulates high productivity and
workers` commitment in the organization and its goals, human
relations are effective
 The ability to work with people in a way that enhances
organization success
 A. Maslow: managers must understand the needs of
an organizations members; Hierarchy of needs (1943)
 - An understanding of the system approach to management (+ Reading on
Systems thinking)

 A system is a number of interrelated and interdependent parts functioning as a whole for some
purpose
 Types of systems:
a. closed: does not interact with its environment, nor it is influenced by them
b. open: constantly interact with their environments
 The firm viewed as a system: open, complex, dynamic, goal-oriented, market-oriented,
partially autonomous, structured, communicative, productive, social
 Systems must be viewed as a whole and modified only through changes in its parts
 Management system approach (triangular management) = classical approach + behavioral
approach + management science
 Biological feature used as a basis for thinking about complex things such as systems
 What does it mean to draw analogies (biology – organizations)
a. you focus on the whole and what it does and the context of the environment in which it does
it and despite which it remains in balance (dynamic rather than static view)
b. you look at what is going on as a system or indeed as a series of systems; you are using
ideas about interrelationships, purpose, adaptation, influence, and environment to help you
construct mental models or aspects of the situation; you are instead seeing how helpful it is to
look at it as a system
c. you look for multiple causes rather than single causes for the things you observe, since
organizations seldom do interesting things for a single and simple reason
 System: a set of parts that are interrelated to the extent that a part is changed by being part of
the systems and the system would change if that part were to be removed
 Environment: those things outside the system that significantly affect it or are affected by it
 Boundary: that which separates the system from its environment; rules for deciding whether
something is part of the system or not
 Subsystem: a part of a system that can be seen as a system in its own right (notion of
hierarchies)
 Goal: the desired outcome or state for the system whether ongoing/final; control is exercised
in order to achieve or maintain the goal state
 - An understanding of the contingency approach to management

 What managers do in practice depends on, or is contingent upon, a given set of

circumstances – a situation
 Attempts to outline the conditions or situations in which various management methods have
the best chance of being successful
 Not one best way of solving a managerial problem in all organizations, but one best way for a
certain situation
 Contingency variables: organization size, environmental uncertainty, technology requirements,
individual differences (culture)
 If → then
 Challenges
a. perceive organizational situations as they exist
b. choosing the main tasks best suited to these situations
c. competently implementing those tactics

- Basic knowledge about the learning organization approach to management

 An organization that does well in creating, acquiring, and transferring knowledge, and in
modifying behavior to new knowledge
 An ability to identify, discuss and apply the main driving forces for internationalization
and the different modes of market entry

 Exploit market opportunities in different countries: new markets, economies of scale,

synergies, power and prestige, tax opportunities, protect home market, etc.
 Exploit production opportunities by establishing production activities where they can be
conducted most efficiently: additional resources (natural resources, technologies, personnel),
lowered costs (materials, labor, financing), incentives (from host or home governments).
 Market entry:
a. exporting – a company supplies foreign demand from home production
b. acting through agents – hiring foreign representation or contracting with foreign
manufacturers
c. licensing – a company grants the right on some intangible property to a foreign company for
an agreed compensation
d. franchising – a company grants the use of a trade mark or other essential asset to a foreign
company for an agreed compensation
e. joint ventures – two or more partners sharing in a project
f. FDI (foreign direct investment) – commitment of capital in a foreign location

 An understanding of and the ability to explain and apply the dimensions of national
culture (Reading Hofstede)

 Influence of national cultures on management – a key issue

 Convergence hypothesis: 1950s & 60s dominant belief in Europe and US: management is
universal, sound management exists regardless of national environments – change local
practice
 1970s convergence was seen as obviously in conflict with reality; problem: supranational
organizations were founded on the convergence belief had to recognize the stubbornness of
national differences; became clear cultures do matter for management and regional
differences are not disappearing
 Why nationality is important:
a. political: formal institutions differ + the informal ways of using them differ
b. sociological: nationality symbolizes values to citizens (sufficient reason for ppl to go to war)
c. psychological: thinking is partly conditioned by national culture factors
 Mental programming: through our experience we become “mentally programmed” to interpret
new experiences in a certain way (culture = collective mental programming); one source is
language; invisible set or mental programs belonging to national cultures; difficult to change;
institutions constrain and enforce the way of thinking they are based on
 National character: more distinguishable to foreigners; superficial/generalizing (no commonly
accepted language to describe culture/ personality (psychology for personality) – for culture
does not exist a scientific language
 Four dimensions of national culture
1. individualism versus collectivism
- the relation between an individual and his or her fellow individuals
- loose ties, everybody looks after his own self-interest and of his immediate family, made
possible by a large amount of freedom that such society leaves individuals – loosely
integrated
- very tight ties, people are born into collectiveness or ingroups that may be extended
family/tribe/ village; look after the interest of the group and have no other opinions/beliefs that
those in the group – tightly integrated

2. large or small power distance

- how society deals with the fact that people are unequal in physical/intellectual capabilities
- some let inequalities grow over time into inequalities in power and wealth
- others play down inequalities as much as possible
- no society has ever reached complete equality
- small to large power distance
- in organization: related to degree of centralization of authority and of autocratic leadership
rooted in the metal programming of the members of a society
- societies in which power is distributed unequally remain because the psychological need for
dependence of the people without power is satisfied
- autocracy exists as much in the members as in the leaders – the value system of the 2
groups are usually complementary

3. strong or weak uncertainty avoidance

- how society deals with the fact time runs only one way: we are all caught in the reality of
past, present, and future, and we have to live with uncertainty because the future is unknown
and will always be
- some society socialize their members into accepting in and not being upset about it, accept
each day as it comes, take risks easily, don`t work as hard, tolerant of different opinions and
behavior because they do not feel threatened – weak uncertainty avoidance, feel relatively
secure
- other socialize their people to beat the future, high level of anxiety, greater nervousness and
aggressiveness – strong uncertainty avoidance, have institutions to create security and avoid
risk (technology vs. nature and war); ways of creating security: 1. laws – intolerance of
deviations, 2. Nominate experts, 3. Religion/ideologies – something bigger that transcends
personal reality

4. masculinity versus femininity

- division of roles between the sexes in society

- what is seen as typical task for men/women can vary from one society to another
- classify on whether they try to maximize or minimize the social sex role division
- some allow both women and man to take many different roles – feminine – small is beautiful
(family, nature & values)
- others make a sharp division between what men/women should do (men – more dominant
role) – masculine – big is beautiful (money & career)

 An understanding of the relationship between ethics and management

 Unless companies are ethical, they cannot be competitive in national or international markets
 Productivity: employees are a major stakeholder group, affected by management practices;
when management acts ethically towards them, then they are positively affected which
enhances productivity.

 Stakeholder relations: a second area in which ethical management practices can enhance
corporate health by positively affecting “outside” stakeholders such as suppliers and
customers (a positive public image)
 Government regulation: the third area in which ethical management practices can enhance
corporate health is in minimizing government regulation.
  The ability to judge if an action is ethical

Managers can feel confident that a potential action will be considered ethical by the general public if it
is consistent with one or more of the following standards:
 The golden rule: act in a way you`d expect others to act towards you
 The utilitarian principle: act in a way that results in the greatest good for the greatest number
of people
 Kant`s categorical imperative: act in a way that the action taken under circumstances can be a
universal law
 The professional ethic: take actions that would be viewed as proper by a disinterested panel of
professional peers
 The TV test: take actions you would be comfortable to explain on the TV
 The legal test: take legal actions only
 The four way-test: take truthful, fair to all, goodwill, and beneficial to all actions

 An understanding of how ethics can be incorporated into management practice

through a code of ethics

 Managers can take responsibility for creating and sustaining conditions in which people are
likely to behave ethically, and minimizing conditions in which people might be tempted to
behave unethically.
 Six steps to effective implementation of a code of ethics:
1. distribute the code of ethics comprehensively to employees, subsidiaries, and associated
companies
2. assist employees in interpreting and understanding the application and intent of the code
3. specify management`s role in the implementation of the code
4. inform employees of their responsibility to understand the code, and provide them with the
overall objectives of the code
5. establish grievance procedures
6. provide a conclusion or closing statement

 An basic understanding of the basic principles underlying a best practice code of

ethics (Reading Paine)

 An ability to define stakeholders, understand how they are identified evaluate their
contributions to and expectations from the organization and how to balance their
interests

 A stakeholder is any group or individual who can affect or is affected by the achievement of
the firm`s objectives
 HILFE BITTE!!!

 An ability to explain the factors used to identify and classify stakeholders (Reading
Mitchell et al.)

 HILFE BITTE!!!

 A definition of planning and an understanding of the purposes of planning

 Planning is the systematic development of action programs aimed at reaching agreed-upon

business objectives by the process of analyzing, evaluating, and selecting among
opportunities that are foreseen.

It is the process of determining exactly what the organization will do accomplished its
objectives

 Purposes of planning
o Protective purpose: is to minimize risk by reducing the uncertainties surrounding
business conditions and clarifying the consequences of related management actions
o Affirmative purpose: is to increase the degree of organizational success

The fundamental purpose of planning is to help the organization reach its objectives.
According to Koontz and O’Donnel the primary purpose of planning is to facilitate the
accomplishment of enterprise and objectives. All other purposes of planning are spin-offs of
this fundamental purpose.

 Insights into how the major steps of the planning process are related

 The planning process consists of 6 steps:

1. State organizational objectives: Because planning focuses on how the management
system will reach organizational objectives, a clear statement of those objectives is
necessary before planning can begin.
2. List alternative ways of reaching objectives: Once organizational objectives have been
clearly stated, a manager should list as many available alternatives as possible for
reaching those objectives
3. Develop premises upon which each alternative is based: To a large extend, the
feasibility of using any one alternative to reach organizational objectives is determined
by the premises, or assumptions, on which the alternative is based. A manager should
list all of the premises for each alternative
4. Choose best alternative for reaching objectives: An evaluation of alternatives must
include an evaluation of the premises on which the alternatives are based. This
elimination process helps the manager determine which alternative would best
accomplish organizational objectives.
5. Develop plans to pursue the chosen alternative: After an alternative has been chosen,
a manager begins to develop strategic and tactical plans
6. Put the plans into action: Once plans that furnish the organization with both long-
range and short-range direction have been developed, they must be implemented.
Obviously, the organization canno directly benefit from the planning process until this
step is performed.

 An ability to define, explain and illustrate the pyramid of purposes

 The pyramid or purposes contains of 3 levels:

1. Normative Level – Organizational purpose => Why the organization exists and where
it is going; Reflected in the organization’s vision mission statement and values:
 * Corporate vision
* Mission statement elements:
1. Customers: who are the firm’s customers?
2. Products or services: What are the firm’s major products or services?
3. Markets: Where does the firm compete?
4. Technology/Innovation: Is the firm technologically current?
5. Survival, growth, and profitability: Is the firm committed to growth and financial
soundness?
6. Philosophy: What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7. Self-concept: what is the firm’s distinctive competence or major competitive
advantage?
8. Concern for public image: Is the firm responsive to social, community, and
environmental concerns?
9. Concern for employees: are employees a valuable asset of the term?
2. Strategic Level – Organizational aims and objectives=> What an organization is trying
to achieve; reflected in strategic planning:
 Strategy:
o Market and product related goals (market penetration, market
development, product development, diversification)
o Competitive goals (cost leadership or differentiation)
o Stakeholder related goals (customer satisfaction, Employees
satisfaction…) or shareholder related goals (shareholder value)
o Society related goals (corporate social responsibility)
o Resource and capabilities related goals (development, acquisition
and use of resources and capabilities)
o Boundary related goals (corporation, M&A, scope of
activities:Insourcing/Outsourcing)
3. Operational Level – Organizational targets => how an organization is trying to achieve
purpose and goals; specific, broken-down measures reflecting purpose and
objectives; reflected in tactical plans and budgets
 Operative Goals
o Human resources (productivity, motivation, development,
turnover)
o Inbound logistics (acquisition, storage of products or inputs)
o Production and quality management( durations, plant
utilization, defects…)
o Research and development (new products, patents, time to
market…)
o Marketing and Sales (market share, sales figures…)
o Outbound logistics (storage of products, delivery, distribution
channels…)
o Service and customer satisfaction (repairs, complaints,
opinion and satisfaction barometer…)
o Management accounting (lowering costs, cost distribution)
o Capital markets (rating, stock market prices,…)
o Resource allocation (budgets, investment plans,…)

 A fundamental understanding of the term decision

 A decision is a choice made between two or more available alternatives

Two types of decisions:
o Programmed decision: is routine and repetitive, and the organization typically
develops specific ways to handle such decisions. These decisions typically require
structured and specific handling methods
o Non-programmed decision: is typically a one-shot decision that is usually less
structured than programmed decisions. These decisions do not have specific handling
methods on require judgment, intuition and creativity.

 An understanding of each element of the decision situation

1. The decision makers: These are the individuals or groups who actually make the
choice between the alternatives.
According to Ernest Dale there are 4 types of weak decision makers:
a. Receptive orientation: believe that the source of all good is outside
themselves, and therefore they rely heavily on suggestions from other
organization members. Basically they want others to make their decisions for
them
 b. Exploitive orientation: also believe that the source of all good is outside
themselves, and they are willing to steal ideas as necessary to make good
decisions. They build their organizations on other’s ideas and typically hog all
the credit, extending little or none to the originators of the idea
c. Hoarding orientation: is characterized by the desire to preserve the status quo
as much as possible. Decision makers with this orientation accept little
outside help, isolate themselves from others, and are extremely self-reliant.
They are obsessed with maintaining their present position
d. Marketing oriented: decision makers look on themselves as commodities that
are only as valuable as the decisions they make. Thus they try to make
decision that will enhance their value, and they are highly conscious of what
others think of their decisions
2. Goals to be served: This involves goals that decision makers seek to attain. In case of
managers these goals are usual organizational objectives.
3. Relevant Alternatives: The decision situation is usually composed of at least two
relevant alternatives. A relevant alternative is one that is considered feasible for
implementation and also for solving an existing problem. Alternatives that will not
solve an existing problem or can not be implemented are irrelevant and should be
excluded from the decision-making process
4. Ordering of alternatives: This requires a process or mechanism that ranks alternatives
from most desirable to least desirable. This process can be objective, subjective, or a
combination of the two.
5. Choice of alternatives: This is the actual choice between the available alternatives.
This choice establishes the decision. Typically managers choose the alternative that
maximizes long-term return for the organization

 An ability to explain and illustrate the decision-making process

 An appreciation for the various situations in which decisions are made and the appropriate
strategies for those situations

 An understanding of the idea of and the ability to discuss the concept of the learning
organization and its building blocks (Reading Garvin)

 Meaning, Management and Measurement: Experts suggest the use of 5 component

technologies (*systems thinking, personal mastery, mental models, shared vision, and
team lerning) But the recommendations are far too abstract and three critical issues
are unsolved; each is essential for effective implementation: Meaning, management
and measurement. Once these “three M’s” are addressed, managers will have a
firmer foundation launching learning organizations.
 What is a learning organization
 Most scholars view organizational learning as a process that unfolds over
time and link it with knowledge acquisition and improved performance.
 A learning organization is an organization skilled at creating, acquiring, and
transferring knowledge, and at modifying its behavior to reflect new
knowledge and insights.
 Ideas are the trigger for organizational improvement
 Without accompanying changes in the way that work gets done, only the
potential for improvement exists.
 Building Blocks
 Learning organizations are skilled at five main activities
 Systematic problem solving: rests heavily on the philosophy and
methods of the quality movement. Its underlying ideas include:
 Relying on the scientific method, rather than guesswork, for
diagnosing problems
 Insisting on data, rather than assumptions, as background for
decision making
 Using simple statistical tools to organize data and draw
interferences
 Experimentation: involves the systematic searching for and testing of
new knowledge. It takes two main forms:
 Ongoing programs: normally involve a continuing series of
small experiments, designed to produce incremental gains in
knowledge. Successful ongoing programs share several
characteristics as working hard to ensure a steady flow of
new ideas, requiring an incentive systems, that favors risk-
taking or the need of managers and employees who are
trained in the skills required to perform and evaluate
experiments
  Demonstrations projects: are usually larger and more
complex. They share a number of distinctive characteristics:
 They are usually the first projects to embody
principles and approaches that the organization
hopes to adopt later on a larger scale
 They implicitly establish policy guidelines and
decision rules for later projects
 They often encounter severe tests of commitment
from employees who wish to see whether the rules
have in fact change
 They are normally developed by strong
multifunctional teams reporting directly to senior
management
 They tend to have only limited impact on the rest of
the organization if they are not accompanied by
explicit strategies for transferring learning
 Learning from the past experience: companies must review their
success and failures, assess them systematically, and record the
lessons in a form that employees find open and accessible.
 Learning from others: of course, not all leaning comes from reflection
and self-analysis. Sometimes the most powerful insights come from
looking outside one’s immediate environment; even companies in
completely different businesses can be fertile sources of ideas and
catalysts for creative thinking
 Transferring knowledge: for learning to be more than a local affair,
knowledge must spread quickly and efficiently throughout the
organization. Ideas carry maximum impact when they are shared
broadly rather than held in a few hands.
 Measuring Learning
 Managers say “if you can’ measure it, you can’t learn it”, so there have been
established learning curves and manufacturing progress functions
 For companies hoping to become learning organizations, these measures are
incomplete as they only focus on one single measure of output
 So the half-life curve was emerged. It measures the time it takes to achieve
50% improvement in a specified performance measure
 They have also a problem: they only focus on results
 Organizational learning can usually be traced through three overlapping
stages: cognitive stage, behavioral stage and permance improvement
 A complete learning audit must include all three
 First Steps: Any company that wishes to become a learning organization can begin by
taking a few simple steps:
 Foster an environment that is conductive to learning. There must be time for
reflection and analysis, to think about strategic plans, dissect customer needs,
assess current work systems and invent new products
 Open up boundaries and stimulate the exchange of ideas. Boundaries inhibit
the flow of information, the keep individuals and groups isolated and reinforce
preconceptions
 Once managers have established a more supportive, open environment, they
can create learning forums.
 These efforts help to eliminate barriers that impede learning and begin to
move learning higher on the organizational agenda.

 Insights into groups as decision makers

 Advantages and Disadvantages of using groups to make decision

o Groups commonly make decisions in organizations
o A group can general come up with more and better decision alternatives than an
individual can (advantage)
o When a group makes a decision, the members of that group tend to support the
implementation of the decision more fervently than they would if the decision had
been made by an individual (advantage)
o Group members tend to perceive the decision as their own, and this ownership
perception makes it more likely that they will strive to implement the decision
successfully rather than prematurely giving in to failure (advantage)
o It takes longer to make a group decision because groups must take the time to
present and discuss all their members’ views (disadvantage)
o Group decisions cost the organization more than individual decisions do simply
because they take up the time of more people in the organization (disadvantage)
 o Group decisions can be of lower quality than individual decisions of they become
contaminated by the group members’ effort to maintain friendly relationships among
themselves (disadvantage)
 Processes for making group decisions
Several useful processes have been developed to assist groups in meeting the challenge of
decision making:
o Brainstorming: is a group decision making process in which negative feedback on any
suggested alternative by any group member is forbidden until all members have
presented alternatives that they perceive as valuable. Brainstorming is carefully
designed to encourage all group members to contribute as many viable decision
alternatives as they can think of. Its premise is that if the evaluation of alternatives
starts before all possible alternatives have been offered, valuable alternatives may be
overlooked. Group member are encouraged to state all their ideas, while one member
records all ideas for later discussion
o Nominal group technique: this process is designed to ensure that each group member
has equal participation in making the group decision, it involves the following steps:
1. Each group member writes down individual ideas on the decision or problem
being discussed
2. Each member presents individual ideas orally. The ideas are usually written in
a board for all other members to see and refer to
3. After all member present their ideas, the entire group discusses these ideas
simultaneously. Discussion tens to be unstructured and spontaneous
4. When discussion is completed, a secret ballot is taken to allow members to
support their favorite ideas without fear. The idea receiving the most votes is
adopted and implemented
o Delphi Technique: involves circulating questionnaires in a specific problem among
group members, sharing the results with them, and then continuing to recirculate and
refine individual responses until a consensus regarding the problem is reached. In
contrast to the other techniques, group members do not meet face to face; it involves
the following steps:
1. A problem is identified
2. Group members are asked to offer solutions to the problem by providing
anonymous responses to a carefully designed questionnaire
3. Responses of all group members are compiled and sent out to all group
members
4. Individual group members are asked to generate a new individual solution to
the problem after they have studied the individual responses of all other group
members compiled is step 3
5. Steps 3 and 4 are repeated until a consensus problem solution is reached
 Evaluating Group Decision-Making Processes: All three of the processes have both
advantages and disadvantages. As with any other management tool, managers must carefully
weigh the advantages and disadvantages of these three group decision-making tools and
adopt the one – or some combination of the three . that best suits their unique organizational
circumstances