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Principles of Management - Summary - BBA - Summary -

lecture 1 - 7
Principles of Management (Macquarie University)

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Week 1 – Managers and Management

An organisation is a group of people that work together to achieve a purpose.

These can be profit or non-profit, small or large.

Who are managers?

 Management is the pursuit of organisational goals efficiently and
effectively by integrating the work of people.
 This is done through planning,
organising, leading and controlling the
organisation’s resources. Basically
overseeing the work of others.
 Key terms: Planning, Organising,
Leading and Controlling
1. For- profit managers: for making
money.
2. Non-profit managers: for offering
services.
3. Mutual-benefit managers: for aiding
members.
Findings of Henry Mintzberg
 A manager relies more on verbal
than on written.
 A manager works long hours at an
intense pace.
 A manager’s work is characterised
by fragmentation, brevity and variety.

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Three types of roles:

1. Interpersonal: figurehead, leader, liaison
2. Informational: monitor, disseminator, spokesperson
3. Decisional: entrepreneur, disturbance handler, resource allocator,
negotiator

The skills exceptional managers need

1. Technical skills: the job specific knowledge needed to perform well in a
specialised field.
2. Conceptual skills: the ability to think analytically, to visualise an
organisation as a whole and understand how the parts work together.
3. Human skills: the ability to work well in cooperation with other people to
get things done.

Five hallmarks of a good manager

1. Gives employees challenging work to do.
2. Creates space for employees to demonstrate their capacity to do a good
job.
3. Provides support when needed in ways that offer feedback without
interfering in the work they have asked others to do.
4. Gives recognition and praise when a piece of work is done well.
5. Is not afraid to make tough decisions.

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Week 2 – The External Environment

Environmental factors
External influences change how a business must work. Managers must also
adapt to changing organizational environments. Changes include new
competitors, laws, resource availability (capital, human resources, materials)
and even weather. E.g.: Extreme weather events that can prevent workers
from completing their job.
 Case: Nanna’s Mixed Berries > Hepatitis outbreak > caused outrage by
consumers > brands not related to incident also effected.
 Changing environments create uncertainty. Managers must predict future
changes and trends in order to remain competitive in the market.
E.g.: Commodity prices for mining.
 Dynamism: How quickly the environment changes.
 Gold collar workers: When a worker has more bargaining power with their
employer due to having in demand skills.

The Task Environment

 A stakeholder is a party that has an
interest in an enterprise or project.
The primary stakeholders in a typical
corporation are its investors,
employees, customers and suppliers.
Customers
 Customers are those who use a
business’s goods or services. It doesn’t
have to be for the exchange of money,
e.g.: volunteer work.
 Customers can have more power than suppliers if they purchase a large
quantity of the business’ stock.

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Competitors
 Competitors compete for different things such as the best staff,
government grants and projects to take on.
Suppliers
 Suppliers can effect various parts of the business such as the pricing of
products and the sources which the products are received from.
 Suppliers are companies that provide inputs such as materials, human
resources and determine the quality, capacity and price of the final
product.
 Dependency on a particular supplier can have a negative effect, for
example with just in time inventory management, if the supplier goes
bankrupt, production will come to a halt.
Distributors
 The profitability of the product depends on how well the distribution of the
product is handled, e.g.: if Woolworths were to place a product at eye level
on its shelving, it would appear to more customers than if it was placed
lower.
Strategic allies
 Strategic allies allow two or more companies to to join forces to achieve
advantages that neither can perform as well alone.
 Airlines sometimes create partnerships to extend their flight destinations
such as Qantas partnering with an American airline to fly to destinations
inside the United States as only American owned airlines can do this since
9/11.
Employee organizations
 Employee organizations such as trade unions and professional associations
allow employees enhance bargaining power and improve working
conditions and pay.

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 The workers pay a fee in order to be protected by the union. This pressures
companies on interests that can arise and can change how the company
treats its employees.
Local communities
 Organizations are effected by how they are perceived by the community;
therefore, it is important that they are viewed positively by contributing
locally.
 Good links with the community include sponsoring local sports teams,
donations to community programs and supporting communal initiatives.
Financial intuitions
 Financial intuitions such as banks and finance companies determine when
credit and loans can be paid.
 Interest can also effect profitability as a higher interest rate will mean the
loan takes longer to pay back > less profit.
Government regulators
 Government regulators create and enforce regulations which organizations
must operate under.
 Breaches of regulation can have an adverse effect of the business, its
profitability and relationship with the community.
Special interest groups or NGO’s
 Special interest groups or NGO’s try to influence specific issues to ensure
their point of view is respected by corporations.
 For example, coal seam gas, burning of fossil fuels etc. has caused
companies to find other ways on manufacturing.
Mass media
 Mass media such as print, radio, TV and the internet allows the fast spread
of information about businesses which can positively or negatively effect
the business.

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 Social media allows anyone to spread information quickly about any topic
which means companies must be more diligent with decisions.

The General Environment

Economic forces
 General economic conditions and trends such as unemployment, inflation,
interest rates and economic growth all effect how a company adapts to the
economic changes in the environment.
 This effects the performance of the company as it must constantly adapt to
the economic forces that are changing around it.
Technological forces
 New developments in methods for transforming resources into good and
services allow the company to save money but also entails loss of human
jobs and the start-up cost of new technology.
 Technology breaks down the barrier on time and space with international
businesses able to communicate in meetings using video and audio over
the internet, saving time and money when communicating.
Sociocultural forces
 Sociocultural forces are influences and trends originating in a country’s, a
society’s or a culture’s human relationships and values that may affect an
organization.
 For example, tipping may be inappropriate in one society while it can be a
requirement in another.
 Another example is McDonald’s changing its menu to suit each country’s
different taste.
Demographic forces
 Demographic forces influence an organization through changes in the
characteristics of a population such as age, gender and ethnic origin.
 Example: An aging population would have an effect of the necessity to
train more younger individuals to replace older workers as they retire.

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Political-legal forces
 Political-legal forces are how politics shape laws and how laws shape the
opportunities for and threats to an organization.
 For example: the lockout laws have caused many businesses to close down
due to lower road traffic that has led to less business.
International forces
 International forces are the changes in the economic, political, legal and
technological global system.

Globalisation
 International success depends on the ability of a company to stay up to
date with issues that are happening world wide.
 Technological advances such as the internet and its bi-products such as
video calling and email have allowed for a much more connected business
that can communicate quickly and effectively.
 Outsourcing has become a large industry due the ability for the head
quarters of a company to organise and maintain international production,
services and other operations quickly and in real time.
 The collapse of time and distance has many positive attributes but also
presents negative impacts such as workers losing their jobs to cheaper
outsourced alternatives.
 E-commerce is a large part of globalisation and has come about to allow to
the buying and selling of products and services through computer
networks. It is projected to account for 10% of all retail sales by 2017.

The Global Economy

 The increasing tendency of world economies to interact with one another
as one market instead of many smaller domestic markets.
 Foreign firms bring international expertise when investing in Australia and
New Zealand.

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 Companies may outsource to circumvent national regulation but can also

reduce pay and jobs for domestic workers.

Why companies expand internationally

6. Availability of suppliers
7. New markets
8. Lower labour costs (avoiding local labour laws and environmental
protections)
9. Financial advantage
10. Avoidance of tariffs and import quotas
11. Gaining scale
12. Following the customer

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Week 3 – Culture

National culture
National culture: a shared set of beliefs, values, knowledge and patterns of
behaviour common to a group of people.
 Culture and national differences create culture shock and require special
attention to ensure they are respected.

Culture dimensions
 Low-context culture: shared meanings are primarily derived from written
and spoken words.
 High-context culture: people rely heavily on situational cues for meaning
when communicating with others.

GLOBE project’s nine cultural dimensions

1. Power distance: how much unequal power distribution should there be in
society or organisation.
2. Uncertainty avoidance: how much should people rely on social norms to
avoid uncertainty. E.g.: reliance on formal processes; avoid risk.
3. Institutional collectivism: how much should leaders encourage and reward
loyalty.
4. In-group collectivism: how much pride and loyalty should people have for
their family/organisation.
5. Gender egalitarianism: how much should society maximise gender roll
differences.
6. Assertiveness: how confrontational and dominant should individuals in
social relationships be.
7. Future orientations: how much should people delay instant gratification.

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8. Performance orientation: how much should individuals be rewarded for

performance and excellence.
9. Humane orientation: how much should society reward people for being
kind, fair and generous.

Other cultural variations

1. Language
2. Interpersonal space
3. Communication
4. Time orientation – monochromic (one thing at a time), polychromic (more
than one thing at a time)
5. Religion

Organisational culture
Organisational culture (aka corporate culture): a system of shared beliefs and
values that develops within an organisation and guides the behaviour of its
members.
Competing values framework

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The Three Levels of Organisational Culture

Level 1 – Observable artefacts
 Physical manifestations such as manner of dress, awards, myths and stories
about the company.
 Visible behaviour exhibited by managers and employees.
Level 2 – Espoused values
 Explicitly stated values and norms preferred by an organisation.
 Enacted values: represents the values and norms actually exhibited in the
organisation.
Level 3 – Basic assumptions
 Represents the core values of the organisation’s culture.
 Those taken for granted and highly resistant to change.

Four functions of organisational culture

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Week 5 – Contemporary Issues

Ethics
 Ethics and CSR are increasingly important due to high profile cases of
unethical behaviour.
 Managers are required to deal with dilemmas on a daily basis.

1. Political issues
2. Governance issues
3. Employment issues
4. Consumer issues
5. Environmental issues

Approaches to deciding ethical dilemmas

1. Utilitarian: Useful rather than attractive.
2. Individual:
3. Moral-rights: All actions do not interfere with others’ rights.
4. Justice: Does the action show fairness and equality.

How can organisations promote ethics?

1. Leadership
2. Strong ethical climate
3. Screening prospective employees
4. Training programs
5. Rewarding ethical behaviour: protection whistle-blowers
6. Job goals and performance appraisal
7. Independent social audits

How can managers support codes of ethics?

 Emphasise the importance of codes
 Regularly re-affirm their content

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 Follow the rules themselves

 Publicly reprimand rule breakers

 Social responsibility: manager’s duty to take actions that will benefit

society and the organisation.
 CSR: notion that corporations are expected to go above and beyond
following the law and making a profit.
 Sustainability: meeting humanity’s needs without harming future
generations.
 Philanthropy: making charitable donations to benefit humankind.

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Week 6 – Foundations of Management: Planning

Planning
 Coping with uncertainty by formulating course of action for future
problems.
 Setting goals and working out how to achieve them.

Planning and strategic management

1. Establish the mission and vision
2. Formulate the grand strategy
3. Formulate strategic plans, then the tactical and operational plans.
4. Implement the strategic plans
5. Control the strategy

Negatives of formal planning

1. Rigidity
2. Intuition and creativity
3. Focus
4. Not always successful

Fundamentals of making plans

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Mission and vision statements

Three levels of management = Three types of planning

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Types of plans
 Action plans: detailed action steps to meeting a goal.
 Operating plans: how a specific team/department will work towards a
corporation’s goal.
 Standing plans: policies, procedures and rules for activities that occur
repeatedly over time.
 Single-use plans: programs and projects

SMART goals
 Specific
 Measurable
 Attainable
 Results
 Target dates

The planning-control cycle

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