principles of management 01 - 02 fall 2007

8/8/2019 Principles of Management 01 - 02 Fall 2007

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Principles of Management

Chapter 1

Understanding the Managers Job

Learning Goals Define management, describe the kinds of

managers found in organizations, and identify

and briefly explain the four basic managementfunctions

Justify the importance of history and theory tomanagement and explain the evolution ofmanagement thought

Discuss contemporary management issues andchallenges

Index card Name name you would like to be

called

How many courses you have taken Why??????????????????

Management Management is a set of activities

directed at an organizationsresources with the aim of achieving organizational goals in

an efficient and effective manner

Management

Activities include the four

functions of management Planning (and decision making)

Organizing

Leading

Controlling

Management

Resources include:

Human Financial

Physical

Information

Management in Organizations

Inputs from the environment

Human resources

Financial resources

Physical resources

Information resources

Planning

and decision

making

Leading

Organizing

Controlling

Goals attained

Efficiently

Effectively

EfficiencyversusEffectiveness

Source: Van Fleet, David D., Contemporary Management , Second

permissions.

EFFICIENCY

EFFECTIVENESSEFFECTIVENESS

Waste of Waste of ResourcesResources

Allocates Allocates

and and

ConservesConserves

ResourcesResources Doing things Doing thingsright (effort)right (effort)

Doing Doing the right things (accomplishment)

Efficiency vs. Effectiveness

K inds of Managers by Level

and Area

Middle managers

Areas of Management

Levels of Management

First-line managers

Top managers

Important Definitions

Top Managers

Middle Managers First-line Managers

Operative Employees

Managers In Different Areas of

The Organization Marketing Managers

Financial Managers Operations Managers

Human Resource Managers

Administrative Managers

The Management ProcessOrganizing

Determining howbest to group

activities andresources

ControllingMonitoring

and correctingongoing activitiesto facilitate goal

attainment

Planning andDecision Making

Setting the organiza-tion¶s goals and

deciding how bestto achieve them

Leading

Motivating membersof the organizationto work in the best

interests of theorganization

Figure 1.2

The Basic Functions of Management

A Circular ProcessPlanning and Decision Making

Organizing

Leading

Controlling

Skills and

theManager

Fundamental Management

Skills Management Skill Mixes at Different

Organizational Levels

Management: Science or Art? Science of Management some

aspects of management are objective

and can be approached with rationalityand logic

Art of Management some aspectsof management are subjective and arebased on intuition and experience

The Evolution of the Study of

Management The importance of history and theory

Theory History

The Historical Context of

Management Management Through the Ages

3000 B.C. 2500 B.C.

A Sumerians F Chinese

B Egyptians

C Babylonians

D Greeks

G Venetians

E Romans

2000 B.C. 1500 B.C. 1000 B.C. 500 B.C. A.D.1500A.D.500 A.D.1000

A Used written rules and regulations for governance

B Used management practices to construct pyramids

C Used extensive set of laws and policies for governance

D Used different governing systems for cities and state

E Used organized structure for communication and control

F Used extensive organization structure for government

agencies and the arts

G Used organization design and planning concepts to

control the seas

An Integrative Framework

of Management PerspectivesSystems Approach

Recognition of internal

interdependencies

Recognition of environmental influences

Contingency Perspective

Recognition of the situational

nature of management

Response to particular characteristics of situation

Classical

ManagementPerspectives

Methods for

enhancing

efficiency andfacilitating planning,

organizing, and

controlling

Behavioral

Insights for moti-

vating performance

and understandingindividual behavior,

groups and teams,

and leadership

Quantitative

Techniques for

improving decision

making, resourceallocation, and

operations

Effective and efficient management

Classical Management

Perspective Scientific Management

Frederick Taylor

The Gilbreths

Henry Gantt

Steps in Scientific

Management

Develop a sciencefor each element of

the job to replace old

rule-of-thumb methods

Scientifically selectemployees and then

train them to do the job

as described in step 1

Supervise employees

to make sure they

follow the prescribed

methods for performing

their jobs

Continue to planthe work, but use

workers to get the

work done

Figure 1.3

The Classical Management

Perspective

Administrative Management focuses

on managing the total organization Henry Fayol

Lyndal Urwick

Max Weber

Fayols Guidelines to Effective

Management Practices Division of labor

Authority

Discipline Unity of command

Unity of direction

Subordination of individuals to thecommon good

Renumeration

Centralization

Scalar chain Order

Equity

Stability Initiative

Esprit de corps

Webers Theory of

Bureaucracy

Division of labor

Reliance on rules and regulations Hierarchy of authority

Employment based on expertise

Inflexible Rigid

Impersonal

The Classical Management

Perspective Contributions

Laid the foundation for management theory

Identified key processes, functions, and skills of managers still important today Made management a valid subject of scientific inquiry

Limitations Best used in simple, stable organizations Provided universal procedures that are not

appropriate in all settings Most viewed employees as tools rather than

resources

The Behavioral Management

Perspective

Placed much more emphasis on individual

attitudes and behaviors and on groupprocesses in organizations.

Recognized the importance of behavioralprocesses in organizations Hugo Munsterberg

Mary Parker Follet

Elton Mayo

Behavioral Management

Perspective Elton Mayo Hawthorne Studies

Illumination study

Group study

Human Relations

Movement Grew out of the Hawthorne studies.

Proposed that workers respond primarily

to the social context of work, includingsocial conditioning, group norms,and interpersonal dynamics.

Assumed that the managersconcern for workers would lead toincreased worker satisfaction andimproved worker performance.

Behavioral Management

Perspective Abraham Maslow

Advanced a theory that employees are

motivated by a hierarchy of needs that theyseek to satisfy.

Douglas McGregor

Proposed Theory X and Theory Y conceptsof managerial beliefs about peopleand work.

Maslows Hierarchy of Needs Five levels

Physiological hunger, thirst, shelter, sex

Safety security and protection

Social affection, interpersonal relationships

Esteem self-respect, achievement status

Self-actualization achieving full potential

Usually thought in the form of a pyramid

Maslows Hierarchy of Needs

Esteem Needs

Social Needs

Security Needs

Physiological Needs

Theory X and Theory Y Theory X Assumptions

People do not like work and try to avoid it.

Managers have to control, direct, coerce,and threaten employees to get them towork toward organizational goals.

People prefer to be directed,to avoid responsibility, andto want security; they havelittle ambition.

by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.

Theory X and Theory Y Theory Y Assumptions

People do not dislike work; work is a

natural part of their lives.

People are internally motivated to reachobjectives to which they are committed.

People are committed to goals to thedegree that they receive rewards whenthey reach their objectives.

Theory X and Theory Y Theory Y Assumptions

People seek both seek responsibility and

accept responsibility under favorableconditions.

People can be innovative in solving

problems. People are bright, but under most

organizational conditions their potentialsare underutilized.

Theory X Theory Y

Think of these theories as a continuum

Theory X Theory Y

Employees fall somewhere in between the two ends

Perspective Contemporary behavioral science in

management emerged because of the

too simplistic descriptions of workbehavior by the human relationstheorists.

Organizational behavior takes a holisticview of behavior, including individual,group, and organization processes

Organizational Behavior Important topics in organizational

behavior research:

Job satisfaction and job stress

Motivation and leadership

Group dynamics and organizational politics

Interpersonal conflict The structure and design of organizations

Gave insights into interpersonal processes such as motivationand group dynamics in organizations

Focused managerial attention on these processes Challenged the view of employees as tools and not resources

Limitations The complexity of human behavior makes prediction difficult

Managers may be reluctant to adopt some of the behavioral

concepts Contributions are often not communicated to the practicing

managers in an understandable form

The Quantitative Management

Perspective

Focuses on decision making, economic

effectiveness, mathematical models, andthe use of computers in organizations

Management science

Operations management

The Quantitative Management

Developed sophisticated quantitative techniques to assist decision making

Models have increased our awareness of complex organizationalprocesses and have aided in the planning and controllingprocesses

Limitations Cannot fully explain or predict behavior

Mathematical sophistication may come at the expense of otherimportant skills

Models may require unrealistic or unfounded assumptions

Contemporary Management

Theory The Systems Perspective

A system is an interrelated set of elements

functioning as a whole. An organization as asystem is composed of four elements:

Inputs (material and/or human resources)

Transformation processes (technical andmanagerial processes)

Outputs (products and services)

Feedback (reactions from the environment)

The Integrated Systems Model

F eedback F eedback

InputsInputsFrom theFrom theenvironment:environment:HumanHuman

MaterialMaterial

FinancialFinancial

InformationInformation

ProcessingProcessingTransformationTransformation

process:process:TechnologyTechnology

Operating systemsOperating systems

AdministrativeAdministrative

systemssystemsControl systemsControl systems

OutputsOutputsInto theInto the

environmentenvironmentProductProduct

ServicesServices

Profit/lossProfit/loss

Employee behavior Employee behavior InformationInformation

Systems Perspective

Open systems interact with one another

and other environments

Closed systems do not interact with their

environment

Su bsystems recognizes the importance of

su bsystems becau se of their

interdependence

Systems Perspective Synergy

Subsystems are more successful working

together than working alone. The whole,

working together, is greater than the sum

of its parts.

Entropy

A natural process leading to system decline

which can be avoided through

organizational change and renewal.

The Universal Perspective vs

The Contingency Perspective The Universal Perspective tries to identify the

one best way to manage an organization,

includes classical, behavioral and quantitativeapproaches

The Contingency Perspective suggests that universal theories cannot be applied to

organizations because each organization isunique what works in one situation may not work in another

Contemporary Management

Issues & Challenges Downsizing

Diversity and the New Workforce

Information Technology

New Ways of Managing

Globalization Ethics and Social Responsibility

Managing for Quality

Service Economy

Principles of Management

Chapter 2

The Environment of Organizationsand Managers

Learning Goals Discuss the environment of organizations and

identify the components of the general, task,and internal environments

Describe the ethical and social environment ofmanagement

Describe the international environment ofmanagement

Discuss the importance and determinants of anorganizations culture

The Organizations

Environment External Environment

General environment

Task environment

Internal Environment

Conditions and forces within an

organization.

The Organization and Its

Environments

Owners

Employees

Physical environment

Board of directors

Culture

Competitors

International

dimension

Political-

dimension

Technological

dimension

Sociocultural

dimension

Economic

dimension

Regulators Customers

Strategicpartners

Suppliers

Internal environment

Task environment External

environmentGeneral environment

Five Dimensions of the

General Environment

Five Dimensions of the

General Environment The economic dimension - the overall health and vitality of

the economic system in which the organization operates

The technological dimension - the methods available forconverting resources into products or services The political-legal dimension - government regulation of

business and the relationship between business and thegovernment

The socio-cultural dimension the general societal/culturalnorms that the organization functions under

The international dimension the extent to which anorganization is involved in or affected by business in othercountries.

McDonalds General

Environment

McDonald¶s

International Dimension Restaurants in 115

countries About two-thirds of

sales from outside

the United

States

Political-Legal

Dimension Government

food standards

Local zoningclimate

General posture

toward business

regulation

Technological

Dimension

Improved information

technology

More efficient

operating systems

Sociocultural Dimension

Demographic shifts in

number of single adultsand dual-income families

Growing concerns about

health and nutrition

Economic

Dimension

Strong economic

growth Low unemploy-

Low inflation

Task environmentExternal environment

General environment

Fig ur e 3.2

Five Dimensions of the Task

Environment Specific groups affecting the organization

Competitors seeking the same resources as theorganization.

Customers who acquire an organizations products orresources.

Suppliers that provide resources for the organization.

Regulators (agencies and interest groups) that control,legislate, or influence the organizations policies andpractices.

Strategic partners (allies) who are in a joint venture orpartnership with the organization.

McDonalds Task Environment

McDonald¶s

Competitors Burger King Wendy¶s Subway

Dairy Queen

Customers Individual

consumers Institutional

customers

Suppliers Coca-Cola Wholesale food

processors Packaging

manufacturers

Strategic Partners Wal-Mart Disney Foreign partners

Regulators Food and Drug Administration

Securities

andExchangeCommission

EnvironmentalProtection Agency

Task environment

OrganizationsandEnvironmentsInteract

How Business and Government

Influence Each Other

Government

Business

The government influences business

through direct and indirect regulation:

Environmental protection legislation

Consumer protection legislation

Employee protection legislation

Securities legislation

The tax codes

Business influences the government

through:

Personal contacts and networks

Lobbying

Political action committees (PACs)

Favors and other influence tactics

The Internal Environment

Conditions and stakeholder forceswithin an organizationOwnersBoard of Directors

Employees

Physical Work Environment - the actualphysical environment of the organizationand the work that people do.

Individual Ethics

Ethical Behavior

An individuals personal beliefs regarding

what is right and wrong or good and bad.

Determinants of Individual

Ethics

Managerial Ethics

Are the standards of behavior that guideindividual managers in their work

Managerial

Ethics

Employees Organization

Conflicts of interest

Secrecy and

confidentiality

Honesty

Hiring and firing

Wages and working

conditions

Privacy and respect

Subject to ethical ambiguities

Advertising and promotions

Ordering and purchasing

Bargaining and negotiation

Financial disclosure

Shipping and solicitation

Other business relationships

Economic Agents

Customers

Competitors

Stockholders

Suppliers

Dealers

Unions

Three areas of concern

for managerial ethics

The relationships of

the firm to the

employee.

The employee to the

The firm to other

economic agents.

Ethics in OrganizationsEthics in Organizations

Organizational Values

Individual Values

Managerial Values

Ethics in Organizations

Managing Ethical BehaviorMust begin with top management

Training on how to handle different ethicaldilemmas.

Code of Ethics

A formal, written statement of the valuesand ethical standards that guides a firmsactions

Individual behavior

Social Responsibility and

Organizations Social Responsibility

The set of obligations (to behave

responsibly) that an organization has toprotect and enhance the social context inwhich it functions.

Social Responsibility and

Organizations Areas of Social Responsibility

Stakeholders: customers, employees, and

investors. The natural environment: environmentally

sensitive products, recycling, and publicsafety.

The general social welfare: charitablecontributions, and support for social issuessuch as child labor and human rights.

Social Responsibility

Ethical Responsibilities

being ethical; doing what is right, just,

and fair; avoiding harm

Voluntary

Responsibilities

being a³good corporate citizen´;

contributing to the

community and quality of life

Source: Adapted from Archie B. Carroll, ´The Pyramid of Corporate

Social Responsibility: Toward the Moral Management ofOrganizational Stakeholders.µ Business Horizons 34 (July/August 1991): 42.

Legal Responsibilitiesobeying the law (society¶s codification of right

and wrong); playing by the rules of the game

Economic Responsibilities

being profitable

Arguments For and Against

Social Responsibility

1. Business creates problems and

should therefore help solve them.

2. Corporations are citizens in our

society.

3. Business often has the resources

necessary to solve problems.

4. Business is a partner in our

society, along with the govern-

ment and the general population.

Social

Responsibility

4. The purpose of business in U.S.

society is to generate profit

for owners.

2. Involvement in social programs

gives business too much power .

3. There is potential for conflicts

of interest.

1. Business lacks the expertise to

manage social programs.

Arguments For Social Responsibility Arguments Against Social Responsibility

Figure 2.2

Approachesto SocialResponsibility

Source: Barney, Jay B. and Ricky W. Griffin, The

Houghton Mifflin Company. Used with permissions.

Managing Social Responsibility

Formal Organizational Dimensions Legal Compliance

Extent to which the organization conforms to local,

state, federal, and international laws Ethical Compliance

Extent to which members of the organization followbasic ethical/legal standards of behavior

Philanthropic Giving Awarding of funds or gifts to charities and other

social programs

Trends in International

BusinessTechnological advances

make this a very small

Decreasing Isolation

from ForeignCompetition

U.S. consumer goodsmarkets are open to

overseas competitors.

Levels of International

Business Activity Exporting

Importing

Licensing

Strategic Alliance and Joint Ventures

Direct Investment

Advantages and Disadvantages of

Advantages and Disadvantages of Various Approaches to

InternationalizationAppr tI t r ti liz ti Advantages isadvantages

I porting or

porting

1. all ash outlay

2. ittle risk

3. o adaptation necessar y

1. ariff s and taxes

2. igh tr ansportation costs

3. over nment r estrictions

icensing 1. Incr eased pr ofitability

2. xtended pr ofitability

1. Inflexibility

2. elps competitor s

tr ategic Alliance /

Joint entur e

1. uick mar ket entr y

2. Access to materials and technology

1. har ed owner ship (limits

contr ol and pr ofits)

ir ect Investment 1. nhances contr ol

2. xisting infr astr uctur e

1. omplexity

2. r eater economic and

political risk

3. r eater uncertainty

Environmental Challenges

of International Management

Controls on International

Trade K ey Concepts

Tariffs are collected on goods shipped across

national boundaries. Quotas are limits placed on the number or value

of goods that can be traded as exports orimports.

Export restraint agreementsare voluntary limits on the volume

or value of goods exported to,

or imported from, another country.

The Structure of the Global

Economy Economic Communities

Sets of countries that engage in high levels

of trade with each other through theeliminationof trade barriers such as quotas and tariffs.

European Union (EU)

North American Free Trade Agreement (NAFTA)

Latin American Integration Association

Caribbean Common Market

EuropeanUnion

(EU)MemberNations

Figure 2.3

Source: Lucas,

George H.,Robert P. Bush,

and Larry R.

Gresham,

Retailing .

1994 by

Houghton

Mifflin

Company. Used

permissions.

The Cultural Environment of

International Buisness Language

The Meaning of Colors

Nonverbal cues

The Organizations Culture Organization Culture collection of values,

beliefs, behaviors, customs, and attitudes

that characterize a community of people. Determinants of Organization Culture

Organizations founder

Articulate the culture through symbols, stories,heroes, slogans, and ceremonies that embodyand personify the spirit of the organization.

Corporate success strengthens the culture.

Organization Culture Managing Organization Culture

Understand the current culture to understand

whether to maintain or change it. Reward and promote people

whose behaviors areconsistent with desiredcultural values.

Promote shared experiencesthat bond organizational members

together.

Organization Culture Changing Organization Culture

Develop a clear idea of what kind of culture you want to create.

Bring in outsiders to important managerial positions.

Adopt new slogans, stories,ceremonies, and purposelybreak with tradition.

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