Nota Principle of Corporate

Principles of Corporate
Management
Chapter 1
The Business Environment
Angkasa Training Centre Sdn Bhd

Business Environment
Business Environment is the social elements that

affects organizational decisions, strategies, processes and
performance.

ELEMENTS OF THE BUSINESS ENVIRONMENT

Elements of Internal Business Environment

Shareholders Customers
Financial
Institution Vendors
Busines
s
Government
agencies Competitors
Trade Unions

Elements of External Business Environment
Material

Technological
Economic

Busines

s

Social Legal-politic


SOCIAL RESPONSIBILITY
The awareness that business activities

have an impact on society, and the
consideration of that impact by firms in
decision making

SOCIAL RESPONSIBILITY TO STAKEHOLDERS
Responsibility to Consumers
1. Consumerism
2. Kennedy’s Consumer Bill of Rights
a. The right to safety.
b. The right to be informed.
c. The right to choose.
d. The right to be heard.

Responsibility to Employees
1. Safety in the workplace (OSHA)
2. Equality in the workplace
3. Sexual harassment
4. Managing cultural diversity

Responsibility to the environment
1. Water pollution
2. Air pollution
3. Land pollution
4. Green marketing

Responsibility to investors
1. Proper management of funds
2. Access to information
3. Executive Compensation

Principles of Management
Chapter 2
Nature of Management

What is Management
A set of activities
planning and decision making, organizing, leading, and
controlling
directed at an organization’s resources

human, financial, physical, and information
with the aim of achieving organizational goals

in an efficient and effective manner.

Basic Purpose of Management
EFFICIENTLY
Using resources wisely and
in a cost-effective way
And
EFFECTIVELY
Making the right decisions and
successfully implementing them

Efficiency :Operating in
such a way that resources
are not wasted.
Efficiency
versus Successful Management
Effectiveness
Effectiveness:Doing the right

Things in the right way at
The right times.
Angkasa
Source: Van Fleet, David D., Contemporary Training
Management, Second Centre Sdn Bhd
Edition.
What is a Manager
Someone whose primary responsibility is to carry

out the management process.
Someone who plans and makes decisions,

organizes, leads, and controls human, financial,
physical, and information resources.

Functions of a Manager
Planning
Planningand
andDecision
Decision
Making
Making Organizing
Organizing
Setting Determining
Determininghow
howbest
besttoto
Settingthe
theorganization’s
organization’s
goals group
groupactivities
goals anddeciding
and deciding activities
how and
andresources
how besttoto
best resources
achieve
achievethem
them
Controlling Leading
Leading
Controlling
And Motivating
Motivatingmembers
membersofofthe
Andmonitoring
monitoring the
Correcting organization to work in
Correctingongoing
ongoingactivities
activities organization to work in
totofacilitate the
thebest
bestinterest
interestofofthe
facilitategoal
goalattainment
attainment the
organization
organization

Functions of a manager
Inputs
Inputsfrom
fromthe
the
environment
environment
Goals
Planning Goals
and attained
attained
Human Organizin
HumanResources
Resources decision- g
making Efficiency
Financial
Financialresources
resources Efficiency
Physical
Physicalresources
resources
Effectiveness
Effectiveness
Information
Information
resources
resources

Controllin Directing
g

OTHER ROLES OF MANAGER
A diplomat and public relations officers
A politician, negotiator and arbitrator
An entrepreneur
A communicator
A teacher and trainer

TYPES OF MANAGERS
DIFFERENTIATION BY LEVELS OF MANAGEMENT
First-line managers
First-line managers supervise and coordinate
the activities of operating employees.
Middle managers
They primarily take the goals and strategies
designed by top managers and put them into
effect
Top Managers
Top managers are a small number of executives who
control the organization by setting its goals, overall
strategy, and operating policies.
TYPES OF MANAGERS
DIFFERENTIATION BY LEVELS OF MANAGEMENT
President
Vice President Vice President Vice President

Top Level Marketing Finance Production
Supervisor Production Supervisor Supervisor

Middle Level A B C
First Employees Employees Employees

Level
Level of Management
DIFFERENTIATION BY AREAS OF MANAGEMENT
Levels of Management
Top managers
Middle managers
First-line managers
s
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Areas of Management
H

Skills at Different Management Level
Technical Skills
Refers to the manager’s ability to use the expertise, tools
and procedures in his area of specialty.
Interpersonal skills
The ability to communicate with, understands, and
motivates individuals and groups.
Conceptual skills
Ability to think in abstract terms and the mental
capacity
Diagnostic and analytic skills
Ability to recognize the symptoms of a problem and then
determine an action plans to fix it.
Communication
The manager’s abilities both to convey and
receive ideas and information effectively from
others.
Decision-Making
The manager’s ability to recognize and define
problems and opportunities correctly and then to
select an appropriate course of action to solve the
problems and capitalize on opportunities.
Time-Management
The manager’s ability to prioritize work, to work
efficiently, and to delegate appropriately.

Technical Skills
Interpersonal Skills
Conceptual Skills
Skills and
Fundamental
Fundamental
the of
of
Diagnostic Skills
Management
ManagementSkills
Manager Skills
Communication Skills
Decision-Making
Skills
Management Skills

Management Skills
Skills
Top
Management
Conceptual Human
Levels
Middle
Management
Technical
Supervision
Skill Distribution at Various

Management Level
MANAGEMENT
ART,
SCIENCE
OR
PROFESSION ?
THE SCIENCE OF MANAGEMENT
 Assumes that problems can be approached

using rational, logical, objective, and
systematic ways.
 Requires technical, diagnostic, and decision-

making skills and techniques to solve
problems.

THE ART OF MANAGEMENT
Decisions are made and problems solved using a

blend of intuition, experience,instinct, and
personal insights.
Requires conceptual, communication,

interpersonal,and time management skills to
accomplish the tasks associated with managerial
activities.
Management - profession
1. There is a body of general principles, specialized

knowledge and skills for members of the profession.
2. Professionals get their status from job-related

performance
3. Professionals are governed by a strict code of conduct

and ethics

Chapter 3
THE DEVELOPMENT OF MANAGEMENT

THOUGHT

Introduction
The study of the development of management

thought helps us better understand the intrinsic
roles of a manager.

DEVELOPMENT OF MANAGEMENT THOUGHT
Five major Schools of Management Thought
MANAGEMENT SCHOOL Beginning Date Emphasis
CLASSICAL SCHOOL
1890s
Scientific Management 1940s Managing workers and
Administrative Management 1920s organization more efficiently
Bureaucratic Management
BEHAVIORIAL SCHOOL
Human Relation 1930s Understanding Human
Behavioral Science 1950s Behavior in the Organization
QUANTITATIVE SCHOOL Increasing Quality of

Management Science 1940s managerial decision-making
Operation Management 1940s through the applications of
Management Information System 1950s-1970s mathematical and statistical methods
SYSTEMS SCHOOL Understanding the organization systems
1950s That transform input into outputs.
CONTINGENCY SCHOOL 1950s Applying management principles
CLASSICAL SCHOOL
The classical school of thought generally concerns

ways to manage work and organizations more
efficiently.
Three areas of study that can be grouped under the

classical school are:
1. Scientific management
2. Administrative management
3. Bureaucratic management.
SCIENTIFIC MANAGEMENT
Frederick W. Taylor was its main proponent.
Scientific management focuses on ways to improve the

performance of individual workers
Grew out of the industrial revolution’s labor shortage at

the beginning of the twentieth century.
SCIENTIFIC MANAGEMENT
Taylor stressed the importance of:

The need to examine and analyze the different
elements of a task
The selection and training of staffs
Communication and co-operation between

management and staff
Equitable division of labor and responsibility

Steps in
Scientific
Management 1
Develop a science
for each element of
the job to replace old
rule-of-thumb methods
2
Scientifically select
employees and then
train them to do the job
as described in step 1
3
Supervise employees
to make sure they
follow the prescribed
methods for performing 4
their jobs Continue to plan
the work, but use
workers to get the
work done
ADMINISTRATIVE MANAGEMENT
Focuses on managing the total organization.
Henri Fayol is the major contributor to this school

of management thought.

He argued that management was a universal

process consisting of functions, which he termed
planning,organizing, commanding, coordinating,
and controlling.

Fayol picked out fourteen management principles of
management that he used frequently :
1. Division of Labor
2) Authority
3) Discipline
4) Unity of Command
5) Unity of Direction
6) Subordination of Individual Interest to the Common
Good
7) Remuneration
8) Centralization
9) The Hierarchy
10) Order
11) Equity
12) Stability of Staff
13) Initiative
14) Espirit de Corps

BUREAUCRATIC MANAGEMENT.
Bureaucratic management focuses on the ideal form of

organization.
Max Weber (1864-1920), known as the Father of Modern

Sociology was the major contributor to bureaucratic
management.
Bureaucracies are founded on legal or rational authority,

which is based on law, procedures, rules, and so on
BUREAUCRATIC MANAGEMENT.
Efficiency in bureaucracies comes

from
1) Clearly defined and specialized functions
2) Use of legal authority
3) Hierarchical form
4) Written rules and procedures
5) Technically trained bureaucrats
6) Appointment to positions based on technical
expertise
7) promotions based on competence
8) Clearly defined career paths
BEHAVIORIAL SCHOOL
Elton Mayo( 1880 –1949) and his Harvard associates

conducted a famous study of human behavior in work
situations.
His conclusion was that special attention frequently

causes people to increases their efforts.
The phenomenon has become

Angkasa TrainingHawthorne
Centre Sdn Bhd Effects
BEHAVIORIAL SCHOOL
Human Relations Contributors
Grew out of the Hawthorne studies.
Proposed that workers respond primarily to the social

context of work, including social conditioning, group
norms, and interpersonal dynamics.
Assumed that the manager’s concern for workers

would lead to increased worker satisfaction and
improved worker performance.
The Hawthorne Studies (1927–1932)
Conducted by Elton Mayo and associates at
Western Electric
 Illumination study—workplace lighting

adjustments affected both the control and the
experimental groups of production employees.
 Group study—implementation of piecework

incentive plan caused production workers to
establish informal levels of acceptable individual
output.
 Interview program—confirmed the importance

of human behavior in the workplace.
BEHAVIORIAL SCHOOL
Summary of Hawthorne Studies

Condition Result
Experiment
Increased Lighting Higher
for Employees Productivity
Reduced
Lighting for Higher
Employees Productivity
Any Adjustment in
Conditions That Reflects Higher
Conclusion Increased Attention Productivity
Toward Employees
THE QUANTITATIVE SCHOOL
Management Science School
Management science (also called

operations
research) uses mathematical and statistical
approaches to solve management problems.

CONTINGENCY APPROACH
 Universal Perspectives
 Include the classical, behavioral, and quantitative
approaches.
 An attempt to identify the “one best way” to manage
organizations.
 The Contingency Perspective
 Suggests that each organization is unique.
 The appropriate managerial behavior for
managing an organization depends
(is contingent) on the current
situation in the organization.

CONTINGENCY PERSPECTIVE
Problems
or situations
Important
contingency
Solutions or Solutions or Solutions or

Action A Action A Action A
Source: Angkasa
Van Fleet, David D., Contemporary
Training CentreManagement,
Sdn BhdSecond Edition.
Chapter 4
Functions of manager

The role of Supervisors
The supervisor’s role is special in that in

the hierarchy of the organization, he is
the most junior manager yet he is the
same time the highest-ranking worker.


Upward Responsibilities
to Higher Management
Parallel Responsibilities to
other Supervisors
of Equal Rank and To Staff Specialists.
Downward Responsibilities
to Subordinates

Responsibilities to the Trade Union
a) Promote good industrial relations

b) Improve working conditions
c) Improve the economic and social status
of workers
d) Promote increased productivity

Chapter 5
DECISION MAKING

Decision Making
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 it
into practice.

Decision Making
Types Of Decision
Organization vs. Personal Decisions

Organizational decision made by managers.
Personal decision made effects the manager’s

personal choice or preference.

Decision Making
Types Of Decision
Programmed vs. Unprogrammed Decision
Programmed decisions are low- risk and can be

standardized into a procedure.
Unprogrammed decisions are non-routine and

carry high risk.

Decision Making
Types Of Decision
Strategic vs. Tactical Decision

Strategic decision affects the long-term survival,
development and growth of the organization.
They are top-level decisions.
Tactical decisions are concerned with the day-to

day operations.
Decision Making
STEPS IN THE DECISION MAKING PROCESS
1. Analyze and define the problem with

information from the external and internal
business environment.
2. State the alternative solutions.
3. Select the best alternative.
4. Plan the course of action.
5. Implement the plan.
6. Control and review the results of the plan
against the objectives.
Chapter 6
Organization

Introduction
Organizations are formed so that people who shares a

common set of values or interests can work together
towards achieving that common objectives.
Organizations are characterized by:
(1.) The people or members of the organization

(2.) Their common objectives
(3.) The structures they develop to help them achieve
these objectives.

Principles Of Organization
The Principle of the Objectives.

The principles of specialization.
The Principles of Coordination.
The Principle of Authority.
The Principle of Responsibility.
The Principles of Definitions.
The Principles of Correspondence.
The Span of Control.
The Principles of Balance.
The Principles of Continuity.

THE ORGANIZATION PROCESS
Detailing of works
The task of an organization must first be
determined to achieve specific sets of goal..
Divisions of works
Works carefully assign on the basis of the
qualifications of members and on a fair
distribution of work
Departmentalization
Process of grouping the related task, activities
or units of an organization.
THE ORGANIZATION PROCESS
Coordination of work
Coordination unifies the members work into
harmonious.
Monitoring and reorganizing.

Managers must take periodic assessments of
what the organization is doing .

AUTHORITY, RESPONSIBILITY AND ACCOUNTABILITY
AUTHORITY
Forms of Authority
Line authority
Main form of authority in organization, is

direct supervisory authority from superior
to subordinate

AUTHORITY
Staff authority
Staff authority is given to those who are

responsible for assisting the line executives.
Staff authority is more limited authority to

advise.
It is authority that is based on expertise and

which usually involves advising line managers.

AUTHORITY
Functional Authority
Delegated to those who have the right to prescribe

policies, schedules and procedures for personnel
who are not their own subordinates.
Exist to make the best use of specialized

knowledge and skills and to ensure a uniform
application of the company policy.

Responsibility
Responsibility is the obligation to use the

authority delegated to carry out tasks assigned.
Responsibilities fall into two categories:

Individual
Responsible for their actions. Nobody gives or delegates
individual responsibilities.
Organizational.
Collective organizational accountability and include
how well departments perform their work.
Accountability
Accountability is answering for the

result of one's actions or omissions. It
is the reckoning, wherein one answers
for his or her actions and accepts the
consequences, good or bad.

Organization
Departmentalization
Departmentalization is the basis on

which work or individuals are
grouped into manageable units.

Departmentalization
Functional Departmentalization
The grouping of jobs involving the same or

similar activities.

Functional Departmentalization
 Advantages  Disadvantages
 Each department  Decision making
can be staffed by becomes slow and
functional-area bureaucratic.
experts.  Employees narrow
 Supervision is their focus to the
facilitated in that department and lose
managers only need sight of
be familiar with a organizational goals/
narrow set of skills. issues.
 Coordination inside  Accountability and
each department is performance are
easier. difficult to monitor.
Product Departmentalization
The grouping of activities around

products or product groups.

Product Departmentalization
 Advantages  Disadvantages
 All activities associated  Managers may focus
with one product can be on their product to
integrated and the exclusion of the
coordinated. rest of the
 Speed and effectiveness organization.
of decision making are  Administrative costs
enhanced. may increase due to
 Performance of individual each department
products or product having its own
groups can be assessed. functional-area
experts.

Customer Departmentalization
 Customer Departmentalization
 Grouping activities to respond to and interact
with specific customers and customer
groups.
 Advantage
 Skilled specialists can deal
with unique customers or
customer groups.
 Disadvantage
 A large administrative staff
is needed to integrate activities
of various departments.
Location Departmentalization
 Location Departmentalization
 The grouping of jobs on the basis of defined geographic
sites or areas.
 Advantage
 Enables the organization to
respond easily to unique
customer and environmental
characteristics.
 Disadvantage
 Large administrative staff
may be needed to keep track
of units in scattered locations.

Common Bases of Departmentalization
By Functions By Products
CEO CEO
Finance Marketing Operation Computers Printers Software
By Customer By Location
CEO CEO
Home Business Educational U.S European Japanese

users users users Region Region Region
Barney, Jay B. and Ricky W. Griffin, The Management of Organizations.

ORGANIZATIONAL STRUCTURE
Five types of organization structures
Line
Line structure consist of a direct vertical line of
authority and responsibility from the owner /
general manager to line managers to workers.
Line and staff

Line executive’s needs assistance either in general
administration or in specialist advice
ORGANIZATIONAL STRUCTURE

Pure functional
Need to give specialist the authority and
responsibility to make decision within areas of
expertise.
Line and functional staff
It allows top management to allocate essential
functions to specialist without having to create
another line of authority.

Committee and task force.
Committees’ serves to bring together a group of
people whose ideas are likely to contribute to the
solution of specific problem or a number of
problems.
The matrix organization.
Matrix systems become necessary when the
organizations need to harness its internal
specialized resources for specific projects.
ORGANIZATIONAL CHART
Diagrams that depict the hierarchy of the formal
relationships, lines of the communication, authority and
responsibility of the major executives of an organization.
Organizational charts show:
(1.) How the organization divides work.

(2.) The role of each position
(3.) The reporting status of each position
(4.) The span of control
(5.) The chain of command

TYPES OF ORGANIZATION
The vertical chart

The traditional way of presenting an organization’s
structure.
The horizontal chart
Similar to vertical chart except that it reads from
left to right.
The concentric chart
Consist number of concentric circles emanating
from the centre cycle which holds the Managing
Director Angkasa Training Centre Sdn Bhd
INFORMAL ORGANIZATION
Informal structures
Relationships between any people in the

organization that develop naturally based
on common interests or activities

INFORMAL STRUCTURE
Possible positive effects from the informal

structure
 Help employees to communicate and

cooperate
 Give support an encouragement to

employees

Possible negative effects from the informal
structure
Can spread harmful and incorrect rumors
Can cause conflict among employees
Can create resistance to change and reduced

management conflicts.
When people work together, they establish social

relationships and informal organization develops.
Coordination
Defined as the process of integrating the

objectives and activities of the separate
units (departments) of an organization so
that organization goals can be achieved
efficiently.

Ways of achieving coordination
Rules and procedures
Organizational rules and procedures are

management decision made to handle routine
events and can thus be efficient tools for routine
coordination and control.
Chain of command
Provides the traditional methods of coordination
and resolving conflicts
 Chain of Command
 A clear and distinct line of authority
among the positions in an organization.
 Unity of Command
 Each person within an organization must
have
a clear reporting relationship to one and
only one boss.
 Scalar Principle
 A clear and unbroken line of authority
must extend from the bottom to
the top of the organization.

Vertical information systems
Means by which data is transmitted down the
levels of the organization and this may take place
inside or outside the chain of command.
Lateral relationships
Information is exchanged and decisions are made
because lateral relationship cut across the chain of
command.
Direct contact between individuals who must deal
with the same situation or problem, can be highly
effective Angkasa Training Centre Sdn Bhd
Self-contained tasks
Managements prepare self-sufficient units
with access to their own resources.
Enjoy the advantage of not having to go in
search of the resources that they need.

Span of Control
 The number of people who report to a

particular manager.
 There is no ideal or optimal span of
management.

Tall Versus Flat Organizations
 Tall Organizations  Flat Organizations

 Are more expensive  Lead to higher levels of
because of the employee morale and

productivity.
number of managers
 Create more
involved.
administrative
 Foster more
responsibility for the
communication relatively few managers.
problems because of  Create more supervisory
the number of people responsibility for
through whom managers due to wider
information must spans of control.
pass.
Tall Versus Flat Organizations
Tall Organization
President
Flat Organization
President

Three factors to consider when management is
choosing the appropriate span of controls
Personality of the managers
Preference of the people being

supervised
The peculiarities of the place or work

situation.
The manager can be successful with
broad span of management when:
 He is highly trained and capable

 He is helped in his supervisory duties
 He does not have non- supervisory
activities to perform
 Personally he prefers a loose style of
supervision
The span of management can be broad
when:
The people being supervised prefer loose

supervision
The people being supervised are well

trained and able to handle a variety of
work situation.
The managers can adopt a broad span of
management when:
 The work is being done is repetitive

 The operation are stable and there are no unusual
events to disrupts the routine
 The methods of work have been well-entrenched
and formalized
 Subordinates generally work independently of one
another
 The work of subordinates can easily be supervised.

DELEGATION
Delegation is the assignment of responsibilities

together with appropriate authority to carry out a
job.
It is a process of empowering employees to carry

out assigned tasks..
In effects some part of management is entrusted

to subordinates.

Distributing Authority
 Authority
 Power that has been legitimized by the organization.
 Delegation
 The process by which managers assign a portion of
their total workload to others.
 Reasons for Delegation
 To enable the manager to get more work done by
utilizing the skills and talents of subordinates.
 To foster the development of subordinates by having
them participate in decision making and problem
solving that allows them to learn about overall
operations and improve their managerial skills

Steps in the Delegation Process
Step 1 Step 2 Step 3

Assigning Granting Creating
responsibility authority accountability
Manager Manager
Manager Manager
Manager
Subordinate Subordinate Subordinate

Three steps to proper delegation:
1) Granting Authority
Sufficient authority should be delegated to meet the
responsibilities and complete the assignment
2) Assigning Responsibility
Obligation by an employee to perform certain duties
or to make sure that they are completed.
3) Requiring Accountability
Obligation created by accepting duties and
responsibilities from higher management.
Problems in Delegation
 Manager  Subordinate
 Reluctant to  Reluctant to accept
delegate. delegation for fear
 Disorganization of failure.
prevents planning  Perceives no
work in advance.
rewards for
 Subordinate’s
accepting
success threatens
superior’s additional
advancement. responsibility.
 Lack of trust in the  Prefers to avoid
subordinate to do any risk and
well. responsibility.
Needs for Delegation
There is not enough time to handle personally all the tasks
that are allocated to a managerial portfolio
Some rules and new techniques are so complicated that

managers needs to delegate the work to specialist who
are familiar with the new technology or new techniques.
A third reason for delegation is to train subordinates who

have proved themselves in their areas of responsibility,
for greater work loads and higher levels of responsibility.

Principles of effective delegation
First principle
Authority to perform specified tasks must be
assigned to the lowest organizational level at which
sufficient ability and information to carry them out completely.
Second principle
Individuals must be granted sufficient
authority to carry out their tasks effectively
Third principle
Managers are ultimately responsible and
accountable for the performance
Angkasa of their
Training Centre Sdn Bhd subordinates.
Principles of effective delegation
Fourth principle
Members of the organization must know to
whom they are responsible and who is responsible to them
Fifth principle
Unity of command, refers to the need for each person in
the organization to have one superior.

Advantage of effective delegation
Subordinates are able to take more responsibilities

from higher level managers.
Delegation helps build up the confidence of

subordinated in their abilities and in time gives them the
necessary experience to take on more responsible.
Delays are reduced.
Better quality decisions

Barriers to effective delegation
Failure to provide employees with sufficient
training to carry out the task.
Poor planning by some managers.
Some managers feel that only they can do a job

properly.
Fear that employees will make mistakes
Fear that employees will do well and be

promoted ahead of the manager.
CENTRALIZATION & DECENTRALIZATION
 Centralization is the degree to which

decision-making is concentrated in top
management's hands
 Decentralization is the extent to which

decision-making authority is pushed down the
organization structure and shared with many
lower-level employees.

Factors determine decentralization
 The external business environment.
 Characteristics of the organization.
 The rate of growth of the organization.

Chapter 7
Controls

Controls
The regulation of organizational activities so
that some targeted element of performance
remains within acceptable limits.
 Provides organizations with indications of

how well they are performing in relation
to their goals.
 Providesa mechanism for adjusting

performance to keep organizations
moving in the right direction.
Importance of Control
Change
Helps managers detect changes in the external and
internal environments.
Complexity
Monitor the diversified product lines to ensure that
quality and profitable are maintained.
Mistakes
Allows a manager to detect mistakes before they
become crucial.
Delegation
Managers will delegate part of their work to subordinate

Importance of Control
Adapt to environmental change Limit the accumulation of error
Control helps the organization
Cope with organizational complexity Minimize costs

Levels of Control
Strategic
control
Structural
control
Operations Financial
control control

Types of Controls
Physical resources—inventory management,quality control,
and equipment control.
Human resources—selection and placement,training and
development, performance appraisal, and compensation.
Information resources—sales and marketing forecasts,
environmental analysis, public relations, production
scheduling, and economic forecasting.
Financial resources—managing capital funds and cash
flow, collection and payment of debts.
Design of control process
The steps in the design of the control

process:
Define the desired results

Establish the predictors of results
Set standards of performance for the predictors
Establish the information and feedback
systems
Measure actual work performance
Compare actual performance to standards
Take corrective actions where necessary.
Problems in setting effective controls
Very often the easily measured factors receive too

much weights while the difficult to-measure items
are not given enough priority.
Sometimes management may emphasis short-run

conditions at the expense of long run factors.
Failure to adjust the control systems to reflect

shift in the importance of various activities and
goals over time.
Control Tools
Breakeven analysis
Study of how costs and profits vary with the
volume of production.
Network analysis
A generic term, which includes those
techniques, used to plan schedules and
control the progress of complex projects
consisting of set of interrelated activities.

Responsibilities for Control
Controller—
Controller a position in organizations
that helps line managers with
their control activities.

Steps in the Control Process
1 2 3 4
Compare Determine need
Establish Measure
performance for corrective
standards performance against standards action
Maintain the Correct the Change
status quo deviation standards

Overcoming Resistance to Control
 Designing effective controls that are properly
integrated with organizational planning and
aligned with organizational goals and
standards.
 Creating controls that are flexible, accurate,

timely, and objective.
 Avoiding overcontrol in the implementation of

controls.
 Guarding against creating controls that reward

inefficiencies. Angkasa Training Centre Sdn Bhd
 Encouraging employee participationin the
planning and implementing of control
systems.
 Developing a system of checks and

balances in the control systems through the
use of multiple standards and information
systems that allow the organization to verify
the accuracy of performance indicators.

Chapter 8
LEADERSHIP

The Nature of Leadership
The Meaning of Leadership
 Leaders
 People who can influence the behaviors of
others without having to rely on force.
 People who are accepted
as leaders by others.

Leadership styles
Leadership Styles
 Autocratic leadership
 Bureaucratic leadership
 Charismatic leadership
 Democratic leadership or Participative
leadership
 Laissez-faire leadership
 People-oriented leadership or Relations
oriented leadership
 Servant leadership
 Task-oriented leadership
 Transactional leadership
 Transformational leadership
Authoritarian or autocratic
Get others to do things for him through the

use of fear, threats, and punishments.
Using the authority for decision-making,

determining policies and procedures.
Described in McGregor’s Theory X

Bureaucratic Leadership
Bureaucratic leaders work “by the book”,

ensuring that their staff follow procedures
exactly.
This is a very appropriate style for work

involving serious safety risks (such as working
with machinery, with toxic substances or at
heights) or where large sums of money are
involved (such as cash-handling).

Charismatic Leadership
A charismatic leadership style can appear similar to a

transformational leadership style, in that the leader
injects huge doses of enthusiasm into his or her team, and
is very energetic in driving others forward.
In the eyes of their followers, success is tied up with the

presence of the charismatic leader. As such, charismatic
leadership carries great responsibility, and needs long
term commitment from the leader.

Democratic or participative Leadership
Encourage the subordinate participation in

decision making,determination of policies and
implementation of procedures.
Invites other members of the team to contribute

to the decision-making process.
Employees and team members feel in control of

their own destiny
Reflects McGregor’s Theory Y

Laissez-faire Leadership
This French phrase means “leave it be” and is

used to describe a leader who leaves his or her
colleagues to get on with their work.
Most often, laissez-faire leadership works for

teams in which the individuals are very
experienced and skilled self-starters.

People -Oriented Leadership
The leader is totally focused on organizing,

supporting and developing the people in the
leader’s team.
A participative style, it tends to lead to good

teamwork and creative collaboration.

Servant Leadership
This term, coined by Robert Greenleaf in the

1970s,describes a leader who is often not formally
recognized as such.
When someone, at any level within an

organization,leads simply by virtue of meeting the
needs of his or her team, he or she is described as
a “servant leader”.
Task-oriented Leadership
A highly task-oriented leader focuses only on

getting the job done, and can be quite autocratic.
He or she will actively define the work and the

roles required, put structures in place, plan,
organize and monitor.


Transactional Leadership
This style of leadership starts with the idea that team

members agree to obey their leader totally when they take
on a job
The “transaction” is (usually) that the organization pays

the team members in return for their effort and
compliance.
You have a right to “punish” the team members if their

work doesn’t meet the pre -determined standard.

Transformational leadership
A person with this leadership style is a true

leader who inspires his or her team
constantly with a shared vision of the future.
Highly visible, and spend a lot of time

communicating.
Delegate responsibility amongst their team.

Formal and Informal leadership
Formal leaders
Delegate authority and thus, exerts
considerable influence.
Informal leader
Though not having
delegated authority, can initiate action.

Approaches to study of Leadership
The qualities or traits approach
Traits Theories of
Leadership
LeadershipTraits:
Traits:
Leadership •• Ambition
Ambitionand
andenergy
energy
Theories that consider •• The
Thedesire
desireto
tolead
lead
personality, social, physical, •• Honest
Honestand
andintegrity
integrity
or intellectual traits to •• Self-confidence
Self-confidence
differentiate leaders from •• Intelligence
Intelligence
nonleaders. •• High
Highself-monitoring
self-monitoring
•• Job-relevant
Job-relevant
knowledge
knowledge
The Behavior Approach
Behavioral Theories of Leadership

Theories proposing that specific behaviors differentiate
leaders from nonleaders.
•• Trait
Traittheory:
theory:
Leaders
Leadersare
areborn,
born,not
notmade.
made.
•• Behavioral
Behavioraltheory:
theory:
Leadership
Leadershiptraits
traitscan
canbe
betaught.
taught.

The contingency approach
This approach examines the work situations and

then seeks a manager whose style is suitable for
that situation.

Fiedler’s Contingency Model
The theory that effective groups depend on

a proper match between a leader’s style of
interacting with subordinates and the degree
to which the situation gives control and
influence to the leader.

The Fielder Model defining the
situation
Leader-Member Relations
The degree of confidence, trust, and respect
subordinates have in their leader.
Task Structure
The degree to which the job assignments are
procedurized.
Position Power
Influence derived from one’s formal structural
position in the organization; includes power to hire,
fire, discipline, promote, and give
Angkasa Training salary
Centre Sdn Bhd increases.
Path-Goal Theory
The theory that it is the leader’s job to assist followers in
attaining their goals and to provide them the necessary
direction and/or support to ensure that their goals are
compatible with the overall objectives of the group or
organization.


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Business Environment is the social elements that

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The awareness that business activities

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Responsibility to the environment

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1. Proper management of funds

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directed at an organization’s resources

with the aim of achieving organizational goals

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Effectiveness:Doing the right

Someone whose primary responsibility is to carry

Someone who plans and makes decisions,

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A diplomat and public relations officers

A politician, negotiator and arbitrator

A teacher and trainer

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DIFFERENTIATION BY LEVELS OF MANAGEMENT

DIFFERENTIATION BY LEVELS OF MANAGEMENT

Vice President Vice President Vice President

Supervisor Production Supervisor Supervisor

First Employees Employees Employees

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Skill Distribution at Various

 Assumes that problems can be approached

 Requires technical, diagnostic, and decision-

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Decisions are made and problems solved using a

Requires conceptual, communication,

1. There is a body of general principles, specialized

2. Professionals get their status from job-related

3. Professionals are governed by a strict code of conduct

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THE DEVELOPMENT OF MANAGEMENT

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The study of the development of management

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QUANTITATIVE SCHOOL Increasing Quality of

The classical school of thought generally concerns

Three areas of study that can be grouped under the

Frederick W. Taylor was its main proponent.

Scientific management focuses on ways to improve the

Grew out of the industrial revolution’s labor shortage at

Taylor stressed the importance of:

The selection and training of staffs

Communication and co-operation between

Equitable division of labor and responsibility

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