Principles of Management
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Transcript of Principles of Management
Historical Developmentand Overview of
Management
Reporters:• Elissa L. Importante• Nochelle S. Urboda, REB• Bon Carlo M. Melocoton, CPA
Management…
• The verb manage comes from the…
– Italian word “managgiare” which means to handle, train, be in charge of
– Latin word “manus” which means hand
– French word “mesnagement” later turned to “ménagement”
Management…
• Is the art of getting things done through other.
• Harold Koontz definition “is the process of designing and maintaining an environment in which individuals, working together in groups efficiently to accomplish selected aims”
Management Concepts…
• Managers carry out their managerial function• Applies to any kind of Organization• Applies to managers at all Organizational level• Aims to create surplus• Concerned with productivity, implies effectiveness
and efficiency• Management of 4 M’s in the Organization
MEN MACHINE
MATERIALS MONEY
Characteristics of Management…
• Management is…
Universal Purposely
Integrative Function Social Process
Multi Disciplinary Continuous Process
Intangible ART as well as SCIENCE
Management as an ART…
• Art involves the physical application of personal skills and knowledge to achieve concrete results
• It is a practical way of doing specific things
• Art is a practice based and perfection in it requires continuous practice over a long period of time
Management as an ART…
• Art is a personalized process and every artist has his own style. Art is essentially creative and the success of an artist is measured by the results he achieves
• The main elements of an art are –
Personal Skills Practical Know-how
Result Orientation Creativity
Constant practice aimed at perfection
Management as an ART…
• Management is basically an art because of the following reasons –
1. A manager applies his knowledge and skills to coordinate the efforts of his people
2. Management seeks to achieve concrete practical results
Management as an ART…
• Management is basically an art because of the following reasons –
3. Management is creative. It brings out new situation and converts into output
4. Effective Management lead to realization of Organizational and other goals. Mastery in Management requires a sufficiently long period of experience in managing
Management as SCIENCE…
• The essential elements of Science –
1. is a systematized body of knowledge
2. contains underlying principles and theories developed through continuous observation, experimentation and research
Management as SCIENCE…
• The essential elements of Science –
3. universal applicability
4. organized body of knowledge can be taught and learnt in class room and outside
Management as SCIENCE…
• Management is a science because it contains all the essential of science,
• Thus, the theory (Science) and practice (Art) of Management go side by side for the efficient functioning of an organization.
Management as a PROFESSION…
• The essential attribute of a profession
A well-defined and organized body of
knowledge
Learning and Experience
Entry restricted by qualification
Recognized national body
Ethical code of conduct
Dominance of service motive
Management as a PROFESSION…
• However, Management cannot be a FULLY PLEDGED PROFESSION due to the following shortcomings
– Skills not fully developed– No uniform method of entry– Objective is monetary rather than service– Ethical code is not strict– Associations are not statutory bodies
Administration VS Management…
# Administration Management
1 It is the higher level functions
It is the lower level functions
2 It refers to the owners of the organization
It refers to the employees
3 Concerned with decision making
Concerned with execution of decision
4 It acts through the management
It acts through the organization
5 Lays down broad policies and principles for guidance
Executes these policies into practice
Levels of Management…
• To analyze, evaluate and deal with the environmental forces
• To establish overall long term goals and broad policies of the company including the master budget
• To appoint departmental and other key executives
• To represent the company to the outside world
• To coordinate the activities and efforts of different department
Top Management
Middle Management
Lower Management
Levels of Management…
• To interpret and explain the policies framed by top management
• To compile and issue detailed instruction regarding operations
• To cooperate among themselves so as to integrate various parts of the division or a department
• To motivate supervisory personnel to work for organization’s goals
• To develop and train supervisory and operative personnel
Middle Management
TopManagement
Lower Management
Levels of Management…
• Also known as Supervisory and Operating Management
• To plan day to day production within the goals lay down by higher authority
• To assign jobs to workers and to make arrangement for their training and development
• To supervise and control workers and to maintain personal contact with them
Lower Management
TopManagement
Middle Management
Roles of Manager…
Interpersonal
Informational
Decisional
FIGUREHEAD- as a symbolic head of an organization,
the manager performs routine duties of a legal nature
LEADER- Hiring, Training, Motivating and Guiding
subordinates
LIAISON- Interacting with other managers outside
the organization to obtain favors and information
Roles of Manager…
Interpersonal
Informational
Decisional
MONITOR- seeks and receive information
concerning internal & external events so as to gain understanding of the organization and its environment
DISSEMINATOR- transmits information to subordinates,
peers and superiors within the Organization
SPOKESPERSON- speaking on behalf of the Organization
and transmitting information on Organization plans, policies and actions to outsiders
Roles of Manager…
Interpersonal
Informational
Decisional
ENTREPRENEUR- initiating changes or improvements in
the activities of the organization
DISTURBANCE HANDLER- taking charge and corrective action
when organization faces unexpected crises
RESOURCE ALLOCATOR- distributing organization’s resources like
money, time, equipment, and labor
NEGOTIATOR- representing the organization in
bargaining and negotiations with outsiders and insiders
Importance of Management…
Management is the dynamic life – giving element in every business. Without it the resources of production remain resources and never become production.
Sound Management provides the following benefits:
•Achievement of group goals •Optimum utilization or resources
•Fulfillment of social obligations •Economic growth
•Stability •Human development
•Meets the challenge of change
Need for Management…
• To increase efficiency
• To crystallize the nature of Management job
• To improve research in Management
• To attain social goals
Management Timeline…
MANAGEMENT APPROACH
DATES EMPHASIS
1. Classical Approach
Scientific Approach 1880s Traditional rules of thumb are replaced by precise procedures developed after careful study of an individual work
Administrative Management
1940s Gives idea about the primary functions of management and the 14 principles of management
Bureaucratic Management
1920s Replaces traditional leadership and charismatic leadership with legal leadership
2. Behavioral Approach
Human Relations 1930s Workers’ attitudes are associated with productivity
Management Timeline…
MANAGEMENT APPROACH
DATES EMPHASIS
Behavioral Science 1950s Gives idea to understand human behavior in the organization
3. Quantitative Approach
Management Science (Operation Research)
1940s Uses mathematical & statistical approaches to solve management problems
Production & Operations Management
1940s This approach focuses on the operation & control of the production process that transforms resources into finished goods & services
Management Timeline…
MANAGEMENT APPROACH
DATES EMPHASIS
4. Recent Developments
Systems Approach 1950s Considers the organization as a system transforms inputs into outputs while in constant interaction with its environment
Contingency Approach
1960s Applies management principles and processes as dictated by the unique characteristics of each situation
INPUT PROCESS INPUT
EXTERNAL ENVIRONMENT
FEED BACK
Henry Fayol (1841-1925)…
• He is a French Industrialist known to be the “Father of Management”
• He contributed the “14 Principles of Management” which is widely applied in all the organizations
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Henry Fayol (1841-1925)
14 Principles of Management…
Work should be divided in proper way with reference to the available time. In general worker on the same job and the managers on the same duty acquire ability sureness and accuracy which increase their output.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Division of Work
14 Principles of Management…
AUTHORITY – it is the power given to a person to get work from his subordinates
RESPONSIBILITY – It is the kind and amount of work expected of from a man by his superior. One of the essential elements of a good management is delegation of authority to the lower levels of management and fixing responsibility on town
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Authority and Responsibility
14 Principles of Management…
Discipline is very essential for the smooth running of organizations. To Fayol, discipline will result from good leadership at all levels of the organization, fair agreements and judiciously enforced penalties for infractions.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Discipline
14 Principles of Management…
An employee must receive orders and instructions from one supervisor only. Multiple commands will cause conflicts and confusions. A sound management should avoid dual commands.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Unity of Command
14 Principles of Management…
Unity of direction signifies each group of activities having the same objectives must have one head and one plan. All the groups should coordinate and work together to achieve the common goal.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Unity of Direction
14 Principles of Management…
Every employee is working in an organization and his interest is to earn money to meet his personal needs. The general interest of the organization is development and the progress of the organization.
The employees should give importance first to the general interest than his individual interest. It will lead to effective management of the organization.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Subordination of Individual Interest to General Interest
14 Principles of Management…
Remuneration should be fair for both the employees and employers. The wage payment systems should satisfy the employees.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Remuneration of Personnel
14 Principles of Management…
The organization is centralized when the power is connected with one person. If the power is fully distributes to the subordinates of the organization is fully decentralized. For effectives management of people decentralization is necessary. Decentralization helps to take a quick decision on all important problems.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Centralization
14 Principles of Management…
Scalar chain principles states that instructions and orders should be sent from the top management to the lower management.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Scalar Chain
14 Principles of Management…
Two types of order 1) Materials order
2) Social order.
In any organization materials and for men are correct places provided. So that materials can be easily taken out and men easily located and also save time.
• Materials order:” A place for everything in its place”
• Social order:” A place for everyone and everyone in place”.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Order
14 Principles of Management…
Equity refers to the treatment of employees equally. Equal treatment of the employees helps to achieve organizational goals.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Equity
14 Principles of Management…
A high employee turnover rate is not good for the efficient functioning of any organization.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Stability of Tenure of Personnel
14 Principles of Management…
It is concerned with thinking and execution of a plan. When employees come forward with new ideas, they must be encouraged by the superiors. It will create the morale of the employees.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Initiative
14 Principles of Management…
This means union is strength. In organization employees should be harmony and unity. It improves employee morale.
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Esprit-de-corps
Critical Evaluation…
• Too formal• Not pay adequate attention to
workers• Vagueness• His principle hinted but did not
elaborate that management can and should be taught
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Centralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Unity of Direction
Initiative
Esprit-de-corps
Critical Evaluation to H. Fayol
F.W. Taylor (1856-1915)…
• He is an American Mechanical Engineer known to be the “Father of Scientific Management”
• “The art of knowing exactly what you want men to do and see that they do it in the best and cheapest way.”
F.W. Taylor (1856-1915)
Principles of Scientific
Management
Techniques of Scientific
Management
Scientific Management…
• Science not rule of thumb• Harmony not discord• Cooperation not individualism• Maximum output in place of
restricted output• Development of each individual to
his greatest efficiency and prosperity
• Mental Revolution – Mental attitude of the two parties
Principles
Principles of Scientific
Management
Techniques of Scientific
Management
Scientific Management…
• Scientific task and Rate-setting• Planning the task• Selection and training• Standardization and
simplification• Specialization (functional
foremanship)• Mental Revolution
Techniques/Elements
Principles of Scientific
Management
Techniques of Scientific
Management
Critical Evaluation…
• Mechanistic Approach
• Unrealistic Assumptions
• Narrow View
• Impracticable
• Exploitation of Labor
Critical Evaluation to F.W. Taylor
Principles of Scientific
Management
Techniques of Scientific
Management
Other Contributors…
Professor of Industrial Psychology at the Harvard Business School
Hawthrone Experiments1. Illumination experiments
2. Relay assembly test room experiments
3. Mass interviewing programme
G.E. Mayo (1880-1949)George Elton
Mayo
Henry Lawrence Gantt
Frank Bunker Gilbreth
Other Contributors…
• Workers working in a group develop bond of relationships
• Behavior at workplace depends on their mental state, emotions and prejudices
• Human and liberal attitude of supervisor helps in improving performances
• Managerial skills and technical skills are not necessary to be a successful leader
Outcome of Hawthrone ExperimentsGeorge Elton
Mayo
Henry Lawrence Gantt
Frank Bunker Gilbreth
Other Contributors…
An American Mechanical Engineer and Management Consultant who is famous for his “Gantt Chart” used for scheduling and control of work
Task and Bonus plan (Minimum wages is guaranteed to all workers irrespective of output, Extra wages are paid for extra work)
H.L. Gantt (1861-1919)George Elton
Mayo
Henry Lawrence Gantt
Frank Bunker Gilbreth
Other Contributors…
Was an early advocate of scientific management and a pioneer of time and motion study, and fatigue study
Work simplification – 3 positional promotion plan
- Present position
- Position to be held before promotion to his present position
- The next higher position
F.B. Gilbreth (1868-1924)George Elton
Mayo
Henry Lawrence Gantt
Frank Bunker Gilbreth
Function of Management…
FUNCTIONS SUB FUNCTIONS
Planning •Forecasting•Policy making•Programming•Problem solving•Innovation
•Decision making•Strategy formulation•Scheduling/Budgeting•Investigation•Research
Organizing •Grouping of functions•Delegation•Decentralization
•Departmentalize•Activity analysis•Task allocation
Staffing •Manpower planning•Job analysis•Recruitment•Selection
•Training•Placement•Compensation•Promotion/Appraisal
Directing •Supervision•Motivation
•Communication•Leadership
Controlling •Fixation of standard•Recording
•Measurement•Reporting corrective action
Function of Management…
Managerial Function
Planning
Organizing
StaffingDirecting
Controlling
Types of Business Organization…
• When organizing a new business, one of the most important decisions to be made is choosing the structure of a business
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Types of Business Organization…
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Sole Proprietorship
• The individual entrepreneur supplies the entire capital, employs labor and machine
• Individual uses his own skill in the management of affairs and is solely responsible for the good or bad result of its operation and working
Types of Business Organization…
MERITS DEMERITS
Easiest and least expensive from of ownership to organize
Unlimited liability and are legally responsible for all debts against the business
Sole proprietor are in complete control, within the law, to make all decisions
Their business and personal assets are 100% at risk
Sole proprietor receives all income generated by the business to keep or reinvest
Are limited to using funds from personal savings
Profits from the business flow-through directly to the owner’s personal tax return
Have a hard time attracting high-caliber employees
The business is easy to dissolve, if desired
Have a hard time to raise investment funds
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Sole Proprietorship
Types of Business Organization…
• Two or more persons come together and start a business with their own funds, the parties agree to share the profits as well as bear the losses in the agreed proportion.
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Partnerships
Types of Business Organization…
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Partnerships
MERITS DEMERITS
Partnerships are relatively easy to establish, however time should be invested in developing the agreement
Partners are jointly and individually liable for the actions of the other partners
With more than one owner, the ability to raise funds may be increased
Profits and decisions must be shared with others, disagreements can occur
The profits from the business flow directly through to the partners’ personal taxes
Some employee benefits are not deductible from business income on tax returns
Prospective employees may be attracted to the business if given the incentive to become a partner
The partnerships have a limited life; it may end upon a partner withdrawal or death
Types of Business Organization…
• A corporation is considered by law to be unique “entity”, separate and apart from those who own it
• A corporation can be taxed, sued, or enter into contractual agreements
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Corporations
Types of Business Organization…
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Corporations
MERITS DEMERITS
Shareholders have limited liability for the corporation’s debts
The process of incorporation requires ,ore time and money than other organization forms
Generally, shareholders can only be held accountable for their investment in stock of the company
Corporations are monitored by state and some local agencies
Corporations can raise additional funds through the sale of stock
Incorporating may result in higher overall taxes
A corporation may deduct the cost of benefits it provides to officers and employees
Dividends paid to shareholders are not deductible from busn income, thus can be taxed twice
Types of Business Organization…
• Capital is contributed by a large number of person in the form of shares of different values– Private Limited Company– Public Limited Company
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Joint Stock Company
Types of Business Organization…
Private Limited Company
- can be formed by 2 to 50 persons. In this, transfer of shares is limited to members only. The government does not interfere in the working of the company
Public Limited Company
- membership is open to general public. The minimum required number to form such company is 7, but there is no upper limit
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Joint Stock Company
Types of Business Organization…
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Joint Stock Company
MERITS DEMERITS
The liability, being limited, of the shareholder bear no risk and therefore more persons are encourage to invest capital
It is difficult to preserve secrecy in these companies
Because of large number of investors, the risk of loss is divided
It requires a large number of legal formalities to be observed
Joint stock companies are not affected by the death or the retirement of the shareholders
Lack of personal interest
Types of Business Organization…
• Wholly owned by the Government. It is usually established by a Special Act of the parliament
• Special statute also prescribes its management pattern power duties and jurisdictions
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Public Corporations
Types of Business Organization…
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Public Corporations
MERITS DEMERITS
These are expected to provide better working conditions to the employees and supported to be better managed
Any alteration in the power & Constitution of Corporation requires an amendment in the particular Act, which is difficult and time consumingQuick decisions can be
possible, because of absence of bureaucratic control
More flexibility as compared to departmental organization
Public corporations possess monopoly & in the absence of competition, these are not interested in adopting new techniques & in making improvements in their work
Since the management is in the hands of experienced & capable managers, these are managed more efficiently than that of government departments
Types of Business Organization…
• Share capital is held by the government or partly by government and partly by one or more state government
• Managed by the elected board of directors which may include private individuals
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Government Companies
Types of Business Organization…
Sole Proprietorship
Partnerships
Corporations
Joint Stock Company
Public Corporations
Government Companies
Government Companies
MERITS DEMERITS
It is easy to form Misuse of excessive freedom cannot be ruled out
The directors of a government company are free to take decisions & are not bound by certain rigid rules and regulation
The directors are appointed by the government so they spend more time in pleasing their political masters & top government officials, which results in inefficient management
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
On the basis of the extent of intimacy with the firm, the environmental factors may be classified into different types namely internal and external
EXTERNAL
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
EXTERNAL
INTERNAL ENVIRONMENTAL FACTORS - has a direct impact on the business - generally controllable because the company has control over these factors - these factors are as follows:
a. Resources- these can be tangible, intangible and human resources
b. Capabilities - firm’s capacity for undertaking a particular
productive activityc. Culture - specific collection of values and norms that
are shared by people and groups in an organization
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
EXTERNAL
EXTERNAL ENVIRONMENT FACTORS - indirect influence on the business - uncontrollable by the business - two types of this factor are as follows
1. MICRO ENVIRONMENTAL FACTORS• External factors close to the company that
have a direct impact on the organizations process
2. MACRO ENVIRONMENTAL FACTORS• Consists of non specific aspects in the
organization’s surroundings that have potential to affect the organization’s strategies
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
EXTERNAL
MICRO ENVIRONMENTAL FACTORS
a. Shareholders• Any person or company that owns at least
one share in a companyb. Suppliers
• Individual or an organization involved in the process of making a product or service available for use or consumption by a customer
c. Distributor• Entity that buys non-competing products,
warehouse them and resells them to retailers or direct end user
d. Customers• A person, company, or other entity that
buys goods and services produced by other person, company or other entity
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
EXTERNAL
MICRO ENVIRONMENTAL FACTORS
e. Competitors• A company in the same industry or a
similar industry which offers a similar product or services
f. Media• Positive or adverse media attention on an
organizations product or service can in some cases make or break an organization
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
EXTERNAL
MACRO ENVIRONMENTAL FACTORS
a. Political Factors• Include government regulations and legal
issues and define both formal and informal rules under which the firm must operate
• tax policy; • employment laws; • environmental regulations, • trade restrictions and tariffs; • political stability
b. Economic Factors• Affects the purchasing power of potential
customers and the firm’s cost of capital• economic growth;• interest rates; • exchange rates; • inflation rate
Classification of Environmental Factors…
MACRO Environment
MICRO Environment
INTERNAL Environment
EXTERNAL
MACRO ENVIRONMENTAL FACTORS
c. Social Factors• Include demographic and cultural aspects
of the external macro environment.• These factors affect customer needs and
the size of potential markets• health consciousness;• population growth rate;• age distribution;• career attitudes;• emphasis on safety
d. Technological Factors• This can lower barriers to entry, reduce
minimum efficient production levels and influence outsourcing decisions
• R&D activity; technology changes• technology incentives; automation
Trends and Challenges of Management in Global Scenario…
• The management functions are planning, organizing, directing, and controlling are just as relevant to international managers as to domestic managers.
• International managers need to…– Have a clear view of where they want their firm to be in
the future– Organize to implement their plans– Motivate those who work to them– Develop appropriate control mechanisms
Trends and Challenges of Management in Global Scenario…
• Planning in a Global Scenario – to effectively plan and make decisions in a global economy, managers must have the following– Broad-based understanding of both environmental
issues and competitive issues– Need to understand local market conditions and
technological factor that will affect their operations– At the corporate level, executives need a great deal
information to function effectively– Variety of strategic decisions about their organizations
Trends and Challenges of Management in Global Scenario…
• Organizing in a Global Scenario– Managers in international business must also attend to
a variety of organizing issues– The firm has made the decision to give local managers
a great deal of responsibility for how they run their business
– Managers in an international business must address the basic issues of organization, structure and design, managing change, and dealing with human resources
Trends and Challenges of Management in Global Scenario…
• Directing in a Global Scenario– Individual managers must be prepared to deal with
cultural and other factors as they interact people from different cultural backgrounds
– Managers must understand… • How cultural factors affect individuals• How motivational processes vary across cultures• How the role of leadership changes in different
cultures• How communication varies across cultures• How interpersonal and group processes depend on
cultural background
Trends and Challenges of Management in Global Scenario…
• Controlling in a Global Scenario– Managers in international organizations must also be
concerned with control– Distances, time zone differences, and cultural factors
also play a role in control– Basic control issues for the international manager revolve
around operation’s management productivity, quality, technology and information system
They say that dedicating is one of the most beautiful acts of love one can
perform.
I would argue that it is even more beautiful to dedicate this to you without saying my
name
Historical Developmentand Overview of
Management
END OF PRESENTATION