Professional Documents
Culture Documents
ESSENTIALS OF MANAGEMENT
Learning Objectives
To understand the role of organizations in modern societies To appreciate the importance of management for organizations To understand difference between efficiency and effectiveness To comprehend generic functions of management To learn about different managerial roles To appreciate different types of managerial skills and their importance at different levels of organization
Management: Principles, Processes & Practices Oxford University Press 2008
Management Functions
Henri Mintzberg called these functions as folklore. He forwarded Role theory of Managerial work. Harold Koontz defends Fayols approach As managerial work is largely cerebral and not directly observable. Further it allows us to look at universal aspects of management across different contexts. Managerial functions approach also helps in classification of management knowledge
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
PLANNING
Setting Objectives Formulating Strategies Policies Procedures Methods
ORGANIZING
An Intentional Structure of Roles Organizational Structure Responsibility & Authority for achieving objectives Departmentation Span of Control Line & Staff Relationships
Management: Principles, Processes & Practices Oxford University Press 2008
LEADING
Leadership Skills Motivation Team Work Communication Negotiation Conflict Resolution
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
CONTROLLING
Anticipate, Monitor & Respond to changing Environment.
Measurement of Actual Performance Comparison against the Standard Managerial Action to correct Deviation LIQUIDITY ACTIVITY PROFITABILITY LEVERAGE BALANCE SCORECARD
Managerial Roles
INTERPERSONAL Figurehead Leader Liaison INFORMATIONAL Monitor Disseminator Spokesperson DECISION Entrepreneur Disturbance Handler Resource Allocator Negotiator
Management: Principles, Processes & Practices Oxford University Press 2008
Management Skills
TECHNICAL SKILLS CONCEPTUAL SKILLS HUMAN SKILLS Managers at Top Level need Conceptual Skills the most and FirstLine Managers Technical Skills the most
Chapter 2
Learning Objectives
To understand the historical evolution of management discipline. To comprehend different schools of management thought. To critically appreciate the modern day relevance of difference schools of management thought. To know contributions of pioneers of management thought. To become aware of contemporary approaches to management. To get acquainted with Eastern Management thought.
QUANTITATIVE SCHOOL
SYSTEMS SCHOOL
CONTINGENCY SCHOOL
CONTEMPORARY /EASTERN APPROACHES
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
CLASSICAL SCHOOL
Scientific Management:- Application of Scientific Method to optimize productivity
FREDERICK W.TAYLOR [1856-1915] HENRY GANTT [1861-1919] FRANK [1868-1924]& LILLIAN GILBRETH [18781972] HUGO MUNSTERBERG [1863-1916]
Administrative Management:- Emphasizes Role of the manager and the functions of Management.
Bureaucratic Management:- Focuses on Ideal Form of Organization.
MAX WEBER [1864-1920] PETER DRUCKER HENRI FAYOL [1841-1925] HENRI MINZBERG
BEHAVIOURAL SCHOOL
Human Relations:- Dealt with human aspects of
Organizations
ELTON MAYO [1880-1949] & OTHERS MARY PARKER FOLLETT CHESTER BERNARD [1886-1961] Human Resources:-Motivation and Leadership techniques
focus etc.
QUANTITATIVE SCHOOL
Management Science &MIS:- Uses Mathematical and Statistical approaches to solve management problems GEORGE DANTZIG Etc. DSS &ERP SYSTEMS
Production and Operations Management:-Focuses upon operation and control of production process that transforms resources into finished goods and services. JURAN W.EDWARDS DEMING
Management: Principles, Processes & Practices Oxford University Press 2008
SYSTEMS SCHOOL
Views Organizations as an interrelated and interdependent set of subsystems functioning as a whole open system interacting with the Environment
LUDWIG VON BERTALANFFY JAMES ROSENZWEIG KENNETH BOULDING
CONTINGENCY SCHOOL
Emphasizes the fit between organizational processes and the characteristics of the situation
PAUL LAWRENCE JAY LORSCH FRED FIEDLER JOAN WOODWARD
CONTEMPORARY APPROACHES
Total Quality Management :-Managing the entire organization to deliver quality goods/services to the customer
Learning Organization:-All employees involved in the growth & learning of organization as it deals with the changing environment Excellence Approach:- Attributes of Excellence empirically derived.
PETERS & WATERMANS
PETER SENGE
OTHER APPROACHES
Indian Management Approach:Emphasizes value-based and management of mind as well as an attitude of detachment to the outcome but focused concentration on the work in hand.
Japanese Management Approach:Emphasizes Participative style of Management and continuous improvement.
CHAPTER 3
Learning Objectives
To learn and appreciate the significance of business environment and society in management. To understand difference between old and emerging economies. To learn application of Michael Porter model in diagnosing the competitive business environment. To learn the significance of corporate social responsibility in todays business environment To understand importance of social audit
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
To learn the difference between business ethics and ethics in business. To learn about steps involved in ethical decision making. To learn about what is meant by corporate governance and its relevance ethical standards
Introduction
Managerial actions as reflected in the organizational performance is the outcome of synchronization of internal systems to respond effectively to the external environment. Organizations for their success in todays fast changing environment have to keep adjusting, adopting, and adapting by developing inbuilt response mechanisms Need to understand importance and relevance of organizational environment for strategic management as also for social concern and value-based management.
LEGAL TECHNOLOGICAL
ORGANIZATIO N
COMPETITIVE
POLITICAL
DEMOGRAPHIC
ECONOMIC
Emerging Economies
Dominance of service sector Global markets Customer behaviour fluid Competitive forces Deregulated regime Emphasis on human assets
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Above factors need to be appropriately diagnosed by the managers to identify their competitive advantages and disadvantages, so as to chalk out strategies that can enable them to achieve their corporate goals and objectives by responding effectively to various environmental forces.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Voluantry Responsibilities
Ethical Responsibilities
Legal Responsibilities Economic Responsibilities
Advantages of CSR
The organizations that integrate CSR as part and parcel of their philosophy of growth, derive various advantages such as improved financial performance, cost reduction, enhanced brand image and reputation, increased customer satisfaction, enhanced productivity, quality, increased market share, more engaged investors, environmental sustainability, and above all competitive edge in the market.
Social Audit
Mandatory as Required by Government Social Audit
Pollution Check Employment Standards Labour Amenities to be provided as per factory Act, Minimum Wages to be Provided
Utilitarain View
Rights View
Justice View
Utilitarian View: The utilitarian view focuses on welfare of the greatest number of people, implying thereby the greatest good for the greatest number as a criterion for weighing and evaluating decisions. Rights View: The protection of individual's rights is the main concern as per rights view.
Justice View: The justice view is grounded in the idea that rules of organizational or societal existence must be imposed equitably to all. The focus is making a decision that is objective without prejudice to emotions and fair to everyone involved.
Management: Principles, Processes & Practices Oxford University Press 2008
Chapter 4
Learning Objectives
To understand the importance of planning To know what plan and planning mean To learn about steps involved in planning To learn about different types and levels of planning To understand SWOT analysis as a tool for business strategies development To understand the use of BCG matrix in categorization of businesses To understand concept of MBO and its relevance to planning
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
A C T I V I T I E S
Goals & Objectives Plans Policies Procedures Rules Strategy Task Resources Program Budget
Types of Planning
Types of Planning
Short-term Planning
Medium-term Planning
Long-term Planning
Levels of Planning
Levels of Planning
Strategic
Tactical
Operational
Strategic planning is undertaken at the top-level of the management. It deals with decision making about the organizations long-term goals and strategies . Tactical planning deals primarily with the specific goals and plans pertaining to functional areas production, marketing, human resources management, etc. It deals with major actions pertaining to implementation phase of the planning process. Operational planning deals with specific systems, procedures, and processes required to implement the tactical plan at the level of the operational or frontline manager.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
External
Internal
Opportunities
Threats
Strengths
Weaknesses
Opportunities and threats are diagnosed by undertaking an external environmental analysis. Strengths and weaknesses are essentially internal to the organization and pertain to its resources. These relate to resources human and nonhuman, physical, processes, programs, and organization in key areas.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
QUESTION MARKS
CASH COWS
DOGS
MBO is a
Employees Get Adequate and Strong Input to be Clear about their Objectives, Time Lines for Completion Synchronizing Goals and Subordinate objectives throughout the Organization
Performance Evaluation and Feedback Management: Principles, Processes & Practices Oxford University Press 2008
Benefits of MBO
Ensuring personal commitment to organizational goals Provides goal and role clarity in the organization and in turn helps in devising organizational structure conducive for improving efficiency and effectiveness Ensures result oriented planning Development of effective control mechanism leading to timely corrective actions Less supervision of subordinates and increased motivational level as a result of each employees clear definition of responsibilities Employees accountability increases Improved managerial effectiveness and efficiency results in greater satisfaction level to the employees
Disadvantages of MBO
Failure to teach the philosophy of MBO across the organization Lack of guidelines to goal setters Difficulty in setting verifiable objectives Over emphasis on short term achievements at the cost of long term growth and development Lack of flexibility to attune changes with changing environmental forces Over emphasis on quantitative goals, even where it may not be applicable It turns out to be paper passing buck, especially in organizations where in well set mechanism to monitor and evaluate the performance does get laid down It is a time consuming process to imbibe the philosophy of MBO in the organization
Chapter 5
ORGANIZATIONAL STRUCTURE
Learning Objectives
To understand what is meant by organizational structure. To comprehend different dimensions of organizational structure. To understand difference between job specialization and differentiation To understand what is meant by formalization To understand difference between centralization and decentralization. To understand the use of different bases for departmentation. To understand the effect of size, environment and technology on organizational structure. To learn about Mintzbergs typology of organizational configurations.
Management: Principles, Processes & Practices Oxford University Press 2008
Behaviour Formalization
Centralization
JOB SPECIALIZATION
Division Of Labour Job Specialization in horizontal and vertical dimensions Job Enlargement Job Enrichment When to go for job Enlargement? When to go for Job Enrichment?
BEHAVIOUR FORMALIZATION
By Positions [Job Description].
By Work-Flow [Process Descriptions]. By Specifying Rules [Regulations, Policy Manuals, Code and Conduct Rules etc.]
CENTRALIZATION
Vertical Decentralization. Horizontal Decentralization Selective Decentralization.
Parallel Decentralization.
SPAN OF MANAGEMENT
Tall Structure Vs. Flat Structure. Chain of Command. Line and Staff Relationships.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
TECHNOLOGY
BATCH PRODUCTION MASS PRODUCTION PROCESS PRODUCTION
MINTZBERGS TYPOLOGY
Key Parts Of an Organization: Operating Core Strategic Apex Middle Line Techno-structure Support Staff
MINTZBERGS TYPOLOGY.
Coordinating Mechanisms: Direct Supervision Mutual Adjustment Work-Process Standardization Outputs Standardization Skills or Knowledge Standardization
Management: Principles, Processes & Practices Oxford University Press 2008
MINTZBERGS TYPOLOGY.
Simple Structure Machine Bureaucracy Professional Bureaucracy Divisionalized Form Adhocracy
Learning Objectives
What is meant by organizational effectiveness Organizational culture and its implications to organizational effectiveness Factors that build and nurture favourable organizational culture Different organization life cycle stages Measuring organizational effectiveness. What does it take to become a high performance organization? Characteristics of effective organizations
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Organizational Effectiveness
Organizational effectiveness is defined as the ability of an organization to maximize its performance within a competitive external environment . An organization is a consciously coordinated entity with an identifiable boundary that functions on a relatively continuous basis to achieve a common goal or set of goals. An organizational structure defines how roles are defined, tasks are allocated, relationships are reported, and the formal coordination and interaction pattern that the organization would follow
Management: Principles, Processes & Practices Oxford University Press 2008
Collectivity Stage
Decline Stage
Entrepreneurial Stage The organization is in its nascent stage. Although its goals are ambiguous, they have a high level of creativity. Collectivity Stage Innovations continue in this stage and the organizations mission is clarified. Communication is informal and its employees are highly committed to the organizations objectives and goals. Formalization and Control Stage In this stage the organizational structure stabilizes and formal rules and procedures put in place. However, innovation is given a back seat while efficiency and stability is emphasized upon. Elaboration of Structure Stage: Products and services are diversified at this level. The structure becomes more complex. Decision-making gets decentralized. Decline Stage: This is the stage when management looks for ways to hold the markets and look for new opportunities. Organizational effectiveness demands to come out with new ideas to exploit existing or emerging opportunities.
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Individuals and the Groups Performance Viewed and Evaluated vis--vis a Predetermined Criteria
Individuals and Groups at Different Tiers have to Plan and Execute a Sequence of Actions and Activities.
CHAPTER 7
Learning Objectives
The meaning of economics The purpose of studying economics Types of economic theories Demand and supply concepts and their relevance to the understanding economic behaviour How market mechanism operates Concepts of elasticity, factors affecting elasticity, and their implications to economic decision-making
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
What is Economics?
Economics (derived from the Greek words (okos), house, and (nemo), rules hence, household management) is the social science that studies the allocation of scarce resources. This involves analysing the production, distribution, trade, and consumption of goods and services. Economics studies choice, decision-making, and optimum allocation of limited resources to fulfil unlimited human needs and wants. Economics involves analysing the production, distribution, trade, and consumption of goods and services with a view to suggest optimum allocation of resources.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Positive economics deals with causal relationships and attempts to find out the causes that lead to a given effect or the vice versa. Normative economics is prescriptive in nature and has more to do with values. Microeconomics deals with individual behaviour of a householder, consumer, businessperson, producer, etc Macroeconomics considers the economy as a whole and deals with aggregate variables such as aggregate demand and supply for money, capital, and commodities.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Descriptive economics refers to the collection of all the relevant facts related to an event and aligning them coherently with emerging implications . Economic theory or analysis helps simplifying explanation of features of an economic systems Applied economics operates within the framework of analysis provided by economic theory. It attempts to test the economic theories to ensure whether or not these theories appear to be supported by statistical evidence about the real world.
Management: Principles, Processes & Practices Oxford University Press 2008
Demand
Demand for a product is defined as the various quantities of it per unit of a time; daily, weekly, or monthly that consumers are willing and able to purchase at alternative prices, keeping all other things affecting demand as constant. The law of demand states that the relationship between a goods price and its quantity demanded is negative
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Where: X = Quantity of goods or services Px = Price of X: N = Number of consumers under consideration. T = Taste and preferences of consumers: Y = Consumers income and distribution: Pn = Price of related goods: R = Range of products available to consumers E = Expectations of consumers:
Demand refers to a demand schedule that lists the different quantities of the commodity that consumers are willing and able to take at alternative prices, keeping all other factors affecting the demand as constant , i.e., ceteris paribus
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Change in Demand
A change in the demand or a shift of the entire demand curve is caused by a change in any of the other factors other than the price of the product under consideration affecting the demand. When demand increases, the quantity demanded by consumers increases at every price. When demand decreases, the quantity demanded by consumers falls at every price.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Supply
The concept of supply is defined as various quantities of a product that the seller places in the market per unit of time at alternative prices, keeping all other factors affecting supply as constant.
Where: X = quantity of good or service Px = price of X N = Number of sellers under consideration T = Technology to produce the product E = Future expectations of the sellers Pi = is the price of inputs
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Market Price
Conventional microeconomic analysis states that the price of a product or service and its output is determined at the intersection of supply and demand curves which is called the equilibrium price. Any price above the equilibrium will result in a situation where the quantity supplied exceeds the quantity demanded. Due to their inability to clear the market, producers may reduce prices. Any price below the equilibrium will see the quantity demanded exceed the quantity supplied, bidding the price upwards.
CHAPTER 8
PRINCIPLES OF PRODUCTION
Management: Principles, Processes & Practices Oxford University Press 2008
Learning Objectives
The need for knowing principles of production To learn about production function To understand the concepts of production function To understand optimal resource allocation in production
Production Function
The production function is the physical relationship between a firms inputs of resources and the output of goods and services per unit of time, leaving prices aside. It gives maximum output that can be achieved by combining inputs into various combinations, for a given technology and prices of inputs. Production function is described as under: Q = f ( x,y,z)
Where Q represents a firms output and x, y, z represent the inputs required to produce the given product.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Returns to Scale
Constant returns to scale production functions are those in which changes in the quantity of all inputs used in the same proportion results in changes in the quantity of output by the same proportion. If all inputs are raised by a proportion k and output increases by a proportion greater than k, then it is referred to as increasing returns to scale production function. If all inputs are raised by a proportion k and output increases by less than k proportion, then it is referred to as decreasing returns to scale production function. For a production function Q = f (x, y) then it is said to be a homogenous function of degree k if k Q = f ( x, y). k = 1, it is a constant returns to scale production function k > 1, it is an increasing returns to scale production function k < 1, it is a decreasing returns to scale production function Management: Principles, Processes & Practices Oxford University Press 2008
Isoquants
Isoquants are locus of points with various combination of inputs that can produce a certain quantity of output per unit of time. The movement to the right gives rise to higher level of production. On a given isoquant map the marginal rate of technical substitution of B (labour) for A (capital) is given by the ratio of the marginal product of B to the marginal product of A. This measures the reduction in one input per unit increase in the other such that the level of output remains constant
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Total Product, Average Product, and Marginal Product under Short Run
In the short run, the production function gives the maximum amount of the total product (output) that can be obtained by combining different amounts of variable inputs with fixed amount of fixed inputs. Marginal product (MP) of a variable input is defined as the change in the total product for a unit change in the variable input in the production system. Average product (AP), with respect to the variable input, is defined as the output per unit of a variable input used, keeping a particular level of fixed input.
Z =
f(x, y) -
( xpx
+ ypy )
To maximize, we need to take partial derivative with respect to variables and put them equal to 0. dz/dx dz/dy dz/d = = = fx px = 0 fy py = 0 E xpx ypy = 0 = = .. 1 2 ..3 fy/py MPy/py
Marginal Rate of Technical Substitution (MRTSxy) = px/py This means to optimize the production, the producer should operate at a point of input combination at which MRTSxy is equal to the input price ratio or MP per rupee worth of an input must be same for each input used in the production system. The second order condition for maximization of output is that d2y/dx2 > 0
Management: Principles, Processes & Practices Oxford University Press 2008
CHAPTER 9 MARKETS
Learning Objectives
Markets and their relevance to business decisions. Different market structures and their implications to business decisions. The difference between normal and economic profits. The mechanism of pricing and output decisions in different markets pure monopoly, pure competition, oligopoly, and monopolistic competition
Management: Principles, Processes & Practices Oxford University Press 2008
Classification of Markets
A market refers to a suitable arrangement in which the buyers and sellers could closely interact (physically or otherwise) to arrive at exchange decisions
Classification of Markets
Pure Monopoly
Oligopoly
Monopolistic competition
Pure Competition
Pure Competition
Characteristics of Pure Competition very large numbers of buyers and sellers; standardized product similar in all respects being produced by each firm; price takersfirms accept the price as given; free entry and exit for sellers; and perfect knowledge about the market.
Demand Curve and Influence of the Firm on Demand, Output, and Prices
Demand curve faced by the sellers is horizontal at the prevailing equilibrium price. It is said to be perfectly elastic, i.e., at the given price, sellers can sell all that they have to offer. However, at any price above the market equilibrium price, firms would not be in a position to sell any quantity. A perfectly competitive industry would be in equilibrium when each and every individual firm in the industry is in equilibrium, i.e., each firm is maximizing its profit by equating marginal revenue with marginal cost and the industry, as a whole, is in equilibrium, i.e., no firms are entering or leaving the market.
Every entrepreneur in the industry earns normal profit profits that are sufficient to sustain the seller in the industry.
d1
P1
d1
Pure Monopoly
Pure monopoly operates in a market when a single firm is the sole producer of a product for which there are no close substitutes. cross elasticity of demand for the monopolists product is either zero or negligible. Barriers to Entry
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Demand Curve
The market demand curve itself would be a demand curve for the monopolist
Rs/unit
D P
A monopolist can increase sales by lowering the price. He can change its demand curve by using promotional tactics. A monopolist can effectively operate on price discrimination strategies
D
Q Quantity Per Unit of Time
Oligopoly
Few sellers and the decision of one affects the other because of the sellers small size . In a pure oligopoly market, firms produce homogeneous products while in a differentiated oligopoly market, firms produce and sell differentiated products. Sellers in an oligopoly market usually turn to advertising to improve their sales. Some examples of oligopolies are banking industry, automotive manufacturers, gas companies, insurance companies, telecommunications companies, etc.
Management: Principles, Processes & Practices Oxford University Press 2008
Demand Curve and Influence of the Firm on Demand, Output, and Prices
The demand for a firms products cannot be determined, if the firm is unable to predict the reactions of its competitors to the changes in its price and output decisions. An oligopolistic firm is in a position to influence its demand curve to some extent and, consequentially, its price and output. An oligopolist can shift its demand curve upwards with the help of advertising and other promotional efforts. Generally, the elasticity of demand would be elastic but it would depend on the rivals reactions to the price and output changes of the single seller.
Monopolistic Competition
Many sellers of a particular product that are differentiated in some way or the other. Each seller is too small to influence the decision of the other. Cross elasticities of demand are high as though differentiatedproducts are good substitutes to each other.
Demand Curve and Influence of the Firm on Demand, Output, and Prices
Relatively less elastic demand as compared to Pure Competition because of differentiated products. Each tries to create a niche for its products in the market. Firms may enjoy economic gains, i.e., profits over and above normal profits. Individual firms may be in a position to influence the demand and price of its product to some degree through advertising.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
CHAPTER 10
Learning Objectives
The relevance of macroeconomics to business Production of output and payments to factors of production Gross Domestic Product (GDP) and its relevance to business entities Techniques used to measure GDP Problems associated with measurement of National Product The relationship between GNP, NNP and NI and DPI
Macroeconomics
Macroeconomics deals with the behaviour of economy as a whole such as booms and recessions, aggregate output of goods and services, growth in employment and output, inflation and deflation, balance of payment, balance of trade, exchange rates, etc. Macroeconomics essentially deals with interactions among goods and services, labour and capital markets of the economy and similar interactions amongst national economies that interact, with each other.
Management: Principles, Processes & Practices Oxford University Press 2008
Concept of GDP
Gross Domestic Product (GDP), is the total market value of all final goods and services produced within a given period, by factors of production located within a country. Final goods and services refer to goods and services produced for final use. Intermediate goods are goods produced by one firm to be used as raw materials by another. Value added is the difference between the values of goods as they leave the stage of production and their cost when they entered that stage. For calculating the GDP, we can either sum up the value added at each stage of production, or we can consider final value of sales.
Measurement of GDP
Aggregate demand or output for the domestic goods and services is made up of four components namely consumption spending by households (C), investment spending by business and households (I), government consumption of goods and services and gross investment (G) and foreign demand for our net exports. Y = C + I + G + (E I)
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Certain expenses that are added to GDP represent use of resources to contain or overcome social evils such as crime or risk to national economy. Quality of Life getting affected on account of environmental pollution and degradation and the improvement in the quality of products such as computers, whose quality and efficiency are improving while the prices are falling, resulting in lesser contribution in GDP for each additional unit produced. Economists have been trying to overcome these limitations to arrive at an adjusted GNP.
Management: Principles, Processes & Practices Oxford University Press 2008
CHAPTER 11
Learning Objectives
The goals of a business entity The meaning and implications of profit maximization The role and function of finance and financial managers Value creation for shareholders Economic value added (EVA) Corporate social responsibility and business
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Value creation for shareholders: By maximizing shareholders wealth by availing profitable business opportunities.
Requires effective and efficient: Investment decisions Financing decisions Dividend decisions
The fundamental purpose for the existence of a business entity is to create value for the shareholders Although there are many stakeholders in a business entity, its key stakeholders are the owners of the company
Uncertainty and risk (profits or EPS does not take care of future risk associated with investment as also expected future flows)
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
Social Responsibility
A good company not only has the maximization of the shareholders wealth as its corporate goal, but also adheres to its social responsibility of by taking care of interest of it all stakeholder.
Responsible governing is part of a good corporate culture and is part and parcel of its ultimate goal of maximizing the shareholders wealth. A good business believes that corporate existence depends upon social responsibility.
Management: Principles, Processes & Practices Oxford University Press 2008
Financial Decisions
optimization of financing mix or capital structure. to generate profit changing the mix of money raised from time to time, retirement of high-cost debt by substituting it with low-cost debt, changing the short-term and long-term mix of funds deployed in the business, etc. to decide as to what proportion of the surplus should be used for repurchasing dividends/shares and what proportion should be redeployed within the business. To build good investor relations, so that company has their support whenever needed.
Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
CHAPTER 12
FINANCIAL STATEMENTS
Learning Objectives
Financial statements and their utility The need and purpose of financial statements Different types of financial statements What constitutes a balance, profit and loss account, cash flow and fund flow statements The difference between cash flow and fund flow and their implications on business decisions The relevance and implication of note forming part of accounts and the auditors report to the shareholders.
Balance Sheet
Balance Sheet
Balance Sheet provides details about a companys assets, liabilities, and shareholders equity at a given point of time. Assets are those resources of a company, that have a value and are expected to provide additional benefits, in the form of higher cash inflows.
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Liabilities
Liabilities are those amounts of money that a company owes to others
Assets -----------------------Fixed Assets Investments Current Assets, Current assets Loans and advances Miscellaneous expenses and losses
Provisions
Operating Expenses
Expenses incurred in running the business during the accounting period consisting of administrative expenses, selling and distribution expenses, depreciation, etc.
Depreciation takes into account the wear and tear on fixed assets, such as machinery, tools, and furniture, which are used over the long term? Companies spread the cost of these assets over the periods they are used.
Operating Profit
Gross profitoperating expenses. It represents the profit earned/loss incurred on account of normal business activities of the company and does not consider non-operating gains. Gains and losses on account of transactions that are not related to normal business of the company such as interest and dividend income, profit/loss on account of sale of fixed assets, investments, etc. Profit Before Interest and Taxes (PBIT) measures profit without considering interest and taxes and is arrived at by adding nonoperating profit or subtracting non-operating loss from the operating profit.
Non-operating gains/losses
Interest
Interest relates to the cost of borrowed funds (secured or unsecured) from banks, financial institutions, fixed deposits, from promoters, commercial papers, etc. PBIT interest expenses Current tax on taxable income as computed under Income Tax Act Profit before taxIncome tax provision
Prior period adjustments From net profit certain adjustments such as adding the profit brought forward, adding reserves written back and subtracting extra burden on account of earlier years taxes/expenses, etc., are done. These are called prior period adjustments.
Profit after tax plus prior period adjustments. From this provision is made for payments of dividends and the balance amount in the profit and loss account is carried forward to the balance sheet. -
Tangible Assets
Intangible Assets
Human Resources
Investments
Fixed Assets
Goodwill
Knowledge Economy
CHAPTER 13
FINANCIAL RATIO ANALYSIS
Learning Objectives
The application of ratio analysis to analyse financial statements Financial ratios and their utility Different types of ratios Using ratio analysis Different types of ratios and their implications on analysis of financial position of the company Evaluating the relative strengths and weaknesses of the company by using ratio analysis so that the various stakeholders of a company may make their financial decisions
Management: Principles, Processes & Practices Oxford University Press 2008
Time Series Analysis: It compares ratios for a given company over a period of time
Liquidity Ratios
Liquidity ratios provide information about the companys ability to meet its short-term commitments with its total cash reserves. Current Ratio = Total Current Assets / Total Current Liabilities Quick Ratio = Cash + government securities + receivables / total current liabilities Current ratio is the ratio between current assets; those that the company owns and can be converted into cash within a short period, i.e., within a year and current liabilities that the company owes to others and are payable within a short time, say within a year. = (Current assets inventory) / Current liabilities Quick ratio differs from current ratio, as it excludes inventories and only considers mostly those liquid assets that can be easily converted into cash. Working capital = Total current assets - Total current liabilities
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Operational Ratios
Operational ratios focus on the managements efficiency in running the business Inventory Turnover Ratio = Net sales / Average inventory at cost Or = Cost of goods sold / inventory Inventory turnover is normally reported in terms of number of days worth of inventory carried by company. Inventory period is worked out as = 365/ Inventory turnover
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Average Collection Period average age of account receivables helps in evaluating a companys policies towards its debtors.
= Accounts receivables/ Average sales per day = Accounts receivables/ (Annual sales / 365) Average Payment Period companys strength to get more favourable terms of payment from its creditors.
= Accounts payable/ Average purchases per day = Accounts payable/ (Annual purchases/365)
Total Asset Turnover Total asset turnover = Sales /total assets Higher the ratio, the greater the efficiency of asset utilization and better it is for the company.
Profitability Ratio Ratios give the margins to sales, on assets, and on owners investment. Comparison of the margin ratios with the average of the industry or the best performers indicates the performance of the company and the scope the management has to improve efficiency of resource generation, allocation, and value addition to the same. Gross margin ratio Gross profit = Gross profit / Net sales = Net sales - Cost of goods sold
Net Profit Margin Ratio = Net Profit (earnings available for common stockholders)/ Net Sales Return on total assets= Net profit (earnings available for common stockholders) / Total assets
Total Asset Turnover It indicates the efficiency with which companys assets are being used. Total asset turnover = Sales /total assets Profitability Ratio Profitability ratios give the margins to sales, on assets, and on owners investment. Comparison of the margin ratios with the average of the industry or the best performers indicates the performance of the company and the scope the management has to improve efficiency of resource generation, allocation, and value addition. Gross margin ratio = Gross profit / Net sales
Gross profit
Net Profit Margin Ratio = Net Profit (earnings available for common stockholders)/ Net Sales
Return on Total Assets/Net Worth/Equity Return on total assets, also known as Return on Investment (ROI) measures the overall effectiveness of the management in generating profits. Return on total assets= Net profit (earnings available for common stockholders) / Total assets Net profit/ Sales (I)
Net profit/Total assets
Divide I by II
Return on Assets
Return on equity
= Net profit (earnings available for common stockholders) / Common stock equity
Return on net worth = Net profit (earnings available for common stockholders)/ net worth
Leverage Ratio Leverage ratio, calculated by total liabilities divided by the net worth of the company indicates the extent to which the business is dependent on debt financing in relation to owners equity. Solvency Ratio The solvency ratios indicate the companys ability to generate cash flow for meeting its overall financial obligations. DebtEquity Ratio This ratio indicates the proportion of debt with respect to the equity, i.e., owners stake in the business. DebtEquity ratio = Debt/Common stock equity Management: Principles, Processes & Practices Oxford University Press 2008
Interest Cover Ratio This ratio measures a companys capacity to meet its interest commitments. The higher the value of the ratio, the better it is. Interest coverage ratio = Earnings before interest and taxes/Interest
Debt Service Coverage ratio (DSCR) A companys capability to service its debt obligations is found through the computation of debt service coverage ratio (DSCR). Earnings before interest and taxes + Lease payments Fixed payment = --------------------------------------------------coverage ratio Interest + Lease payments + [(Principal payments + Preferred stock dividends) {1/ (1T)}] Management: Principles, Processes & Practices Oxford University Press 2008
Ratio Analysis enable the management to take corrective steps or realize its objectives and goals. What matters the most is interpretation of financial ratios, as certain information given in the financial statements is incomplete without really understanding the implications of notes to accounts and their effect on the financial ratio at a given time or in the future. Therefore, coupled with financial ratio analysis, practising financial analysts with their experience often develop their own measures for particular industries and even individual companies to evaluate their financial performance.
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CHAPTER 14
Learning Objectives
Human Resource Management (HRM) HRM in the current complex business environment The objectives of HRM functions More about HRM Steps in HR planning process Various facets with which HRM deals with
Recruitment and Selection Human Resources Planning, Organizing, Directing and Controlling Training, Orientation and Induction Career Planning Performance Appraisal Placement Compensation Package Creating conducive Work Environment and Motivation of Employees Management: Principles, Processes & Practices Oxford University Press 2008 All rights reserved
HR Planning Process
HR managers have to synchronize their activities with the business plan of the organization to ensure that the right type and number of people are made available to different departments of an organization, in line with their contribution to the organizational goals. organization is expected to take steps for synchronizing human resources activities such as recruitment, selection, placement, training, recognition and reward system, performance appraisal, and labour relations with the organizational business plan. HRM has to review and evaluate its actions to ensure that the steps taken are producing the expected results as per business plan and the corrective measures that need to be taken, in case they are not. The evaluation of human resource activities focus on productivity, quality, quantity, innovation, and employee satisfaction levels.
applications and resumes examinations, group discussions and interviews reference checks personality tests integrity tests ensure reliability and validity of various tests used
Contd..
Induction of new employees Outsourcing certain stages of production, functions, and services Creating and providing an environment conducive to growth Determining employees benefits and compensation package Training and development Career planning for different groups of employees Arranging training in-house or outside Leadership development Self-development
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Contd..
Team training Diversity training Training need assessment Training evaluation Regulatory compliance to be ensured Personnel database management Framing and devising personnel policies Statutory compliances Employees rules and regulations and other related issues Ethical practices to be followed To ensure non-discriminatory treatment to employees
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Learning Objectives
Job design Its significance to HRM professionals Job design related factors that affect work performance Changes that the job design perspective has undergone change over years Issues that job design addresses Different approaches to job design Implications of viewing an organization from socio-technical systems model point of view
Job design also deals with the administrative issues such as:
Job rotation Job enlargement Job enrichment Job engineering Task/machine pacing Work breaks Working hours Working environment Working relationships
Focus on
Job Enlargement Job enlargement for a particular task attempts to enhance the scope of the jobs to include a variety of tasks that need to be performed by the individual Job Rotation Job rotation moves employees from one task to another to add variety and reduce boredom by allowing them to perform a variety of tasks
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Job Enrichment Job enrichment, as per Orsburn and Moran (2000), empower employees to assume greater responsibility and accountability for planning, organizing, performing, controlling, and evaluating their own work Work Design (job engineering) Work design allows employees to understand and appreciate the linkage between work methods, layout, and handling procedures as also the interaction between people and machines.
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Socio-technical systems
The socio-technical systems model views organizations as organic wholes made up of people with various competencies and capabilities, i.e., the social system, that uses machines, tools, and techniques, i.e., the technical system, to produce goods and services that are valued by customers. This necessitates developing of social and technical systems in such a way that they become interdependent in a unified whole to fulfil the demands made on them by customers, suppliers, and other stakeholders in the external environment.
CHAPTER 16
Learning Objectives
Recruitment and selection as an HRM function The significance of recruitment and functional aspects for developing an effective recruitment process The different steps required for effective recruitment The importance of proper induction of employees and professional approach to induct new employees
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Recruitment
Recruitment is a specialized task and effective recruitment is becoming more and more challenging in present environment. Major challenges to recruitment lies in recruiting a right person who would have a long-term relationship with the organization. Recruitment decisions should be made in the context of an overall staffing plan, which takes into account long-term operational needs, known retirements, and resignations vis--vis the growth plans of the company
Approaches to Recruitment
Internal Promotions and Transfers from Within the Organization
Recruitment External
HRM Planning
Job Description
Job title Location of the job, i.e., department/group/division Grade of the post Whom an employee would be responsible Who all would be reporting to the person occupying a particular position Main purpose of the job Duties and responsibilities involved Special working conditions
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The selection
Quality and quantity of results of the efforts made through alternative sources to attract more and better candidates depends mainly upon the good marketing practices followed to market the organization. Transparency in terms of providing more information, as sought by the prospective candidates, generate greater trust and interest in the organization. Simplicity and straightforwardness of the process lead people to think well of the organization. Flexible in approach towards interview timings and transparent as also quick in decisionmaking, attracts greater response from the candidates.
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Organizations
Communicate the decision on-the- spot or immediately after the interview, giving a rationale and reasoning for selection
Nonprofessional
Take a long time to decide. Candidates Remain in dark for long or forever
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CHAPTER 17
Learning Objectives
The relevance of training in a fast changing business environment Training, training and development, and learning and development The scope of training The steps involved in designing a good training programme The significance of systems approach to training The sources of data for training that need assessment Various methods of training and their relevance to training objectives The relevance of training evaluation, techniques, and approaches used to evaluate training
Training: A Definition
Training is A planned process to modify attitude, knowledge, or skill behaviour through learning experience to achieve effective performance in an activity or range of activities. Its purpose, in the work situation, is to develop the abilities of the individual and to satisfy the current and future needs of the organization. Training may be distinguished from development. Training usually refers to teaching lower-level employees how to perform their present jobs, while development involves teaching managers and professional employees broader skills needed for their present and future jobs. ( Bateman and Snell 2002)
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Contd..
David Kolb (1984) has focused on experiential learning, i.e., experience as the source of learning and development. He emphasizes on how a learner can transform learning into an experience, and later, use it to perform his assigned duties. Each learner has his preferred method of learning which gets developed like any other facet of his personality
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Observe reflection
Think abstraction
PRAGMATIST
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THEORIST
Updated Knowledge, Skills and Attitude Required for Improved Efficient and Effective Performance of Job role
Scope of Training
Improve the method and system of working Increase the work output of the trained employee Increase employee versatility Improve communication and cooperation among employees and with clients Lower absenteeism Motivate employees to give their best to the organization
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Contd..
Equip employees to deal and handle new technology Help in overcoming resistance to change Increase employee satisfaction and lower grievances Reduce overtime Help superiors to delegate their responsibilities Let the trainee learn new skills at a very fast rate
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Employee Analysis
Contd..
Efficiency indices Changes in machinery, equipment, and technology Changes in systems and procedures Changes in policies Mandate from top management and executives for training Exit interviews
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Job/ Analysis
Contd..
Job description Job specification Performance standards Steps involved in performing the job Diagnosing jobs in consultation with departmental/divisional employees Operating problems involved in effectively performing the job Person Analysis
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Contd..
Performance appraisal data Interviews with job performers and their supervisors Questionnaires Attitude surveys Assessment centers
Steps in Training
Prepare Tell Show Do Review
Training Methods
Informational Techniques Lecture Talk Discussion Audiovisuals Independent study Programmed Instructions
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CHAPTER 18
Learning Objectives
What is motivation Theories of motivation Motivating and demotivating factors How to motivate the self and employees
What is Motivation?
Motivation is a drive, an energizing force that directs and sustains a persons effort to achieve a given objective and goal . Motivation is need based and, therefore, can be defined as what one does not have that one wants, one works to achieve that which one needs
Affection Needs
Safety Needs
Physiological Needs
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Job Satisfaction
Job Enlargement
Job Enrichment
Fulfillment Acts As
Self
Others
Managerial Success
Negative Criticism Humiliation in Public Rewarding Non-performance Lack of Clarity about Objectives and Goals Negative Attitude Discriminatory Treatment Frequent Transfers and Change in Job Roles Responsibility not Backed by Authority
Group
Organizational Performance
Contd..
Experiential Techniques On-the-job training Role-play Case study or analysis Games and simulations Project Computer assisted Instruction Group dynamics Sensitivity Training Mentoring
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Training Evaluation
Participants opinions and reactions Extent and degree of learning by the participants Change in the behaviour of participants To what extent have the proposed training goals and objectives been achieved Return on investment and cost-benefit analysis Benchmarking, that is comparing the data with data from companies that excel in those areas
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CHAPTER 19
TEAM EFFECTIVENESS
Learning Objectives
The importance of team building in organizational effectiveness Inputs that design effective teams Rules of team development The principles of team building Ways of building co-operation Ways to improve team effectiveness
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Team
A team is defined as a group of interdependent individuals who work together to accomplish a common goal or purpose.
The critical prerequisites for building an effective team are interaction, mutual influence, interdependence, and a welldefined common goal.
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Problem- solving
Virtual Advisory Self-managed Management: Principles, Processes & Practices Oxford University Press 2008
Contd..
Communication Participation Decision-making Problem-solving Team spirit factor Feedback rules Team effectiveness review
Contd..
Inculcate in team members the need to show respect for and courtesy towards each other Promote free discussion cross fertilization at planning stage Use brainstorming techniques to trigger creativity Provide organizational support Have a performance linked objective reward system
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CHAPTER 20 COMMUNICATION
Learning Objectives
The importance of communication in improving personal and organizational effectiveness How communication enhances personal effectiveness Understanding communication process Barriers to effective communication The basic rules for ensuring effective communication Improving organizational effectiveness through communication
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Effective Communication
Effective communication is important, not only for the success of an organization but also the individuals within it. Individuals who are able to communicate their ideas and thoughts effectively influence others and leave their mark.
Communication refers to a series of interrelated activities such as reading, listening, managing, interpreting information, serving clients, writing, speech making , and the use of symbolic gestures (Conger, 1991).
Communication Process
Distortions and Noise Sender
Encoding
Decoding
Receiver
Contd..
Communication is said to be complete when it serves the intended purpose. It should have a balance between emotion and intelligence, speaking and listening, and above all should ensure that the audience grasps its content and purpose. Effective communication is creative and caters to its audiences needs.
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Contd..
Perceptual differences Professional relationship between two individuals. Information may be misunderstood due to lack of understanding Use of an inappropriate medium Not caring for time relevance of information arrival and need for timely response accordingly Effective communication requires deciphering the basic values, motives, aspirations, and assumptions that operate across geographical areas. Thus, cultural differences if not resolved and understood may result in miscommunication
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Contd..
Dont try to impress others with your vocabulary, you may miscommunicate Be an attentive listener Be calm and poised Make positive first impression Synchronize body language with verbal communication Modulate your content appropriately Use motivating statements and positive strokes wherever required Always give a concise summary
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Organizational Communication
Organizational communication refers to the way organizations respond, adjust, and adapt themselves to changing environments, externally and internally. Communication channels to all stakeholders
Organizational structure Official channels Unofficial channels Communication devices / technology Communication cultures
Regional Managers Understanding & and Clarity (40%) Information Loss BMs Under- standing Information Loss & and Clarity (30%)
Employee Clarity (20%)
Downward Communication - flow of information from higher to lower levels in the organizations hierarchy Upward Communication - flow of information from lower to higher levels in the organizations hierarchy. Horizontal Communication: The flow of information amongst people on the same hierarchical level
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Formal and informal Communication: formal communications are official and can move upward, downward, or horizontally for performing a specific task. However, informal communication is unofficial. Diagonal Communication: refers to communication between managers and workers located in different functional departments/divisions
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Intrapersonal
Diagonal Inter-department
CHAPTER 21
CONFLICT MANAGEMENT
Learning Objectives
Conflict and its causes Types of conflict and their sources Identifying the root cause of conflict Managing conflict Managing conflict in organizations Creativity and managing conflict
What is Conflict?
Conflict refers to a process in which one party (person or group) perceives that its interests are being opposed or negatively affected by another party. Conflict implies a mismatch in the concerns of people involved in a particular event. Conflict is a state of disagreement resulting from individuals or groups that differ in attitudes, beliefs, values, objectives, and goals
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CONFLICT ?
YOUR FEELINGS YOUR BEHAVIOUR MY FEELINGS MY BEHAVIOUR
MISMATCH
Stages of Conflict
Latent Conflict manifests itself non-verbally mainly through actions and reactions to the situations. Perceived conflict normally results from partial availability of information that is likely to jeopardize the interest of one of the parties involved in the situation. Manifested Conflict is a phase wherein the conflict manifests itself verbally or materially. Felt conflict is the stage wherein one or the other involved parties undergo a stage of felt emotions including fear, mistrust and anger.
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Varieties of Conflict
Goal conflict arises because of a mismatch between the expected and the actual outcomes of an event/action. Cognitive conflict arises because of confusion within an individual resulting from his own ideas and thoughts on a particular issue. Affective conflict arises becase of inconsistency in feelings and emotions within an individual or between individuals. Procedural Conflict arises when individuals and groups have differing opinions about the process to be used for responding to an issue.
Sources of Conflict
Diverse goals or objectives Different values and beliefs Status; incongruence, salary differences, education level Decision making; considerations, pressures Role pressure or clarification Differences in perception of the situation Group associations, status, or identity Race, ethnicity, or gender differences Personality clashes
Contd..
Competition for limited resources or competition to achieve similar goals Inadequate or poor communication Resource inadequacy; disagreements about who does what Leadership problems, including inconsistent leadership, lack of knowledge for avoiding conflict Disagreement on the process of doing things Personal, self, or group vested interests Power and influence Getting into win-lose situation Role ambiguity and lack of role clarity Communication; limited, lack of, under, or distorted
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Managing Conflict
Define conflict and get concerned about it when it is at latent or felt stage Identify the root causes behind conflict by diagnosis and analysis Work out an implementable and acceptable management strategy through negotiation
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HIGH
ACCOMMODATIVE OBLIGING
COLLABORATING
COMPROMISE
LOW
AVOIDING
LOW
Negotiation
Negotiation is a systematic process in which two or more individuals or groups having common and/or conflicting goals, discuss alternate possible solutions involving specific terms for a possible agreement It involves three stages namely: Pre-negotiation Negotiation Post-negotiation
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CHAPTER 22
DYNAMICS OF LEADERSHIP
Learning Objectives
Leadership Theories of leadership Leadership traits The difference between leaders and non-leaders The difference between leaders and managers Different leadership styles
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Leadership Defined
Leadership is all about influencing people to act, behave, and perform as desired by the leader. Good leaders survive in adverse conditions while bad leaders can lose even in favourable conditions.
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Leadership Theories
Traits Theory: assumes that certain characteristics, mostly those of personality, when combined with an individual, bring forth a successful leadership.
Behavioural model of leadership: focuses on what leaders do and how they do it. Situational Approach: successful leader adapts behaviour according to the situation; adaptability is the key.
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Leadership Traits
Integrity Loyalty Commitment Energy Decisiveness Selflessness
LEADERS Coach Open Door Problem Solver Advice Giver Cheer Leader Fair in Dealings with Others Open to Disagreement Decisive, Humble, Persistent
0 Decide
3 Consult Individually
5 Consult Team
7 Facilitate
10 Delegate
Leadership Styles
Decide Style: leader makes the decision and either announces or sells the same to the subordinates . Consult individually Style: leader consults. However decision may or may not be the outcome of this consultation. Consult Team Style: leader places the problem before the group, however, the decision may or may not be the outcome of their suggestions. Facilitate Style: leader presenting the problem to the team acts as a facilitator, get the views of the team members and a concurrence to a decision. Delegate Style: leader empowers subordinates and allows the team to make decisions within the given limits.
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CHAPTER 23
DECISION MAKING
Learning Objectives
Decision making Its relevance to managers Systematic and structured decision making Steps involved in decision making Tools and techniques for making decision The Six Thinking Hats
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Non-programmed Decisions are one-shot occurrences and are usually less structured
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Plus/Minus/ Implications
Force Field Analysis Six Thinking Hats Cost/Benefit Analysis
Learning Objectives
To understand relevance of emotional intelligence and emotional competence to work performance To understand the meaning of emotional intelligence To understand relationship between emotional competence and emotional intelligence To understand emotional competence framework
EMOTIONS
Anyone can become angry that is easy. But to be angry with the right person, to the right degree, at the right time, for the right purpose, and in the right way is not that easy!
Emotional Competence
Goleman (1998) defines emotional competence as A learned capability based on emotional intelligence that results in outstanding performance at work.
Emotional Intelligence
To be adept at an emotional competence e.g. in customer service or conflict management necessitates an underlying ability in emotional intelligence fundamentals especially, social awareness and relationship management.
EQ VS EI
However, possession of social awareness or skill at managing relationships does not guarantee skills in handling a customer adeptly or resolving a conflict. Emotional intelligence merely relates to the potential but emotional competencies are learned abilities
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EMPIRICAL EVIDENCE
A study of Harvard graduates in the fields of law, medicine, teaching, and business found that scores on entrance exams - a surrogate for IQ had zero or negative correlation with their eventual career success.
DANIEL GOLEMAN
Being intelligent and gaining expertise in one's line of work aren't enough to ensure success, says author Daniel Goleman. In addition, he says, people in business must be judged on "how well we handle ourselves and each other."
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FIVE COMPETENCIES
"Emotional 'intelligence' determines our potential for learning the practical skills that are based on its five elements [or competencies]:viz. self-awareness, motivation, selfregulation, empathy, and adeptness in relationships,"
CHAPTER 25
STRESS MANAGEMENT
Learning Objectives
After studying this chapter, you will be able to understand: Stress Eustress and Distress The human stress response Stressors Stress and the organization Levels of stress Stress and individual behaviour Stress management Stress management at the individual level
Understanding stress
Stress is tension that is an outcome of anxiety and fear about a current event or a future one. Thus, the chief cause of stress is anxiety resulting in feeling of discomfort in mind that further leads to body ailments. In management, stress is defined as the human bodys response to the demands made on it.
Stress can be defined as: The non-specific response of the body to any demand put upon it. It is the bodys automatic response to challenge
Stress is not: An event or a circumstance but a response to it Necessarily bad, damaging, or unhealthy Always over stimulating or exciting Simply anxiety yet a vital signal that something is out of balance
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Disstress
NO SUCCESS
Manifestation of Stress
Three Stages of Stress
Stage III High Stress Arousal Pressure Stage of Strain Stage II: Continuance of Stress Stress Arousal Pressure Stage I: Beginning of Stress Mobilization of Energy
Stressors
Stressors refer to those events and situations that trigger stress. Some of common stressors are: Non-fulfilment of needs Not being invited as part of a group you want to belong to Not being cared for, recognized, respected, or valued Having a feeling incompetence compared to peers Neglected, not cared for, or denied what is due to you Monotony or boredom from assigned job role Not having freedom to take initiative Being over or closely supervised Inequity in rewards and work assignments
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Contd..
Try not to make unnecessary appointments and unachievable deadlines Protect your time by learning to say NO Do something that relaxes you Try to make yourself aware of your behaviour and its impact on others Do not be an idealist Take time off to develop social relationships
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Stress management
Individual Level Planning for Stress Management Maintaining Good Physical Health Practice Relaxation Develop Psychological Support System Manage Your Time Physical/Psychological Withdrawal Accept the Fact that I am Not Always Right Develop a Positive Orientation Towards Life
Stress Management
The
Through
Contd..
Lack of growth opportunity Work overload , deadlines, or boredom at work Inadequate resources to effectively and efficiently perform the assigned work Conflict between personal and organizational values Excessive and conflicting demands at work Responsibilities not well defined. Ambiguity and confusion about what is expected Unpredictable behaviour on the part of the boss Unknown and completely unfamiliar work situations Being made scapegoat for group failures
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Chapter 26
Learning Objectives
To understand meaning of Entrepreneurship To learn what is meant by creativity and its relevance to entrepreneurship To learn about the relationship between creativity and innovation and creativity and invention To learn about knowledge economy and relevance of creativity in knowledge economy To know about basic requirements to become successful entrepreneur
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BUSINESS CREATIVITY
Business creativity, is the entire process by which ideas are generated, developed, and transformed into value. It encompasses what people commonly mean by innovation and entrepreneurship. ---[ John Kao ] It includes both the art of giving birth to new ideas and discipline of shaping and developing those ideas to the stage of realized value.