CHAPTER I - NATURE AND CONCEPT OF MANAGEMENT

1. Definition and Functions of Management

Management involves coordinating and overseeing
the work activities of others so that their activities are
completed efficiently and effectively.
Coordinating and overseeing the work of others is what
distinguishes a managerial position from a non managerial
one.
Efficiency is getting the most output from the least
amount of inputs in order to minimize resource costs.
Efficiency is often referred to as “doing things right”
Effectiveness is completing activities so that
organizational goals are attained and is often described as
“doing the right things”
IMPORTANCE OF MANAGEMENT
1. Management is goal oriented
Management is concern with achievement of specific goals. It is
always directed towards achievement of objectives. The success
of management is measured by the extent to which objectives are
achieved.
2. Management is associated with group efforts
The business comes into existence with certain objectives which
are to be achieved by a group and not by one person alone.
Management gets things done by, with and through the efforts of
group members. It co-ordinates the activities and actions of its
members towards a common goal.
3. Management is intangible
It is an unseen force, its presence can be evidence by the result of
its efforts up to date order but they generally remain unnoticed.
IMPORTANCE OF MANAGEMENT (con’t)
4. Management is an activity and not a person or group of person
Management is not people or not a certain class but it is the
activity, it is the process of planning, organizing, directing and
controlling to achieve the objectives of the organization.
5. Management is situational
Management does not advice best way of doing things. Effective
management is always situational. A manager has to apply
principles, approaches and techniques of management after taking
into consideration the existing situations.
6.Management is universal
Most of the principles and techniques of management are
universal in nature. They can be applied to government
organization, military, educational institutes, religious institutes
etc. They provide working guidelines which can be adopted
according to situations.
IMPORTANCE OF MANAGEMENT (con’t)
7. Management is concern with people
Since management involves getting things done through others
only human being performed this activity with the help of
planning and control. The element man can not be separated
from the management.
8. Management is the combination of art, science and
profession
Management makes use of science as well as art. It is science
because it collects knowledge with the methods and data,
analyzes and measures it and decision is taken with the help of
experiment. It is a systematic body of knowledge. Art means
application of knowledge for solving various problems. In
modern times there is separation of ownership and
management, so professional experts are appointed.
 The major functions of management

Planning :
It includes forecasting,
formation of objectives,
policies, programmes,
producer and budget It
determines in advance
what should be done,
why should be done,
when, where, how should
be done.
 The major functions of management

Directing:
It includes decision
making, supervising,
guidance etc. It
reflects providing
dynamic leadership.
 The major functions of management

Organizing:
It includes
departmentation,
delegation of authority,
fixing of responsibility
and establishment of
relationship. It is a
function of providing
everything useful to the
business organization.
 The major functions of management

Staffing:
It includes
manpower planning,
recruitment,
selection, placement
and training.
 The major functions of management

Controlling
It is a process of
checking actual
performance
against standard
performance
2. The Evolution of Management Theory
 Why do we need to Study Management Theory?
• Theories are perspectives with which people
make sense of their world experiences
• Theories provide a stable focus for
understanding what we experience (Henry Ford–
large and compliant work force; Alfred Sloan of
GM on market strategy)
• Theories enable us to communicate effectively
and thus move into more complex relationships
with other people (Ford / Sloan)
• Theories make it possible to keep learning about
our world. Theories have boundaries. Triggers to
look beyond. (Cold war, Model T and GM)
 Management Theory
1. SCIENTIFIC
MANAGEMENT
THEORY
Frederick W. Taylor (1856–
1915) is best known for
defining the techniques of
scientific management, the
systematic study of
relationships between
people and tasks for the
purpose of redesigning the
work process to increase
efficiency.
 Management Theory
2. Administrative
Management
Theory (Max
Weber)
–The study of how to
create an
organizational
structure that leads
to high efficiency
and effectiveness.
 3. Behavioral Management Theory
Management Theory
(Mary Parker Follett)
– The study of how managers
should behave to motivate
employees and encourage
them to perform at high
levels and be committed to
the achievement of
organizational goals.
– Focuses on the way a
manager should personally
manage to motivate
employees.
 Management Theory
4. Management Science Theory
An approach to management that uses rigorous
quantitative techniques to maximize the use
of organizational resources.
 Management Science Theory

–Quantitative management — utilizes linear

programming, modeling, simulation systems
and chaos theory.
–Operations management —techniques used
to analyze all aspects of the production
system.

17
 5.Organizational
Environment Management Theory
Theory
The set of forces and
conditions that
operate beyond an
organization’s
boundaries but affect a
manager’s ability to
acquire and utilize
resources
 3. FUNCTIONS, ROLES, AND SKILLS OF A
MANAGER
MAIN FUNCTIONS OF A
MANAGER
1. PLANNING – This step
involves mapping out exactly
how to achieve a particular
goal.
Example: improve company sales
 Manager decide which steps are necessary to
accomplish that goal.
 Steps include: advertising, inventory, and sales
staff
MAIN FUNCTIONS OF A MANAGER
2. Organizing: After a plan is
in place a manager needs
to organize his team and
materials according to the
plan.
2 important elements
 Assigning work
 Granting authority
MAIN FUNCTIONS OF A MANAGER

3. Staffing: After a manager discerns his

area’s needs he may decide to beef
up his staffing by recruiting,
selecting, training, and developing
employees.
 Job of HR department
MAIN FUNCTIONS OF A MANAGER

4. LEADING: Involves motivating, .

communicating, guiding, and
encouraging.
 It requires the manager to coach, assist and solve
problem
MAIN FUNCTIONS OF A MANAGER
5. CONTROLLING: needs to continuously
check results against goals and take
any corrective actions necessary to
make sure that his area’s plans remain
on track.
 ROLES OF A MANAGER

A manager wears many hats. Not only a

manager a team leader, but he or she is also
a planner, organizer, cheerleader, coach,
problem solver, and decision maker — all
rolled into one.
 The Nature of Managerial Work
Henry Mintzberg

3 categories:
Interpersonal: This role involves human interaction.
Informational: This role involves the sharing and
analyzing of information.
Decisional: This role involves decision making.
 MINTZBERG’S SET OF TEN ROLES
CATEGORY ROLE ACTIVITY
1. Informational Monitor Seek and receive
information; scan
periodicals and reports;
maintain personal contact
with stakeholders.
Disseminator Forward information to
organization members via
memos, reports, and phone
calls
Spokesperson Transmit information to
outsiders via reports,
memos, and speeches.
 MINTZBERG’S SET OF TEN ROLESc
Interpersonal Figurehead Perform ceremonial and
symbolic duties, such as
greeting visitors and
signing legal documents.
Leader Direct and motivate
subordinates; counsel and
communicate with
subordinates.
Liaison Maintain information links
both inside and outside
organization via mail,
phone calls, and meetings
 MINTZBERG’S SET OF TEN ROLESc
Decisional Entrepreneur Initiate improvement projects;
identify new ideas and delegate idea
responsibility to others.

Disturbance Take corrective action during

Handler disputes or crises; resolve conflicts
among subordinates; adapt to
environments.
Resource Allocator Decide who gets resources; prepare
budgets; set schedules and
determine priorities.

Negotiator Represent department during

negotiations of union contracts,
sales, purchases, and budgets.
 The Organization’s Environments
External environment –
everything outside an
organization’s boundaries that
might affect it. ( w & T
General environment
Task environment

Internal envirownment – the

conditions and forces within
an organization. (S * O)

31
 The
Organization
and Its
Environments
 The External Environment
General environment is the set of broad
dimensions and forces in an organization’s
surroundings that create its overall context.
International dimension
Technological dimension
Political-legal dimension
Socio-cultural dimension
Economic dimension
 The General Environment
• Economic dimensions: the overall
health and vitality of the economic
system in which the organization
operates.
• It includes the impact of economic
factors like e.g. interest rates,
unemployment rates, retail price index
(inflation), gross domestic product(GDP),
exchange rates
 When there is a strong economy,
people have more money to spend on
goods and services.
 The General Environment
• Technological Dimension: the
methods available for
converting resources into
products or services.
Assembly-line techniques for car
manufacturing and
hamburger assembly at
McDonald’s
Use of internet in all areas of
business
 The General Environment
• Socio-cultural Dimensions :
Managers must adapt their
practices to the changing
expectations of the society and
their life style.
Socio-cultural processes determine
the products, services and standards
of conduct that society is likely to
value.
Consumer tastes change over time
– preferences for color, style, taste,
etc change from season to season.
[McDonald’s response to healthier
food selections]
 McDonald’s
General
Environment

37
 The General Environment. . . (continued)

Political-Legal dimension: the

government regulation of
business and the general
relationship between
business and government.
• The legal system partially defines what an
organization can and cannot do.
• These are often seen in the laws of a
society.

38
 Additional Dimensions
International Dimension
The extent to which an organizations is involved in or
affected by business in other countries.
Multinational firms are clearly affected by
businesses in other countries. [car and aircraft
manufacturers, restaurants, electronics firms,
etc]
 The External Environment. . . (continued)

Task environment consists of specific

organizations or groups that influence an
organization.
Competitors
Customers
Suppliers
Strategic partners
Regulators
 The Task Environment . . . (continued)

Competitors

Other organizations that compete with

our organization for resources.
Organizations compete for bank loans, property, quality
labor, technological breakthroughs, patents, scarce raw
materials.
 The Task Environment . . . (continued)

Customers
Whoever pays money to acquire an
organization’s products or services.
Customers of major organizations may
include: schools, hospitals, government
agencies, wholesalers, retailers and
manufacturers.
 The Task Environment . . . (continued)

Suppliers
Organizations that provide resources for
other organizations.
McDonald’s depends on Coca-Cola for its
soft drinks.
 The Task Environment. . . (continued)

Strategic Partners (Allies)

Two or more companies that work together in

joint ventures or similar arrangement.
McDonald’s with Wal-Mart and Disney.
 The Task Environment . . . (continued)

Regulators
A unit that has the potential to control,
legislate or otherwise influence the
organization's policies and practices.
Regulatory agencies – created by the
government to protect the public from
certain business practices or to protect
organizations from one another. [DTI
,SEC)
McDonald’s Task
Environment
The Internal Environment. . . (continued)

Owners
People who can claim property rights to an
organization.
Single individual who establishes and runs
a small business.
Partners who jointly own a business.
Shareholders who own shares of stock in a
corporation or other organization.
 The Internal Environment . . . (continued)

Board of Directors

Governing body elected by a

corporation's stockholders and charged
with overseeing the general management
of the firm to ensure that it is being run
in a way that best serves the
stockholders’ interests.
 The Internal Environment . . .(continued)

Employees

The nature of the workforce is changing

in terms of gender, ethnicity, age, etc.
Workers are also demanding more job
ownership – partial ownership in the
company or more say in how they
perform their jobs.
 The Internal Environment . . .(continued)

Physical Work Environment

An important consideration for many

businesses.
Facilities may be spread out among various
buildings in the city, in rural or suburban areas,
or in campus-like facilities.
Some facilities have traditional offices on each
side of a hall, some modular cubicles with
partial walls, or an even more open
arrangement.
 The Internal Environment . . .(continued)

Culture
A set of values, beliefs, behaviors, customs and
attitudes that helps the members of the
organization to understand what it stands for,
how it does things and what it considers
important.
Plays an important part in shaping
management behavior.
 PLANNING
•Planning is the first managerial
function to be performed. It is
concerned with deciding in advance
what is to be done in future, when,
where and by whom it is to be done. It
is a process of thinking before doing.
“Without the activities determined by planning,
there would be nothing to organize, no one to
activate and no need to control”.
George R. Terry
 Planning
• Identifying and selecting appropriate goals
and courses of action for an organization.
– The planning function determines how effective
and efficient the organization is and determines
the strategy of the organization.
• Three Steps in the Planning Process:
– Deciding which goals to pursue.
– Deciding what courses of action to adopt.
– Deciding how to allocate resources.
 (1)
Mission
or Purposes,
(2) Objectives or goals,
(3) Strategies,
(4) Policies,
(5) Procedures,
(6) Rules,
(7) Programs, and
(8) Budgets

Hierarchy Of Plans
 Hierarchy of Plans

• The mission, or purpose, identifies the basic purpose or

function or tasks of an enterprise or agency or any part of it
• Objectives, or goals, are the ends toward which activity is
aimed
• Strategy is the determination of the basic long-term objectives
of an enterprise and the adoption of courses of action and
allocation of resources necessary to achieve these goals
• Policies are general statements or understandings that guide or
channel thinking in decision making
• Procedures are plans that establish a required method of
handling future activities
 Hierarchy of Plans

• Rules spell out specific required actions or non actions,

allowing no discretion
• Programs are a complex of goals, policies, procedures, rules,
task assignments, steps to be taken, resources to be
employed, and other elements necessary to carry out a given
course of action
• A budget is a statement of expected results expressed in
numerical terms
 KINDS OF PLANNING

KINDS OF PLANNING

Organizational level Focus Time period

Corporate Strategic Long range
Divisional Operational Medium range
Functional Tactic Short range
 ORGANIZATIONAL PLANNING
• Corporate planning or top level planning: It lays
down the objectives, policies and strategies of an
organization. Usually made for a longer time
period.
• Divisional planning or middle level planning: It is
related to a particular department or division. It
lays down the objectives, policies and strategies
of a department.
• Sectional planning or lower level planning:
focused on laying down detail plans for the day to
day guidance.
 FOCUSED PLANNING
1. Strategic planning: deciding the objectives and to
decide the resource in order to realize the
objectives. Done by the top management.
2. Operational planning: ensuring efficient use of
resources and to develop a control mechanism
so as maximum efficiency is ensured.
3. Tactical planning: made for short term moves.
Required to meet the sudden changes in the
environment forces.
 TIME PERIOD PLANNING
1. Long range planning: for a period of five years at
least. Involves capital budgeting, product
planning, project planning etc.
2. Medium range: for one to five years. Relate to
development of new products and markets,
product publicity etc. supportive to long range
plans.
3. Short range: up to one year. Made to achieve
short term goals. Focused on the internal
environment of the business.
PLANNING AT A DIFFERENT LEVELS IN THE FIRM

The Management Pyramid

Top
Managers

Middle
Managers

First-line
Managers
 The Management Pyramid

President, CEO, VP •Make long-range plans

•Establish policies
Top
•Represent the company
Managers

Middle
Managers

First-line
Managers
 The Management Pyramid

Controller, Marketing •Implement goals

Manager, Sales Manager •Make decisions
Top
•Direct first-line managers
Managers

Middle
Managers

First-line
Managers
 The Management Pyramid

Office Manager, •Implement plans

Supervisor, Foreman, •Oversee workers
Top
Department Head •Assist middle managers
Managers

Middle
Managers

First-line
Managers
 DECISION MAKING
“Making decisions is selecting one alternative from
different alternatives”
• Decision is a choice whereby a person comes to
a conclusion about given circumstances/situation.
• It involves choice making
• It is core of managerial activities in organization
 TYPES OF DECISIONS
A programmed decision is one that is fairly structured or
recurs with some frequency.

Non-programmed decisions, on the other hand, are

relatively unstructured and may occur much less
often. No business makes multi-billion-dollar
decisions on a regular basis. Managers faced with
such options must treat each one as unique, investing
enormous blocks of time, energy, and resources into
exploring the situation from all perspectives.
 DECISION-MAKING CONDITIONS
• Managers sometimes have an almost perfect
understanding of conditions surrounding a
decision, but at other times they have few clues
about those conditions.
• In general, the circumstances that exist for the
decision maker are conditions of certainty, risk, or
uncertainty.
• These conditions are represented in the form of a
figure
 STEPS IN DECISION MAKING
1. Recognizing and defining Some stimulus indicates that a decision
the situation must be made. The stimulus may be
positive or negative.
2. Identifying alternatives Both obvious and creative alternatives are
desired. In general, the more significant the
decision, the more alternatives should be
generated.
3. Evaluating Each alternative is evaluated to determine
alternatives its feasibility, its satisfactoriness, and its
consequences.
4. Selecting the best Consider all situational factors, and choose
alternative the alternative that best fits the manager's
situation.
5. Implementing the chosen The chosen alternative is implemented into
alternative the organizational system.
6. Follow-up and At some time in the future, the manager
evaluation should ascertain the extent to which the
alternative chosen in step 4 and
implemented in step 5 has worked.
A plant manager sees that employee
turnover has increased by 5 percent.
The plant manager can increase wages,
increase benefits, or change hiring
standards.
Increasing benefits may not be feasible.
Increasing wages and changing hiring
standards may satisfy all conditions.
Changing hiring standards will take an
extended period of time to cut turnover,
so increase wages.
The plant manager may need permission
of corporate headquarters. The human
resource department establishes a new
wage structure.
The plant manager notes that, six months
later, turnover has dropped to its previous
level.
 What Is Organizing?
Organizing
Arranging the
activities of the
enterprise in such a
way that they
systematically
contribute to the
enterprise’s goals.
Organizing is deciding how best to group
organizational elements (resources).
 Organizational Structure is a set of six basic building
blocks (elements) that managers may use to configure
(construct) an organization.
Six Basic Building Blocks for Organization Structure
1) Designing jobs
2) Grouping Jobs
3) Establishing reporting
relationships between
jobs
4) Distributing authority
among jobs
5) Coordinating activities
among jobs
6) Differentiating among
positions
 1. Designing Jobs five (5) other
Job design is the approaches to job
determination of an
design
individual’s work-related
responsibilities. Alternatives to Job
Specialization:
Job specialization is the
Job Rotation
degree to which the overall
task of the organization is Job Enlargement
broken down and divided Job Enrichment
into smaller component Job Characteristics
Approach
parts. Sometimes referred
Work Teams
to as the division of labor.
[assembly-line tasks, Disney characters drawn by only one animator, etc.)
 Designing Jobs. . . [continued]

Job Rotation involves

systematically moving
employees from one job to
another.
Different part of the job is
done on various days of the
weeks.
Used primarily as a training
practice to improve
workers’ skills and flexibility.
 Designing Jobs. . . [continued]

Job enlargement involves giving the employee more

tasks to perform.

Designed to allow the worker to perform a variety of

tasks to reduce the level of job boredom or
dissatisfaction.
Disadvantages may include: training costs usually
increase; unions have argued that pay should
increase as the worker is doing more tasks; and in
many cases, the work still remains boring and
routine.
 Designing Jobs. . . [continued]

Job enrichment involves increasing both the number

of tasks the worker does and the control of worker
has over the job.

To implement job enrichment, managers remove

some controls from the job, delegate more authority
to employees and structure the work in complete,
natural units.
Another part of job enrichment is to continually
assign new and challenging tasks to allow the
employee an opportunity to grow and advance.
Before undertaking job enrichment, work systems
should be analyzed and managers should ask for
employee preferences.
 Designing Jobs. . . [continued]

Job Characteristic Approach suggests that jobs

should be diagnosed and improved along five core
dimensions, taking into consideration both the work
system and employee preferences.

The higher a job rates on these dimensions, the more

employees will experience various psychological
states.
Five core dimensions include:
Skill variety
Task identify
Task significance
Autonomy
Feedback
 Designing Jobs. . . [continued]

Work Team allows an entire

group to design the work
system it will use to
perform an interrelated set
of tasks.
The team itself decides how
jobs will be allocated and
assigns specific tasks to
members, monitors and
controls its own
performance and has
autonomy over work
scheduling.
2. Grouping Jobs: Departmentalization

Departmentalization is the process of grouping jobs

according to some logical arrangement.
As an organization grows, new managerial positions
are created to supervise work of others grouped
according to some plan which leads to the creation
of departments.
2. Grouping Jobs: Departmentalization
Functional Departmentalization groups jobs involving
the same or similar activities.
Most common in smaller organizations; has three
primary advantages:
Each department can be staffed by experts in that
functional area.
Supervision is also facilitated because an individual
manager needs to be familiar with only a relatively
narrow set of skills.
Coordinating activities inside each department is
easier.
Disadvantages emerge as an organization grows because
it becomes increasingly difficult to monitor accountability
and performance. [was product failure due to poor
marketing or production deficiencies?]
2. Grouping Jobs: Departmentalization
Product Departmentalization groups activities around
products or product groups.
Has three major advantages:
All activities associated with one product or product group can be easily
integrated and coordinated.
The speed and effectiveness of decision making are enhanced.
The performance of individual products or product groups can be
assessed more easily and objectively, thereby improving the
accountability of departments for the results of their activities.
Has two major disadvantages:
Managers in each department may focus on their own product or product
group to the exclusion of the rest of the organization.
Administrative costs may rise because each department must have its
own functional specialists for areas such as market research and financial
analysis.
 2. Grouping Jobs: Departmentalization

Customer Departmentalization occurs when the organization

structures its activities to respond to and interact with
specific customers or customer groups.

Major advantage is that the organization is able to use skilled

specialists to deal with unique customers or customer groups.
[different skill sets required to read a balance sheet and approve a BD500,000 loan to a business vs evaluating an
individual’s creditworthiness to receive a BD20,000 loan to buy a car]

A disadvantage is that a fairly large administrative staff is

required to integrate various departments’ activities to make
sure the organization does not overcommit itself in any one
area.
2. Grouping Jobs: Departmentalization

Location Departmentalization groups jobs on the

basis of defined geographic sites or areas.

Primary advantage is that it enables the organization

to respond easily to unique customer and/or
environmental characteristics in the various regions.
A disadvantage is that a larger administrative staff
may be required if the organization must keep track
of units in various locations.
Departmentalization
 3. Establishing Reporting Relationships

1. Chain of Command is a clear and distinct line

of authority among the positions in an
organization that has two components:
Unity of command – each person within an
organization must have a clear reporting relationship
to one and only one boss.
Scalar principle – there must be a clear and unbroken
line of authority that extends from the lowest to the
highest position in the organization.
Someone in the organization must ultimately be
responsible for every decision. [President Harry Truman’s saying that
‘the buck stops here.’]
 3. Establishing Reporting Relationships

2. Span of Management,
sometimes called the span of
control, is the number of people
who report to a particular
manager.
 3. Establishing Reporting Relationships

3. Narrow versus Wide Span Theories:

He stated that managers must deal with
three kinds of interactions with and
among subordinates:
Direct – one-to-one with each
subordinate
Cross – among the subordinate
themselves
Group – between groups of
subordinates
 3. Establishing Reporting Relationships

4. Tall versus Flat Organizations:

Flat structures seem to lead to higher levels of
employee morale and productivity.
A wider span of management in a flat structure may result in a
manager’s having more administrative and supervisory
responsibilities. If these responsibilities become excessive, the flat
organization may suffer.
A tall structure is more expensive because of
the larger number of managers.
Communication in a tall structure seems to suffer due to the
increased number of people through whom information must
pass.
Tall Versus Flat Organizations
 3. Establishing Reporting Relationships

5. Determining the Appropriate Span:

• The relative importance of each factor

varies in different settings.
• Managers must determine the
importance of each factor or set of
factors when deciding the optimal span
of management for their unique
situation.
4. Distributing Authority
Authority is the power that has been
legitimized (approved) by the organization.
Organizations must determine how authority is to be
distributed among positions.
An employee must have the power to make some
decisions on his/her own, some in consultation with
coworkers and must defer some decisions to his/her
boss.
Two issues that managers must address when
distributing authority are delegation and
decentralization.
Steps in the Delegation Process
4. Distributing Authority

Decentralization:

The process of systematically

delegating power and authority
throughout the organization to middle
and lower-level managers.
4. Distributing Authority

Centralization:

The process of systematically retaining

power and authority in the hands of
higher-level managers.
5. Coordinating Activities

Coordination is the process of

linking the activities of the various
departments of the organization.

Primary reason for coordination is that

departments and work groups are interdependent
– they depend on each other for information and
resources to perform their respective activities.
Draw an ORGANIZATIONAL CHART FOR SENIOR HIGH
SCHOOL and discuss the duties and responsibilities.
5. Coordinating Activities

Pooled interdependence exists

when units operate with little
interaction; their output is simply
pooled.
Each unit has its own budget, staff, etc., and their
profits/losses are added together at the
organizational level. They do not interact on a
day-to-day basis. [Debenham's, Marks & Spenser, etc.]
5. Coordinating Activities

Sequential interdependence occurs

when the output of one unit becomes
the input for another in sequential
fashion.
Level of interdependence is generally one
way.
Nissan has one plant which assembles engines
and then ships them to another plant where
the cars are completed.
5. Coordinating Activities
Reciprocal interdependence occurs when activities
flow both ways between units.

This form of interdependence is the most complex.

Within any hotel, the reservations department, front-desk
check-in and housekeeping are all ‘reciprocally
interdependent’.
Reservations has to provide front-desk employees with
information about how many guests to expect each
day, and housekeeping needs to know which rooms
need ‘priority cleaning’. If any of the three units does
not do its job properly, all will be affected.
5. Coordinating Activities
Structural Coordination Techniques
These techniques were designed to achieve
and maintain coordination among
interdependent units. They include:
The managerial hierarchy
Rules and procedures
Liaison roles
Task forces
Integrating departments
5. Coordinating Activities

The Managerial Hierarchy

One manager is placed in charge of
interdependent departments or units.
Wal-Mart’s distribution center places one manager
in charge of both receiving and unloading
shipments from railroad cards and loading other
shipments onto trucks for distribution to retail
outlets.
Both departments are interdependent because they
share the same loading docks.
5. Coordinating Activities

Rules and Procedures

Routine coordination activities may be handled
by rules and standard procedures.
However, complex or unusual problems may
have to be handled independently.
Wal-Mart has a rule that an outgoing truck has
priority over an incoming rail shipment. So all
forklifts and related equipment are available to
loading outgoing trucks first.
5. Coordinating Activities

Liaison Roles
A manager acts as a common point of contact
but has no formal authority over the
interdependent groups.
He/she simply serves as a facilitator of
information flow between the units.
He/she maintains familiarity with each unit and
can answer questions and otherwise serve to
integrate the activities. [engineering groups working on a large project
may interact through a liaison]
5. Coordinating Activities
Task Forces
A task force may be needed when interdependence is
complex and several interdependent units are involved.
It is created by drawing one representative from each
unit.
Coordination function is then spread across several
individuals, each of whom has special information
about one of the units involved.
When coordination of project is completed, the task
force is dissolved.
5. Coordinating Activities
Integrated Departments
• Similar to a task force but is more permanent.
• Usually has more authority than a task force and may
even be given some budgetary control.
• Generally has some permanent members as well as
members who are assigned temporarily from units that
are particularly in need of coordination.
• Firms characterized by complex and dynamic
environments tend to use integrated departments to
maintain internal integration and coordination.
5. Coordinating Activities
Electronic Coordination
E-mail makes it easier for people to communicate at all
levels.
Electronic scheduling is used and makes it easier for
individuals’ schedules to be coordinated to set
meetings and know when individuals are otherwise
available.
Some organizations require project contractors,
subcontractors and suppliers to use a common web-
based communication/reporting system to make
coordination easier among the units.
6. Differentiating Between Positions

Line position is in the direct chain of

command that is responsible for
achieving an organization’s goals.
Staff position is one intended to
provide expertise, advice and
support for line positions.
6. Differentiating Between Positions
Differences between Line and Staff
Line managers work toward organizational goals; staff
managers advise and assist.
Line managers have formal and legitimate authority; staff
authority is less concrete and may take a variety of forms:
Compulsory authority – line manager must listen to advice of staff
manager, but can choose to take it or ignore it. [Finance Manager must listen
to advice of auditor, but may take it or leave it]

Functional authority – formal or legitimate authority given to staff

managers over activities related to their specialties. [HR specialist who is
expert in discrimination or Labor Law]
6. Differentiating Between Positions
Administrative Intensity
Administrative intensity is the degree to which
managerial positions are concentrated in staff
positions.
An organization with ‘high’ administrative
intensity is one with many staff positions
relative to the number of line positions.
Organizations would generally like to devote
most of their HR investment to line managers
because they contribute directly to the
organization’s basic goals.
 FORMAL AND INFORMAL ORGANIZATION
 Formal structures 
– An organization chart is a diagram describing
reporting relationships and the formal
arrangement of work positions within an
organization.
– An organization chart identifies the following
aspects of formal structure:
• The division of work.
• Supervisory relationships.
• Communication channels.
• Major subunits.
• Levels of management.
 FORMAL AND INFORMAL ORGANIZATION
 Informal structures 
– A “shadow” organization made up of the
unofficial, but often critical, working relationships
between organization members.
– Potential advantages of informal structures:
• Helping people accomplish their work.
• Overcoming limits of formal structure.
• Gaining access to interpersonal networks.
• Informal learning.
 FORMAL AND INFORMAL ORGANIZATION
 Informal structures (cont.) 
– Potential disadvantages of informal structures:
• May work against best interests of entire
organization.
• Susceptibility to rumor.
• May carry inaccurate information.
• May breed resistance to change.
• Diversion of work efforts from important
objectives.
• Feeling of alienation by outsiders.
113
 Human Resource Management

The integration of all processes, programs, and

systems in an organization that ensure staff are
acquired and used in an effective way
Human Resource Management (Contd.)
HR is multidisciplinary: It applies the disciplines of
Economics (wages, markets, resources),
Psychology (motivation, satisfaction),
Sociology (organization structure, culture) and
Law (min. wage, labor contracts)

What HR Professionals Do?

HR planning
Recruitment & Selection
Training and development
Compensation & Performance review
Labor relations
Job Analysis
(Functional Job Analysis, Position analysis questionnaire)
A Basic Human Resource Management Tool

Human Resource
Tasks Responsibilities Duties Planning
Recruitment
Selection
Training and
Job
Development
Descriptions
Job Performance Appraisal
Analysis Job Compensation and
Specifications Benefits
Safety and Health
Employee and Labor
Relations
Knowledge Skills Abilities Legal Considerations
Job Analysis for Teams
Definitions
Job - Consists of a group of tasks that must be performed for an
organization to achieve its goals
Position - Collection of tasks and responsibilities performed by one
person; there is a position for every individual in an organization
Job analysis - Systematic process of determining the skills, duties,
and knowledge required for performing jobs in an organization
(functional job analysis , position analysis questionnaire)
Job description – document providing information regarding tasks,
duties, and responsibilities of job
Job specification – minimum qualifications to perform a particular
job
Recruitment
Process of locating, identifying, and
attracting capable candidates
Can be for current or future needs
Critical activity for some corporations.
What sources do we use for recruitment
 School
Placement Employee
Referrals

Internal Recruitment
Searches Voluntary
Sources Applicants

Employment
Agencies Advertisements
SELECTION

A series of steps from initial applicant screening

to final hiring of the new employee.
Selection process.
Step 1 Completing application materials.
Step 2 Conducting an interview.
Step 3 Completing any necessary tests.
Step 4 Doing a background investigation.
Step 5 Deciding to hire or not to hire.
 Selection process
Step 1 Completing application materials.
Gathering information regarding an applicant’s
background and experiences.
Typical application materials.
Traditional application forms.
Résumés.
Sometimes tests may be included with application
materials.

Step 2 Conducting an interview.

Interviews can provide rough ideas concerning the
person’s fit with the job and the organization.
 Selection process
Step 3 Completing any necessary tests.
Administered before or after the interview.
Common examples of employment tests.
Cognitive, clerical, or mechanical aptitudes or
abilities.
Personality.
Step 4 Doing a background investigation.
Can be used early or late in selection process.

Background investigations include:

Basic level checks.

Reference checks.
 Selection process
Step 5 Deciding to hire or not to hire.
Draws on information produced in preceding selection steps.
A job offer is made.
A physical examination may be required if it is relevant to job
performance.
Negotiation of salary and/or benefits for some jobs.

Step 6 Socialization.
The final step in the staffing process.
Involves orienting new employees to:
The firm.
The work units in which they will be working.
The firm’s policies and procedures.
The firm’s organizational culture.
Performance Appraisal
 Performance Appraisal

The identification, measurement,

and management of human
performance in organizations.
Why Conduct Performance Appraisals?

Make decisions about that person's future

with the organization
Identify training requirements
Employee improvement
Pay, promotion, and other personnel
decisions
Research
Validation of selection techniques and criteria
A Model of Performance Appraisal

Skills/Activities/Output

Performance Appraisal System

Reward/Training/Punishment
Techniques for Evaluating Managers
Evaluation by superiors
Evaluation by colleagues
Peer ratings tend to be more favorable for
career development than for promotion
decisions
Self-evaluation
Self-ratings suffer from leniency
Subordinate evaluation
Effective in developing leadership
Leads to improved performance
360 degree feedback (multi-source)
360° Feedback

The combination of peer,

subordinate, and self-review
Key Steps in Implementing 360° Appraisal
Top management communicates the goals
Employees and managers are involved in the development of the
appraisal criteria and process.
Employees are trained in giving & receiving feedback.

Employees are informed of the nature of the 360° appraisal instrument

and process.
The 360° system undergoes pilot testing
Management continuously reinforces the goals of the 360° appraisal and
is ready to change the process when necessary.
 Definition of Leadership
Leadership, according to Peter DeLisle, is the
ability to influence others, with or without
authority.
All successful endeavors are the result of human
effort; thus, the ability to influence others is a
derivation of:
• Interpersonal Communications
• Conflict Management
• Problem solving
 Interpersonal Effectiveness
Interpersonal effectiveness is the capability of
an individual to do this, influence others,
competently.
Leadership is a direct function of three elements
of interpersonal effectiveness
• Awareness
• Ability
• Commitment
Interpersonal Effectiveness
 Awareness
Awareness is a state of consciousness.
It is the ability to recognize yourself, others,
events and situations in real time.
It is the ability to assess the impact of actions on
situations and others, and be critically self-
reflective.
It is a development process that is a function of
experience, communication, self discovery and
feedback.
 Ability
Ability to learn and understand technical issues is the
basis of our careers.
Ability to lead is a function of influence:
• Ability to communicate
• Ability to resolve conflicts
• Ability to solve problems and make decisions
As a member of a team, we influence others in a
collaborative effort to find better ideas or solve
problems.
 Commitment
For leaders, the “one thing” that leads to
maturity is the fully aware recognition that
one’s decisions make a difference, both
positively and negatively, in the lives of others,
and that any attempt to solve a problem might
have a decided negative impact on some,
while helping others.
In no-win scenarios, one must still make a hard
decision.
 Attributes of a Leader

1. Guiding vision: Effective leaders know what

they want to do, and have the strength of
character to pursue their objectives in the face
of opposition and in spite of failures. The
effective leader establishes achievable goals.
 Attributes of a Leader
2. Passion: Effective leaders believe passionately
in their goals. They have a positive outlook on
who they are, and they love what they do.
Their passion for life is a guiding star for others
to follow, because they radiate promise!
 Attributes of a Leader
3. Integrity: Because they know who they are,
effective leaders are also aware of their
weaknesses. They only make promises they
can follow through on.
4. Honesty: Leaders convey an aura of honesty in
both their professional and their personal lives.
5. Trust: Effective leaders earn the trust of their
followers and act on behalf of their followers.
 Attributes of a Leader
6. Curiosity: Leaders are learners. They wonder
about every aspect of their charge. They find
out what they need to know in order to pursue
their goals.
7. Risk: Effective leaders take calculated risks
when necessary to achieve their objectives. If a
mistake is made, the effective leader will learn
from the mistake and use it as an opportunity
to explore other avenues.
 Attributes of a Leader
8. Dedication: The effective leader is dedicated
to his or her charge, and will work assiduously
on behalf of those following. The leader gives
himself or herself entirely to the task when it is
necessary.
 Attributes of a Leader
9. Charisma: This may be the one attribute that is
the most difficult to cultivate. It conveys
maturity, respect for your followers,
compassion, a fine sense of humor, and a love
of humanity. The result is that leaders have
the capability to motivate people to excel.
10. Listening: Leaders Listen! This is the most
important attribute of all, listen to your
followers.
 Leader vs Manager
Leader = A person who is followed by others.

Manager = A person controlling or

administering a business or a part of a
business
 Leadership & Management Skills
Leadership – soft skills
• Communications
• Motivation
• Stress Management
• Team Building
• Change Management
Management – hard skills
• Scheduling
• Staffing
• Activity Analysis
• Project Controls
Controlling as a Management Function
• Controlling
– A process of monitoring performance and
taking action to ensure desired results.
– It sees to it that the right things happen, in
the right ways, and at the right time.

149
Controlling as a Management Function
• Controlling
– Done well, it ensures that the overall directions of
individuals and groups are consistent with short
and long range plans.
– It helps ensure that objectives and
accomplishments are consistent with one another
throughout an organization.

150
Controlling as a Management Function
• Controlling
– It helps maintain compliance with essential
organizational rules and policies.

151
 The Control Process
• Establish objectives and standards.
• Measure actual performance.
• Compare results with objectives and
standards.
• Take necessary action.

152
 The Control Process

1. Establish Objectives and Standards

• The control process begins with planning and

the establishment of performance objectives.
• Performance objectives are defined and the
standards for measuring them are set.
Establish Objectives and Standards

• There are two types of standards:

– Output Standards - measures performance
results in terms of quantity, quality, cost, or time.
– Input Standards - measures work efforts that go
into a performance task.

154
 The Control Process
2. Measuring Actual Performance

• Measurements must be accurate enough to

spot deviations or variances between what
really occurs and what is most desired.
• Without measurement, effective control is
not possible.

155
 The Control Process
3. Comparing Results with Objectives and
Standards
• The comparison of actual performance with desired
performance establishes the need for action.
• Ways of making such comparisons include:
– Historical / Relative / Engineering
– Benchmarking

156
 The Control Process
4. Taking Corrective Action
• Taking any action necessary to correct or improve
things.
• Management-by-Exception focuses managerial
attention on substantial differences between
actual and desired performance.

157
 Taking Corrective Action

– Management-by Exception can save the

managers time, energy, and other resources,
and concentrates efforts on areas showing the
greatest need.
– There are two types of exceptions:
• Problems - below standard
• Opportunities - above standard

158
 Effective Controls

The Best Controls in Organizations

are
• Strategic and results oriented
• Understandable
• Encourage self-control

159
 Effective Controls

The Best Controls in Organizations are

• Timely and exception oriented
• Positive in nature
• Fair and objective
• Flexible

160
 Types of Control

• Preliminary
Sometimes called the feedforward controls,
they are accomplished before a work
activity begins.
They make sure that proper directions are
set and that the right resources are
available to accomplish them.

161
 Types of Control
• Concurrent
Focus on what happens during the work
process. Sometimes called steering controls,
they monitor ongoing operations and
activities to make sure that things are being
done correctly.

162
 Types of Control

• Postaction
Sometimes called feedback controls, they
take place after an action is completed.
They focus on end results, as opposed to
inputs and activities.

163
 Types of Controls
Managers have two broad options with
respect to control.
• They can rely on people to exercise self-
control (internal) over their own behavior.
• Alternatively, managers can take direct action
(external) to control the behavior of others.

164
 Types of Control

• Internal Controls
Allows motivated individuals to exercise self-
control in fulfilling job expectations.
The potential for self-control is enhanced when
capable people have clear performance objectives
and proper resource support.

165
 Types of Control

• External Controls
It occurs through personal supervision and the use
of formal administrative systems.
– Performance appraisal systems, compensation
and benefit systems, employee discipline systems,
and management-by-objectives.

166
 Organizational Control Systems
1. Management Processes
– Strategy and objectives
– Policies and procedures
– Selection and training
– Performance appraisal
– Job design and work structures
– Performance modeling, norms, and organization
culture

167
Organizational Control Systems

2. Compensation and Benefits

– Attract talented people and retain them.
– Motivate people to exert maximum effort in
their work.
– Recognize the value of their performance
contributions.

168
 Organizational Control Systems

3. Employee Discipline
– Discipline is defined as influencing behavior
through reprimand.
– Progressive Discipline ties reprimand to the
severity and frequency of the employee’s
infractions.
– Positive Discipline tries to involve people more
positively and directly in making decisions to
improve their behavior.

169
 The “Hot Stove Rule”

To be Effective Discipline Should be:

• Immediate • Informative
• Focus on activity not • Occur in a supportive
personality setting
• Consistent • Support realistic
rules

170
 Organizational Control Systems

4. Information and Financial

– Activity-based costing - the true cost of all
products and services.
– Economic value added - examine the value
added by all activities.
– Understand the implication of key financial
measures of (ratios) organizational
performance

171
Operations Management and Control

1. Purchasing
– Economic Order Quantity
automatic reorder points
– Just-In-Time Scheduling

172
Operations Management and Control

2. Project Management
– Program Evaluation and Review Technique
(PERT) - Identifies and controls the many
separate events in complex projects.

173
Operations Management and Control

3. Statistical Quality Control

– Based on the establishment of upper and lower
control limits, that can be graphically and
statistically monitored to ensure that products
meet standards.

174
175
176
What Is Operations Management?
• Operations Management
– Management of the conversion process which
transforms inputs such as raw material and
labor into outputs in the form of finished
goods and services.

Inputs Outputs
(customers Transformation Process (goods
and/or (components) and
materials) services)
Role of OM within an Organization
 Top-down Approach to OM Strategy
• Operations Strategy Decisions
– Strategic (long-range)
• Needs of customers
(capacity planning)
– Tactical (medium-range)
• Efficient scheduling of
resources
– Operational planning
and control (short-range)
• Immediate tasks and
activities
MARKETING

‘Marketing is the human activity directed at

satisfying human needs and wants through
an exchange process’

Kotler 1980
 What is Marketed?

• Goods  Places
• Services  Properties
• Events  Organizations
• Experiences  Information
• Persons  Ideas
 Marketing Management
The analysis, planning, implementation, and
control of programs designed to create, build,
and maintain beneficial exchanges with target
buyers for the purpose of achieving
organizational objectives.

182
 Marketing Management Involves:

• Demand Management : The organization has a desired level

of demand for its products. At any point in time, There may be
no demand, adequate demand, irregular demand, or too
much demand, and marketing management must find ways to
deal with these different demand states.
• Building Profitable Customer Relationships : Beyond
designing strategies to attract new customers and create
transactions with them, companies now are striving to retain
current customers and build lasting customer relationships.

183
184
 Are you ready to start a
Business?
What is an entrepreneur?
– "An entrepreneur is a person who What you need:
assumes the organization, management
and risks involved in a business venture."  Personal skills
 Business knowledge
Qualities that make a successful
entrepreneur:  A good idea!
– Decision Maker  Start-up money
– Analytical Ability (problem solving skills)
– Good Interpersonal Skills  Support
– High Drive (highly motivated)  Good personal
– Risk Taker credit history

185
 Lets get down to business

First steps to start a business:

From a legal From a fiscal From an insurance
stand point stand point stand point
 Choose the form of  Get a business  Buy business
business: number insurance
– Sole proprietor  Register for GST – Liability
– Partnership, or and PST – Disability
– Incorporation – Key people
 Register your form – Business interruption
of business  Prepare to have
 Get a business employees
licence
186
 Your proposal

• Your proposal will include your business plan as

well as additional documentation such as:
– Market research
– Industry trends
– Other information supporting your
project’s viability

187
 Your business plan
What is a business plan:
• A business plan can help
you detail your goals, and serves
as an operational
plan for achieving them
• Everyone who is going
into business and who is
operating a business requires a
business plan
188
Why a business plan?
 It describes your business
 It conveys your vision to
potential investors
 It explains your business goals
 It raises potential problems and
ways to solve them
 It states the amount of capital
required to finance your
venture
 Your business plan

What it should include:

1. An executive summary
2. A description of your company
3. A description of your management team
4. An overview of your marketing plan
5. Human resources plan
6. Financial planning
7. Appendices that boost your credibility
189
 Your business plan

What it should include:

1. An executive summary
 Your industry, products/services, competitive advantages,
amount of financing required
2. A description of your company
 Legal status, date company founded, mission, objectives
and vision
3. A description of your management team
 Roles, experience and competence, education
190
 Your Business plan

4. Marketing Plan Overview of your

Four sections should be detailed:
1. Your product or services
 Why your products/services will sell?
2. Your market potential
 Target clients, market size and penetration,
demographic factors
3. Overview of your competition
 Their strengths and weaknesses
4. Marketing strategy
 Overview of your Marketing plan, media
chosen, partners, etc.
Marketing plan
 Is there a proven market for
your products or services?
 Who are your competitors?
 What is your client profile?
 What will you offer that is
better?
 How will you get them to
switch?

191
 Your Business plan

5. Human resource plan

– Determine how you will recruit, retain and develop employees:
– HR Policy
– Subcontracting and outside professionals
– Organizational and development plan

6. Financial planning
– Forecasts, balance sheet, statement of income, cash flow budget

7. Appendices that boost your credibility

– Brief bios of your management team, market studies, client
testimonials, etc.
192
 Finding financing

What lenders look for:

• Proof of experience, skills, determination, and self-confidence
to successfully carry out your project
• Your personal credit history – past performance can affect
perception about how you will perform in the future
• Your business plan must be clear, structured, and short, but it
must cover all elements of your business idea

193
 Finding financing

What lenders look for:

• For new and existing companies:
– Forecast for next 2 years
– A cash flow analysis that describes
your forecasts:
• Shows the seasonal fluctuations in your business
and prescribes the need for capital
194
 Financing to get started

Finding initial financing:

1. Personal investment money:  Proof that you have a long-term commitment
Cash/collateral on your assets. to your project

2. Gift capital or love money:

Money loaned by loved one  Bankers consider this asset as “patient capital”
and that will be repaid later.

3. Investments from others:  Bankers regard such investment highly

Money you raise from  Proof that your idea is sound but can often
investors. diminish the degree of control you have over
you own company
195
 Financing to get started

Finding initial financing:

4. Supplier (A/P)  Policy for paying suppliers based on their payment
Financing: conditions (often 30 or 60 days after delivery).
 Check with each supplier, since many offer
discounts for quick payment.

5. Grants,  You may have access to grants, subsidies or tax

Subsidies and credits to help recover expenses such as salaries or
Tax Credits: equipment.

196
 Financing to get started

Type of loans:
1. Personal Loan  Money loaned to you, not your business
 Loan secured by your personal assets
 Many banks offer this type of loan to start-up businesses or
those with few assets (land, building or equipment)

2. Operating Loan  Short term, flexible financing that you manage yourself
- Also called  Borrowing as much as you need up to a determined
Line of Credit amount
 Secured by your inventory and accounts receivable, and your
bank can require full repayment at any time

197
 Financing to get started

Type of loans:
3. Term Loan  Long-term financing option for fixed assets such as
equipment, land or building

4. Working capital  Long-term financing to cover projects such as Growth,

Loan Export, Marketing, e-Business, R&D, etc.
 Help provide you the cash flow to fuel your growth
 Complement your existing line of credit

198