Post on 14-Apr-2018
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CHAPTER 1
MANAGEMENT AND ITS
EVOLUTION
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CHAPTER OVERVIEW Defining Management.
Various Approaches to Management
Business Environment
Business Ethics & Social Responsibility
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BACKGROUNDManaging is one of the imp activities
today.
Imp to ensure coordination of individualefforts.
Thus, task of Managers has been gaining
significance.
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WHAT IS AN ORGANIZATION? A formal and coordinated group of people
who function to achieve particular goals
These goals cannot be achieved by individualsacting alone
An organization has a structure
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MANAGEMENTOrganization
Two or more people who work together in a structuredway to achieve a specific goal or set of goals.
GoalsPurpose that an organization strives to achieve;
organizations often have more than one goals, goals
are fundamental elements of organization.
The Role of Management
To guide the organizations towards goal
accomplishment
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NEED FOR MANAGEMENT We are members of one
or other organizations.
Organizations also have some
plan to achieve these goals.
Organizations also need to acquire
& allocate the resources necessary to
achieve their goals.
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DEFINITION OF MANAGEMENT The process of planning, organizing, leading, and
controlling the work of organization members & of
using all available organizational resources to reach
stated organizational goals.(Stoner, Freeman & Gilbert)
The process of designing & maintaining an
environment in which individuals, working togetherin groups, efficiently accomplish selected aims.
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5 MS OF MANAGEMENT Money
Manpower
Material Machinery
Methods
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SO, MANAGEMENT IS Management is an art of getting things done
through and with the people in formally
organized groups.
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MANAGEMENT AND ORGANIZATIONALRESOURCES
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BASIC MANAGERIAL FUNCTIONS
OrganizingAssign responsibility for tasks
PlanningSelect goals & ways
to attain them
ControllingMonitor activities & make
corrections
LeadingUse influence to motivate
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NATURE OF MANAGEMENTMultidisciplinary
Dynamic nature of Principles
Relative; not absolute principlesManagement: Science or Art
Universality of Management
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IMPORTANCE OF MANAGEMENT Encourages Initiative
Encourages Innovation
Facilitates growth and expansionOptimum Utilization of Resources
Reduces Cost
Establishes Sound Organization
Establishes Equilibrium
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IMPORTANCE OF MANAGEMENT Improves corporate image
Motivates employees
Reduces wastageReduces absenteeism and labour turnover
Increases efficiency
Improves relationsEncourages Team Work
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IMPORTANCE OF MANAGEMENT
Optimum utilisation of resources: Management facilitates optimumutilisation of available human and physical resources, which leads toprogress and prosperity of a business enterprise. Even wastages of alltypes are eliminated or minimized.
Competitive strength: Management develops competitive strength inan enterprise. This enables an enterprise to develop and expand itsassets and profits.
Cordial industrial relation: Management develops cordial industrialrelations, ensures better life and welfare to employees and raises theirmorale through suitable incentives.
Motivation of employees: It motivates employees to take more interestand initiatives in the work assigned and contribute for raising productivityand profitability of the enterprise.
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Introduction of new techniques: Management facilitates theintroduction of new machines and new methods in the conduct ofbusiness activities. It also brings useful technological developments andinnovations in the management of business activities.
Effective management: Society gets the benefits of efficientmanagement in terms of industrial development, justice to differentsocial groups, consumer satisfaction and welfare and proper dischargeof social responsibilities.
Expansion of business: Expansion, growth and diversification of abusiness unit are possible through efficient management
. Brings stability and prosperity: Efficient management brings success,
stability and prosperity to a business enterprise through cooperationamong employees.
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Develops team spirit: Management develops team spirit and raises overall efficiency of
a business enterprise.
Ensures effective use of managers: Management ensures effective use of managers so
that the benefits of their experience, skills and maturity are available to the enterprise.
Ensures smooth functioning: Management ensures smooth, orderly and continues
functioning of an enterprise over a long period. It also raises the efficiency, productivity
and profitability of an enterprise.
Reduces turnover and absenteeism: Efficient management reduces labour turnover andabsenteeism and ensures continuity in the business activities and operations
.
Creates sound organisation: A dynamic and progressive management guarantees
development of sound Organisation, which can face any situation - favorable or
unfavorable with ease and confidence.
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HISTORY.. The systematic study of management began
after 1900.
Industrial Revolution also had a deep impact on
Management practices & Approaches.
Management philosophies and organization
forms change over time to meet new needs.
Some ideas and practices from the past are still
relevant and applicable to management today.
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APPROACHES TO MANAGEMENT
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MANAGEMENT THEORIES
1. ScientificManagement School
4. ModernPerspectives
3. BehavioralApproach
2. Classical Approach
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THE THEORISTS & THE SCHOOLSSCIENTIFIC APPROACH
1) Frederic Taylor
2) Gantt
3) Gilberths
CLASSICAL APPROACHES
1) Henri Fayol
2) Max Weber
3) Mary Parker Follett4) Chester Barnard
BEHAVIOURAL APPROACH
1) Hawthorne Experiments
2) Maslow & McGregor /Organizational Behaviour
MODERN APPROACHES
1) Systems Approach
2) Contingency Approach
Approaches to
Management
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SCIENTIFIC MANAGEMENTFrederick Taylor was called as the
father of Scientific management.
Theory arose in part from the needto increase productivity.
The systematic study of the
relationships between peopleand tasks to redesign the work
for higher efficiency.
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FOUR BASIC PRINCIPLES OF TAYLOR The Development of a true science of management:
Study the way job is performed now & determine new ways to do it. Gather
detailed, time and motion information. Try different methods to see which is best.
The Scientific Selection of workers:
Each worker would be assigned responsibility for the task hes best suited toincrease efficiency & productivity.
The Scientific education & development of theworker:Scientifically select and then train, teach, and develop the worker.
Intimate, friendly cooperation betweenmanagement and labor:Establish a fair or acceptable level of performance for a task, and then develop apay system that provides a reward for performance above the acceptable level
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CONTRIBUTIONS The efficiency techniques have been applied to many
organizations.
LIMITATIONS: Managers often implemented only the increased output
side of Taylors plan. They did not allow workers to share in increased output.
Specialized jobs became very boring, dull.
Workers could purposely under-perform; as it would
exhaust whatever work was available causing layoffs.
Emphasis on Productivity & Profitability led somemanagers to exploit both workers & customers.
Workers began to distrust Scientific Management
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HENRY GANTT Refined Taylors incentive system.
Originated a charting system for production scheduling
named as Gantt Chart.
Introduced reward systems for both the workers &
supervisors.
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FRANK & LILLIAN GILBRETHS Refined Taylors work and made many improvements to
the methodologies of time and motion studies.
Time and motion studies
Breaking up each job action into its components.
Finding better ways to perform the action.
Reorganizing each job action to be more efficient.
Also studied worker-related fatigue problems caused by
lighting, heating, and the design of tools and machines. They focused on the ways of promoting individual
workers welfare & believed that motion studies would
raise worker morale.
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CLASSICAL APPROACHES HENRI FAYOL Founder of classical management school. His theory is an attempt to identify the
principles & skills that underlie effective
management. Fayol was interested in total organization &
focused on management.
Developed fourteen principles ofmanagement that applied to all
organizational situations
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MAX WEBER - BUREAUCRACY Concept given by German sociologist Max
Weber.
Org required strictly defined hierarchy; governed
by clearly defined regulations & lines ofauthority.
Bureaucracy: Org with a legalized formal &
hierarchical structure; also refers to the formalstructural process within an org.
He emphasized rationality, predictability,
impersonality, technical competence, and
authoritarianism.
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WEBERS PRINCIPLES
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KEY POINTS OF BUREAUCRACY
Authorityis the powerto hold peopleaccountable for their actions.
Positions in the firm should be held based onperformancenot social contacts.
Position duties are clearly identified.Peopleshould know what is expected of them.
Lines of authorityshould be clearly identified.Workers know who reports to who.
Rules, Standard Operating Procedures (SOPs), &
Normsused to determine how the firm operates.Sometimes, these lead to red-tape and other
problems.
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MARY PARKER FOLLETTAn influential leader in early managerial
theory.
Introduced new elements in terms of human
relations & org structure.
Was a great believer in the power of group.
Added org environment to the theory.
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CHESTER BARNARD Introduced elements to the classical theory.
Central thesis: Org goals should be kept in
balance with the aims & needs of the
individuals working for it.
Importance & universality of Informal Org
Employees zone of indifference.
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BEHAVIORAL APPROACHES Emerged with a group of management scholars
who were trained in sociology, psychology &related fields
Focuses on the psychological and sociologicalprocesses (attitude, motivations, groupdynamics) that influence employee performance
Focuses more on the people side of theorganization
Focuses on the way a manager should personallymanage to motivate employees
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THE HUMAN RELATIONS THEORY
Human relations theory is characterized by a shift inemphasis from TASK to WORKER
A more dyadic (two-way) conceptualization of
communication.
SOCIAL RELATIONSHIPS are at the heart of organizationalbehavior.
Workers communicate opinions, complaints, suggestions,and feelings to increase satisfaction and production.
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HUMAN RELATIONS MOVEMENT
The Human Relations Movement Pyramid
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THE HUMAN RELATIONS MOVEMENTAn effort to make managers more sensitive to
their employees needs
Arose out of the influences ofThe threat of unionization
The Hawthorne studies
The philosophy of industrial humanism
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HUMAN RELATIONS MOVEMENT The Threat of Unionization
The Wagner Act of 1935 legalized union-management collective bargaining, promoting
the growth of unions and union avoidance byfirms.
The Philosophy of Industrial Humanism:
Emotional factors were more importantdeterminants of productive efficiency than werephysical and logical factors.
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HOWTHORNE EXPERIMENTS Studies performed at the Western Electric
Company from 1924-1933.
An attempt to investigate the relationship
between the level of lighting in the workplace& worker productivity.
Worker productivity was measured at variouslevels of light illumination.
Social environment / informal work groupsalso had a positive influence on productivity.
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HAWTHORNE EFFECT:
The discovery that paying special attention tothe employees motivates them to put greater
efforts into their jobs. Employees would work
harder if they believed management was
concerned about their welfare & supervisorspaid special attention to them.
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IMPLICATION OF HAWTHORNE STUDIES Behavior of managers and workers in the
work setting is as important in explaining the
level of performance as the technical aspects
of the task Demonstrated the importance of
understanding how the feelings, thoughts,
and behavior of work-group members andmanagers affect performance
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THEORY X & THEORY Y Douglas McGregor proposed the two
different sets of assumptions about workers.
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MASLOWS THEORY
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MANAGEMENT SCIENCE SCHOOLOperations Research:
At the beginning of World War II, the britishers
first formed the Operational Research(OR) teamsto solve problems.
They were able to achieve significanttechnological & tactical breakthroughs.
OR are mathematical techniques for modeling,
analysis & solution of management problems.OR procedures were formalized & are known
as Management Science School.
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MODERN APPROACHES
2-45
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SYSTEMS APPROACH It views an org as a unified, purposeful system
composed of interrelated parts.
The org is looked up as a whole and a part of thelarger, external environment.
Activity of any segment of an organization willaffect every other segment.
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KEY CONCEPTS IN SYSTEMS APPROACH.. The parts that make up the
whole of a system.1.
SUBSYSTEMS
Whole is greater than the sum of is parts
Depts. that interact cooperatively aremore productive ; than operated inisolation.
2. SYNERGY
A system which interacts with itsenvironment.
A system that does not interact with itsenvironment.
3. OPEN SYSTEMS
4. CLOSEDSYSTEMS
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KEY CONCEPTS IN SYSTEMS APPROACH.. The boundary that separates each
system from its environment.
Rigid Closed System;
Flexible Open System
5. SYSTEM
BOUNDARY
Components such as information, material &energy ; which are known as inputs.
They get transformed as outputs ( goods &services).
6. FLOW
Key to systems control
The results of actions are returned to theindividual ; allowing work procedures to beanalyzed & corrected.
7. FEEDBACK
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THE ORGANIZATION AS AN OPEN SYSTEM
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SYSTEMS APPROACH IN GIST Looks upon the management as a System as an organized whole
make up of sub-systems integrated into a unity or orderly totality.
Attention should be given to overall effectiveness of the systemrather than effectiveness of any sub-system in isolation.
Emphasizes the inter-relatedness and inter-dependence of allactivities within an organization.
Forces the manager to look upon his business as an open adaptivesystem.
Every system is a part of a super system
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CONTINGENCY THEORY
Also sometimes called the Situational approach. There is no one universally applicable set of
management principles (rules) by which tomanage organizations.
The idea that the organizational structures andcontrol systems manager choose depend onare contingent oncharacteristics of the
external environment in which the organizationoperates.
Portrays each set of organizational relationshipsin its unique circumstances.
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CONTINGENCY THEORY
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POPULAR CONTINGENCY VARIABLES Organization size
As size increases, so do the problems of coordination.
Routineness of task technology
Routine technologies require organizational structures,
leadership styles, and control systems that differ from
those required by customized or non-routine
technologies.
Environmental uncertainty
What works best in a stable and predictable environment
may be totally inappropriate in a rapidly changing and
unpredictable environment.
Individual differences
Individuals differ in terms of their desire for growth,
autonomy, tolerance of ambiguity, and expectations.
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BUSINESS ENVIRONMENT
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BUSINESS
Business may be understood as the organizedefforts of the enterprise to supply consumers withgoods & services for profit.
Society cant do without business & vice versa.
Character ist ics o f 21s tCentu ry Businesses:
+ Trend towards mini organizations
+ Flexible, flat & team based structures
+Businesses are knowledge based.+ Impact of IT
+ Dispersed ownership, transparentenvironment
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BUSINESS ENVIRONMENT DEFINED Refers to the totality of all the relevant forces,
to and beyond the control of an individualbusiness enterprise & its management.
The aggregate of all conditions, events, &influences that surround & affect it.
These exercise a significant & meaningfulinfluence on the life & growth pattern.
Character is t ics of Bus iness Environment :
+ Complex, Dynamic, Multi-faceted & has
far-reaching impact.
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RELEVANCE/ IMPORTANCE Helps to develop broad strategies & long term
policies
Enables t analyze competitors strategies
Will keep organizations dynamic in approach
Forsee impact of socio economic changes atthe national & international level
BUSINESS ENVIRONMENT
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Business
Decision
Internal Environment
Mission / Objectives
Management Structure
Internal Power RelationshipPhysical Assets & facilities
Company image
Human resources
Financial Capabilities
Technological Capabilities
Marketing Capabilities
Financiers
Suppliers
CustomersCompetitors
Public
Mktg Intermediaries
Micro Environment
Economic
Technological
Global
Demographic
Socio-Cultural
Political
Macro Environment
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INTERNAL ENVIRONMENT All factors within the organization which impart
strengths or cause weaknesses of strategic nature.
Control lable factors; wh ich inc lude:
Vision
Mission
Objectives
Management Structure
Human Resources Financial Factors
Company Image and Brand Equity
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EXTERNAL ENVIRONMENT Includes all factors outside the organization
which provide opportunities or pose threats
to the organization.
Uncontrollable factors.
Consists of Micro & Macro Environment
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MICRO ENVIRONMENT Micro Environment consists of factors in the
immediate environment.
Facto rs Inc lude:
SuppliersCustomers
Marketing Intermediaries
Competitors
Publics
Financial Communities
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MACRO ENVIRONMENT Comprises of general trends & forces that
may sooner/ later alter the way organization
operates.
Consists of Economic & Non economicenvironment
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ECONOMIC ENVIRONMENT Economic Systems, Policies & Plans
Budgets
Economic Indices GDP, Per Capita Income,
Consumer Price changes etc.
Investment Criterias & Savings
International Transactions
New Economic Policies
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NON ECONOMIC ENVIRONMENTSOCIO
CULTURAL ENVIRONMENT:
Social Customs& Rituals
Lifestyle patterns
Family structure
Role & position of men, women, aged &
children in society.
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NON ECONOMIC ENVIRONMENTDEMOGRAPHIC ENVIRONMENT:
Growth of population
Age Composition
Life Expectancy
Sex Ratio
FertilityandMortalityrates Inter-state migration
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NON ECONOMIC ENVIRONMENTTECHNOLOGICAL ENVIRONMENT:
Plays pivotal role in creating and changing an
organizations task environment
New technological innovation Technological Advances
Improved access to services (e.g. Banking)
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NON ECONOMIC ENVIRONMENTPOL ITICAL ENVIRONMENT:
The influence exerted by the three politicalinstitutions i.e.. legislature, executive andjudiciary in shaping, directing, developing andcontrolling business activities.
Political parties in power
Foreign Policy
Laws governing business The Judicial System
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NON ECONOMIC ENVIRONMENTGLOBAL ENVIRONMENT:
Growth of world economy
International Institutions ILO, WTO
Economic relations between nations
Global HR skills, mobility
Global Technology & Quality standards Global Demographic patterns
3.3
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ENVIRONMENTALLY-CONSCIOUS BUSINESS PRACTICES
Cut back on environmentally unsafe operations
Compensate for environmentally risky endeavors
Avoid confrontation with state and federal pollution
control agencies Comply early with government regulations
Promote new manufacturing technologies
Recycle wastes
AN ORGANIZATIONS ENVIRONMENT
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Industry SectorCompetitors,
Industry size andCharacteristics, Related
Industries
Raw Materials
Sector
Suppliers,Manufacturers,
Real Estate
HumanResources
SectorLabor Market, Employment
Agencies, Universities, Training
Schools, Employees in Other
Companies, Unionization
Financial Resources Sector
Stock Markets, Banks,
Savings and Loans,
Private Investors
Market
Sector
Customers, Clients,
Potential Users of
Products and Services
Technology
Sector
Techniques of
Production, Science,
Research Centers,
Automation, New
Materials
Economic
Conditions Sector
Recession, UnemploymentRate, Inflation rate, Rate of
Investment, Economics,Growth
Government Sector
City, State, Federal Laws and
Regulations, Taxes, Services,
Court System, Political
Processes
Socio-Cultural sector
Age, Values, Beliefs, Education,
Religion, Work Ethic, Urban vs.
Rural, Birth Rate
ORGANIZATION
DOMAIN
Task Environment
Macro
Environment
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