UNIT 1 Managing & Managers

WHAT IS MANAGEMENT?
FREDERICK W TAYLOR The art of knowing what you want to do and seeing that it is done in the best and cheapest way.

STANLEY VANCE Simply the process of decision making and control over the action of human beings for the expressed purpose of attaining pre-determined goals .

DEFINITIONS
Management is the process of designing and maintaining an environment in

which individuals, working together in groups, efficiently accomplish selected aims

Management is the art of getting things done through and with the people in

formally organized groups

Herald Koontz

Management is a process of planning, organizing, actuating and accomplish

the objectives by the use of people and resources

George R. Terry

Management is concerned with resources, tasks and goals. It is the process of

planning, organizing, directing and controlling to accomplish organizational objectives through the coordinated use of human and material resources

Management as a Unifying Force

Methods Machinery

Management Materials Money

Man Power

 Organizations possess human as well as non-human resources that are put to use in the service of specific goals.

Management is needed whenever people work together in an organization.

The aim of managers is to create surplus. As managers, people carry out the managerial functions of planning, organizing, staffing, leading and controlling.

Management thus,

 Applies to any kind of organizations.  Is a continuous process.  Applies to managers at all organizational levels.  Is concerned with productivity., which implies effectiveness and efficiency

Management Process
OUTPUTS

INPUTS

MEN MATERIALS MACHINERY MONEY

GOODS SERVICES PROFIT PRODUCTIVITY CUSTOMER SATISFACTION

FUNCTIONS OF MANAGEMENT
LUTHER GULICK 7 FUNCTIONS - POSDCORB 1) P 2) O 3) S 4) D

LANNING
RGANISING TAFFING IRECTING C ORDINATING O R EPORTING B UDGETING ONTROLLING

5) C

PLANNING
Determining in advance what should be done. Determination of what is to be done, how, where it is to be and who is to be done, finally how the results are to be evaluated. It is done for every department, division or sub-unit of the organization. It is a function to be performed by managers are all levels Top Middle Supervisory Plans may be Long term management Short term shorter period for a day or for a week made by middle and first line managers. cover a period more than 5 to 10 years made by top

ORGANISING
Providing a business with everything useful for its functioning : the 4 M s(Man, Machine, Money & Methods) Refers to the structure which results from identifying and grouping work, defining and delegating responsibility and authority and establishing relationships - Allen

STAFFING
Important function of building human resources The Manager attempts to find the right person for each job Involves
Recruiting Selection Training

Includes a suitable system of compensation

DIRECTING
This function can be called by Leading Motivating Actuating The manager explains to his people what they have to do and helps them do it to the best of their ability. Involves three sub-functions Communication Leadership control Communication passing of information. Leadership guiding and influencing the work to the subordinates Motivation arousing desire in the minds of the employees to give their best to the enterprise Financial incentives, bonus, increase in salary, etc., Non-financial promotion, job security, recognition, etc

CONTROLLING
Ensuring that everything occurs in conformity with the plans set, the instructions given and the principles established. Involves five functions Setting up of standards Measuring the actual performance Comparing with the standards Finding out deviations, if any Making corrective actions. In absence of control, the set objectives could not be achieved

LEVELS OF MANAGEMENT
First line Managers
Foremen White collar Supervisors

Middle Level Managers

Sales Managers Plant Managers Personnel Managers Other Departmental Heads Board of Chairman The Company Presidents The Executive Vice-Presidents The other men who coordinate all the specialties and make policies for the company as a whole.

Top Management

MANAGERIAL SKILLS
A skill is the ability of transforming knowledge in action It can be developed through:a) practice b) experience and c) back ground The managerial skills are
Conceptual skills Technical skills Human Relations skill

 Conceptual Skills
The ability to take a broad and foresighted view of the organization and its future To conceptualize the environment, the organization and his job so that he can set appropriate goals for his organization, for himself and for his team Important when the manager moves up to a higher position of responsibility.

Technical Skills
Person s knowledge and proficiency in any type of process of technique Seems to be important at lower levels of management In higher functional positions, conceptual component relating to those functional areas are important rather than the technical component

 Human relations skill

The ability to interact effectively with people at all levels recognize the feelings and sentiments of others to judge the possible reactions and outcomes of various course of action to examine his own concepts and values which may enable him to develop more useful attitudes about himself Consistently important for managers of all levels

Skill-mix at different management levels

Top Management Middle Management Supervisory Level

Conceptual skills Human Relations skills Technical skills

MANAGEMENT & ADMINISTRATION

Administration:- The overall determination of policies, the setting of major objectives and the laying out of broad programmes Haimann Function:- A type of work activity than can be identified and distinguished from other work Three different criticisms Administration is broader than Management Management is broader than Administration Administration and Management are identical

Administration is broader than Management

Administration determines the specific goals and lays down the broad areas to achieve these goals It is a policy making function According to American School of thought Administration Top Level activity Management Lower Level activity Some writers strong with this criticism: a) Ordway Tead b) Oliver Sheldon c) William Spriegel d) William Schulze

Management is broader than Administration

Management is rule - making and rule - enforcing body Administration is a part of management and it is just an implementing agency. According to English School of thought Management wider concept Administration handles the current problem that may arise in carrying out the policies laid by management. Some writers strong with this criticism: a) E.F.L Brech b) Henry Fayol c) Kimball and Kimball

Administration & Management are Identical

Some writers strong with this criticism: a) William Newman b) Herold Koontz c) Dalton E. McFarland d) Earnest Dale Peter Drucker:The use of these words in different fields makes a difference. Government Administration Emphasis is not on economic consequences of decisions. Ex. Military organization Private - Management Emphasis is on economic consequences on every decision and action put on

ADMINISTRATION AND MANAGEMENT

Administration

Top Management Middle Management Management Lower Management

DISTINCTION BETWEEN ADMINISTRATION AND MANAGEMENT

Point of Distinction Nature Scope Level Skills Represents Usage Administration Thinking Function Determines Broad objectives and policies Top level Conceptual and Human Owners invest capital and receive profits Government Organizations Management Doing Function Implements and achieves Middle and Lower Level Technical and Human Managers paid individuals Business Enterprises

MANAGEMENT A SCIENCE OR AN ART?

Science:An organized or systemized body of knowledge pertaining to a specific field of enquiry

a) Systemized body of knowledge

used to solve problems

number of principles to apply and can be

b) Management is a social science it deals with human behavior. It can be

called a soft science

c) Management is an inexact science does not offer absolute principles. It can

offer only guidelines to solve problems

d) Manager Vs. Scientist Scientist can wait till all the information are collected but
Manager cannot wait and he has to take decisions for present and future based on inadequate information. e) Scientific Management Sophisticated Managerial Science

 Art:It is the application of knowledge and personal skills to achieve results a) b) Use of Knowledge Creative art
use of management theory in managerial functions

creative in combining human and non-human resources in an

effective manner to achieve results

c)

Personalized
people

every manager has his own way of managing things and

d)

Constant Practice Learning from mistakes as artistic skills can be developed

through training, so as managerial skills

MANAGEMENT IS SCIENCE AS WELL AS ART

A successful manager requires both the knowledge of management principles and the skills of how the knowledge could be utilized Management uses both scientific knowledge and art in managing the organization A balance between the two is needed for an effective management.

COMPARISON BETWEEN SCIENCE AND ART AS USED IN MANAGEMENT

SCIENCE Advances by knowledge Proves Predicts Defines Measures Impresses ART Advances by practice Feels Guesses Describes Opines Expresses

MANAGEMENT AS A PROFESSION
Well defined body of knowledge Formal education and training Representative body Code of conduct Service motto

SCOPE OF MANAGEMENT
Management as an economic resource
Management is required to convert the disorganized resources of

5 M s into a productive, useful, on-going concern - Newman

Management as a system of authority

Rule-making and rule-enforcing body Bound by a relationship i.e., superior and subordinate Various levels of authority top, middle and supervisory

Management as a class or elite

Management is a distinct class in society having its own value system The term Management refers to the group of individuals occupying managerial positions Al the managers from the chief executive to the first line supervisors are collectively addressed as Management , which refers to the group

CHARACTERISTICS OF MANAGEMENT
Management is  INTANGIBLE  GOAL-ORIENTED  UNIVERSAL  SOCIAL PROCESS  GROUP ACTIVITY  SYSTEM OF AUTHORITY  ACTIVITY  DYNAMIC  SCIENCE AS WELL AS AN ART  MULTIDISCIPLINARY

IMPORTANCE OF MANAGEMENT
Optimum use of resources Effective leadership and motivation Establishes sound industrial relations Achievement of goals

Evolution of Management DEVELOPMENT OF MANAGEMENT THOUGHT

The period between 1700 1850, the period of Industrial Revolution which brought out the advent of factory system. Highlighted the importance of direction as a managerial function. Several economists in their writings explained the concepts and functions of management. Adam Smith Division of Labor Turgot The Importance of Direction and Control Say Importance of Planning Management emerged as different field of study only during the 19th century with the introduction of stock exchanges. The different form of enterprise separated business organizations from their ownership.

 It gave rise to different problems of labor inefficiency and inadequate system

of wage payment. payment.

To give solutions to the above problem, Management started emerging as a

new field. field.

During the last 100 years, Management is more scientific with certain

standardised principles and practices. We study the evolution thought in three practices. periods. periods.
Early Classical approaches scientific management, administrative

management, bureaucracy.
Neo-Classical approaches human relation movement and behavioural Neo-

approach.
Modern approaches quantitative approach, systems approach and

contingency approach

EARLY CLASSICAL APPROACHES

Frederick Winslow Taylor is considered to be the Father of Scientific Management Through his experiments with companies : Midvale Steel

Company, Simonds Rolling Machine and Bethlehem Steel he made several important contributions to Scientific

Management Taylor s work The Principles of Scientific Management was published in 1911 which is a famous work done by him. He invented high-speed steel cutting tools and spent most of his life as a consulting engineer.

CONTRIBUTIONS OF TAYLOR
TIME AND MOTION STUDY: The practical application of this approach was to break each job down into

its smallest and simplest component parts or motions

Each single motion in effect became a separate specialized job to be allocated to a separate worker

Each motion of a job was to be timed with the help of a stop watch and

shorter and fewer motions were to be developed

Workers were selected and trained to perform such jobs in the most

efficient way possible, eliminating all wasted motions or unnecessary physical motion
Thus, the best way of doing job was found It replaced the old rule of thumb knowledge of the workman

 DIFFERENTIAL PAYMENT: New payment plan called differential piece work was introduced Incentives were linked with production A worker was entitled to receive a low piece rate if he produced the

standard number of pieces

A worker received high piece rate if he produced more than the standard Taylor thought high piece rate would motivate the workers to produce

more to increase the production

SCIENTIFIC RECRUITMENT AND TRAINING: Scientific selection and development of employee was emphasized The management should develop and train every worker to bring out his

best
To enable the worker to do higher, more interesting and more profitable

class of work

DRASTIC REORGANISATION OF SUPERVISION: Two new concepts were developed by Taylor (i) Separation of planning and doing (ii) Functional Foremanship The worker should not plan any work It was the duty of the foreman who has to plan for the work There should be many foreman as there are special functions involved in doing a job Each foreman of different functions should give orders to the worker on his specialty

INTIMATE FRIENDLY COOPERATION BETWEEN THE MANAGEMENT AND WORKERS : Management and labour had a common interest in increasing productivity There should be a complete revolution on the part of management and labour was required By working together profits could be increased, so that management and labour could no longer compete each other

CONTRIBUTIONS BY HENRY GANTT

Using of correct methods and skills in performing a task was important than knowing the skills and methods The importance of human element in productivity , thus he needed motivation He introduced two main features in Taylor s incentive scheme Every worker who completed his assigned work 50 % bonus Foreman was also entitled to receive a bonus for every worker who have completed the assigned task + extra bonus if every one completed

Ratings of workers publicly:

Every worker s progress is recorded on individual bar charts
Black completed the standard Red deviations in standard i.e. fell below the standard

A charting system for production control

Each man s daily performance compared with standard of performance

CONTRIBUTIONS BY FRANK AND LILLIAN GILBERTH

Frank and Lillian Gilbreth made their contribution as husband and wife They made their contribution in Motion and Fatigue studies to eliminate wasteful hand-and-body motions. The Gilbreths also experimented with the design and use of the proper tools and equipment for optimizing work performance. The Gilbreths were among the first to use motion picture films to study hand-and-body motions. The Gilbreths also devised a classification scheme to label 17 basic hand motions, which they called Therbligs. According to them, the Motion and Fatigue studies raised the workers morale

1. CONTRIBUTIONS OF SCIENTIFIC MANAGEMENT IN SHORT

The four objectives of management under scientific management were as follows:a) b) c) The development of a science for each element of a man s work to replace the old rule-of thumb methods The scientific selection, training and development of workers instead of allowing them to choose their own tasks and train themselves as best they could The development of a spirit of hearty cooperation between workers and management to ensure that work would be carried out in accordance with scientifically devised procedures. d) The division of work between workers and the management in almost equal shares, each group taking over the work for which it is best fitted instead of the former condition in which responsibility largely rested with the workers. Selfevident in this philosophy are organizations arranged in a hierarchy , systems of abstract rules and impersonal relationships between staff.

LIMITATIONS
Economic incentives are not the strong motivators for increased production. Taylor believed it so, which is proved wrong. No man is an economic man Time and motion study could not be called a one best way Separation of planning and doing tended to reduce the need for skill and produce greater monotony of work Taking orders from 7 or 8 bosses resulted in confusion Advances in methods and tools and machines eliminated some workers, who found it difficult.

2. ADMINISTRATIVE MANAGMENT
Henry Fayol is considered the Father of Administrative Management (1841 1925) broad administrative principles applicable to general managerial levels Basically a French mining engineer turned to a leading industrialist and successful manager Till his monograph General and Industry Administration which he wrote in 1916, was translated to English in 1929, very little was known about him He provided broad analytical framework on the process of administration He divided the activities of a business enterprise into six groups : technical, commercial, financial, accounting, security and administrative or managerial He has presented 14 Principles of Management to guide the management process and practices and higher

FAYOL S 14 PRINCIPLES OF MANAGEMENT

1. Division of work 2. Authority and Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of Individual Interest to General Interest 7. Remuneration 8. Centralization 9. Scalar Chain 10.Order 11.Equity 12.Stability of Tenure of Personnel 13.Initiative 14.Esprit de Corps

CONTRIBUTIONS OF ADMINISTRATIVE MANAGEMENT

Taylor and Fayol, both concentrated on increasing production; Taylor worked from the bottom whereas Fayol worked from upside to down Fayol s principles met with wide spread acceptance In US, two General Motor Executives James D Mooney and Alan C Reiley, wrote a book, Onward Industry in 1931 and revised as Principles of Organisation Colonel L Urwick, a distinguished executive and a management consultant in UK wrote a book, The Elements of Administration, where they tried to comprehend the concepts and principles of Taylor, Fayol, Mooney and Reiley. It made an explosion in number of principles of management. His important concepts are
There should be clear line of authority The authority and responsibility should be clearly communicated Each worker should be given single operation or work only The span of control of a manager should not exceed six Authority can be delegated

 A new school of thought Management Process School came into existence with inspirations from Fayol Harold Koontz and Cyril O Donnell, the champions of the school believed management is a dynamic process of performing the functions of management (PODSCORB) They believed these functions and principles on which they are based have universal or general acceptability Managers or the Managing Directors perform same planning and control functions and only the degree of complexity differs Management functions are applicable not only to business organisations but also to all organisations where group effort is employed Management theory is not culture - bound but it is transferable to any environment This approach is known as Universalist approach

LIMITATIONS OF ADMINISTRATIVE MANAGEMENT

Fayol s principles of specialization produced dysfunctional consequences a) Formation of small work groups with norms and goals which does not suit with those of the management b) Dissatisfaction among workers c) Increase in overhead cost Fayol s principles are both plausible and contradictory. There is nothing in his writings to indicate which is to apply The principles are based on few case studies only and not empirically proved These principles are stated as unconditional principles but what needed is conditional principles Result in the formation of mechanistic organization structures which are insensitive to employees social and psychological needs These principles are based on the assumption that organizations are closed system but in reality organizations are open system

3. BUREAUCRACY
Max Weber is known as the Father of Bureaucracy A German Sociologist, he made study on different types of business and

Government Organizations
He found three basic types of administration Leader oriented no delegation of management functions Tradition oriented managerial positions are handed over from

tradition to tradition
Bureaucratic management responsibility is based on the person s

demonstrated ability to hold the position

He considered bureaucracy was the ideal type of administration

FEATURES OF BUREAUCRACY
1. There is no instance on following Standard Rules 2. There is a Systematic Division of Work 3. Principle of Hierarchy is Followed 4. It is necessary for the Individual to have Knowledge of and Training in the Application of Rules 5. Administrative Acts, Decisions and Rules are recorded in writing 6. There is Rational Personnel Administration

LIMITATIONS
Over conformity to rules Buck-passing Categorization of Queries Displacement of Goals No real right of appeal Neglect of informal groups Rigid structure Inability to satisfy the needs of mature individuals

NEO CLASSICAL APPROACHES

y These approaches are called neo-classical approaches as they tried to refine the classical approaches y Neo classical approaches could be classified into A) Human Relations Movement B) Behavioural Approach

1. HUMAN RELATIONS MOVEMENT

Managers found that Taylor s and Fayol s principles of management were not helpful in achieving complete production efficiency and work place harmony They faced difficulties because of the rational behavior of employees To help the managers to deal effectively with the people side of the organization, the human relations movement was begun The real impression came from Hawthorne Experiments by Prof. Elton Mayo and his colleagues in Western Electric Company s plant in Cicero, Illinois from 1927 to 1932 The plant employed 29,000 workers to manufacture telephone parts and equipment The study can be described in four parts:
1) 2) 3) 4) Illumination Experiments Relay Assembly Test Room Interviewing Programme Bank Wiring Test Room

1. ILLUMINATION EXPERIMENT
y First phase of the study to test the correlation between illumination and

productivity
y Experiments were done on a group of workers and the productivity is measured

at various illumination levels

y The results were erratic and the researchers changed their methodology y There were two groups of workers in different buildings:

control groups - who work under constant level of illumination test groups - worked under changing levels of illumination
y The post-test productivity of the two group then compared and found out that

illumination and productivity were very marginally related

2. RELAY ASSEMBLY TEST ROOM

y The object of the study was broadened to know not only the illumination and productivity but also such other factors like the length of the working day, rest pauses, their frequency and duration and other physical conditions y A group of six women workers were selected, told about the experiment and asked to work in an informal atmosphere with a supervisor-researcher in a separate room y Several variation were made in the working conditions to find out the combinations which were ideal for production y Surprisingly, the production increased at all levels and stabilised at high level y Researchers then found the following factors y Feeling of importance among the girls to participate in the research y High cohesion among the workers of the group y Warm informality, tension-free interpersonal and social relations and relative freedom from strict supervision and rules

3. INTERVIEWING PROGRAMME
y The knowledge about the informal groups in the second phase made the researchers to design the third phase to know the basic factors for the human behaviour at work y 20,000 employees were interviewed with direct questions relating to type of supervision, working conditions, living conditions and so on where the employees reluctant to answer y The technique was changed to a non-directive type where the employees were asked to speak about the most interesting part of their working environment y It revealed that the workers social relations inside the organisation had an unmistakable influence on their attitudes and behaviour y The study revealed the pervasive nature of the informal groups which had their own culture and production norms which their members were forced to obey

4. BANK WIRING OBSERVATION ROOM

y This phase involved the observation of 14 men making terminal banks of telephone wiring assemblies to find out the effect of informal group behaviour with formal economic incentives on productivity y The group had its own production norms for its members which was very low when comparing with the management norms, defeating the incentive scheme y This artificial restriction saved the employees from a cut in price rates and protected the weaker employees y Workers foolishness means who produced more than the group norms isolated from the group harassed or punished by the group called rate busters y Chisellers too slow workers y Squealers - who complained about their co-workers to the supervisors y The members of the informal group gave rankings about each other, which helped to find out the internal social structure of the group and its informal leaders

FINDINGS OF HAWTHRONE EXPERIMENT

Produced an impact on human relations movement The important role played by the informal group in an organisation was identified Research scholars began to concentrate on the human behaviour of management and principle When people work together people should understand people to accomplish the goals of the management

CONTRIBUTIONS OF HUMAN RELATIONS MOVEMENT

y Business organisation is an social system not merely a technoeconomic system y No correlation between high working conditions and productivity y The production norms were set by the group not as time and motion study. The employees who deviate from the norms were penalised y The workers main motto is not only money but also the nonfinancial rewards which affect largely their behaviour and limit the effect of economic incentive plan y Task-centered leader ship is not effective y The informal group was the unit of analysis in any organisation and not the individual

LIMITATIONS
y Human relations writers saw only the human variable as critical and ignored other variables y It is possible to find out a solution which satisfies everybody so that the organisation is turned out to be a big happy family is not correct y Over emphasizing on symbolic rewards and underplaying the role of material rewards y The informal groups are shown as the major source of satisfaction for industrial workers y The approach is production-oriented and not employee-oriented y The process of decision making is very leisure which will not help in emergency y People want to become managers only for the desire of power but this approach makes an unrealistic demand on the superior y It relies on the assumption that satisfied employees are more productive workers, which is wrong

2. BEHAVIOURAL APPROACH
More mature version of the human relations approach to management Behavioural scientists Douglas McGregor Abraham Maslow Kurt Lewin Chester Barnard Mary Parker Follett George Homans Rensis Likert Argyris Warren Bennis These scientists were trained in various social sciences such psychology, sociology and anthropology Thus they were known as behavioral scientists rather than members of human relations school Their contributions have helped enormously to understand the organizational behavior

CONTRIBUTIONS OF BEHAVIOURAL APPROACH

The traditional concepts like hierarchical authority, unity of command, line

and staff relationships and narrow span of control are criticized by the behavioral scientists
They concluded that managers are always dominating so that

subordinates are passive and dependent on them

Behaviorists prefer an organization which is more flexible and the jobs

should be built around the capabilities and aptitudes of average employees

It recognizes the practical and situational constraints on human rationality

for making optimal decisions

They give importance to participate and group decision making as it is not

feasible to make individuals to solve the problems themselves

 They underlined the desirability of humanizing the administration of the control process and encouraging the process of self-direction and control instead of imposed control they considered organization as groups of individuals with certain goals They made extensive studies on leadership. For them, the democraticparticipative leader style is desirable than the autocratic and taskoriented style In real, human motivation is complex, i.e., no two people are exactly alike, so the manager has tailor his attempts to influence them based on the individual needs They recognized the conflict is inevitable and sometimes desirable too

LIMITATIONS TO BEHAVIOURAL APPROACH

Self actualization view no two employees are equal and every one will have different desire and needs There is no compatibility between individual and organizational goals, in reality, individual s desire to be autonomous This approach discounted the non-human aspects of an organisation such as task, technology and manufacturing Like other approaches, it also tried to find out the best way of managing. It assumed humanizing the organisation is the best way of managing As human behavior is so complex, the behavioral scientists offer differ in their recommendations for a particular problem

MODERN APPROACHES
1. QUANTITATIVE TECHNIQUES
y During World War II, mathematicians, physicists, and other scientists joined together to solve military problems. y The quantitative school of management is a result of the research conducted during World War II. y The quantitative approach to management involves the use of quantitative techniques, such as statistics, information models, and computer simulations, to improve decision making. y People used the techniques or problem solving to the industry after the end of the war y A mixed team of specialists were called to analyse the problem where they construct a mathematical model to simulate the problem y The model shows all the relevant factors which are interrelated with the problem y By changing the values of the variables and analysing the different variables with the help of a computer, the expert team determine the effect of change

FEATURES OF QUANTITATIVE APPROACH

y The focus of the quantitative approach is decision making. Managerial choices in

any situation depend on criteria such as costs, revenues, return on investment, impact on other areas etc.,
y It facilitates disciplined thinking, while defining management problems and

establishing relationships among variables

y It aims at precision and perfection by expressing in quantitative terms y Widely used in planning and control activities where problems can be identified

and expressed in quantitative terms

y Heavy emphasis is put on computers and their processing capabilities. Final

solutions to problems are reduced to mathematical formulae. subjected to further analysis and processing to find viable alternatives

These are

LIMITATIONS
Still uncommon in some areas like staffing, organising and leading where problems are more human oriented than technical in nature There is no importance on human relationships and individual needs and aspirations Though the inputs for decision making are not readily available, the manager cannot postpone the decisions Decision quality depends on the quality of data If the data is not adequate and an updated one, it does not serve the purpose

BRANCHES OF QUANTITATIVE APPROACH y MANAGEMENT SCIENCE:y Aims at increasing decision effectiveness through the use of advanced mathematical

models and statistical methods

y The computers are used more as it focuses on technical rather than human behaviour

problems

y OPERATIONS MANAGEMENT:y It includes fields such as inventory management, production management, planning,

design and location, work scheduling and quality assurance

all functions responsible for

managing the production and delivery of an organisation s products and services

y MANAGEMENT INFORMATION SYSTEMS:y Focuses on computer based information systems for use by management where the raw

data is converted into meaningful information for decision making at various levels

2. SYSTEMS APPROACH
It attempts to view the organization as a single unified, purposeful entity As the classical approach emphasized task and structure , the behavioral approach emphasized people and the quantitative approach emphasized mathematical decision making , the systems approach tries to get ideas by looking the organisation as a whole and as a part of the larger, external environment The systems approach provides the manager an integrated approach to management problems Chester Bernard, George Homans, Philip Selznick and Herbert Simon are the important advocates of systems approach

SYSTEMS - TERMS
System: Inter-related parts or components Sub-system The parts which make up the whole system Synergy The output of the system which is always more than the combined output of it parts Open and Closed System A system which is interacting with its environment Open system A system which is not interacting Closed System

 System Boundary: Which separates the system from its environment Flow: Receiving inputs from the environment

----->

processing the

inputs into output ----> outputs may be goods or services returned to the environment Feedback: Central to system control Holism: No part of the system could be accurately analysed and understood apart from the whole system. Each part bears the interdependence to every other part. This concept is called Gestalt in psychology. William Foote White with his 3 subordinates applied this concept in a study of 12 restaurants in Chicago

ORGANISATION AS AN OPEN SYSTEM

ENVIRONMENT E N V I R O N M E N T

INPUTS

PROCESSES

OUTPUTS

Men, Materials, Money, Technology

Activities, Operations

Goals, Sales / Profits

TARGETS

E N V I R O N M E N T

ENVIRONMENT

Organisation as a Open System

Input of information, Energy, Materials (Import)

Transformation of Energy (Throughput)

ENVIRONMENT

Output of Products, Ideas, Services (Export)

CONTRIBUTIONS OF SYSTEMS APPROACH

A problem is studied both at the level of the sub-system and the total system To apply this approach the executives of the organisation should be generalists i.e., they should have enough knowledge in other fields in addition with their functional skills They can easily maintain a trade-off between the needs of the various parts of the enterprise and goals of the firm as a whole

LIMITATIONS
The conceptual framework of understanding organist ions provided by the systems approach is vague or too abstract It is not identifying the situational differences and factors The oneness in any organisation, in reality is not a easy one, either it is difficult or is it impossible Provides more specificity in terms of variables and if-then relationships in a situational context Attempts to integrate various school of thought thus there is nothing new with the approach

3. CONTINGENCY OR SITUATIONAL APPROACH

This approach is in a view point that the various schools of management could not be applied generally or universally under all conditions There is no one best way as situations and conditions differ. The same results may not be obtained It suggests that the manager should find out which technique will best suit to the contingency situation to attain the firm s goals The manager have to select a situational sensitivity and practical selectivity The contingency theorists are Selznik Burns and Stalker Woodward Lawrence and Lorsch James Thompson

 Contingency approach views are applicable in Designing organizational structure Deciding the degree of decentralization Planning of information system Resolving conflicts and managing change Employee development and training programmes and Other relevant areas of organisation

ENVIRONMENT AN INTRODUCTION
Environment is anything which surrounds a system thus business environment is anything which surrounds the business organisation The strategies, decisions, processes and performances are affected by the environment Two types of environment Micro Environment:Different types of stakeholders - customers, employees, suppliers, board of directors and creditors. Any changes in this environment will directly affect Is also called internal environment Macro Environment:Beyond the control of the business (STEP) - Social, Technological, Economical and Political. Any changes will indirectly affect Is also called external Environment

FEATURES OF ENVIRONMENT
COMPLEX Environment comprises of different event, factors, conditions and influences arising from various sources which interact with each other constantly and produce new set of influences It cannot be predictable what kind of forces influence an environment DYNAMIC Environment is constantly changing There may be too many changes with in a short span of time which might be shocks and surprises to the organisation Some times the organizations are forced to comply with the changes in the environment CHALLENGING The factors of macro environment have an impact on organizations (Political, Legal, Economic, Technological and Social systems) These forces are so dynamic and their constant change results with lot of opportunities, threats and constraints to the managers

ENVIRONMENTAL ANALYSIS
Every organisation must strike a balance between environment, values

and resources in order to survive in a high competitive environment

Environmental analysis is the process of monitoring an organizational

environment to identify both present and future threats and opportunities that may influence the firm s ability to reach its goals
Features : Holistic Exercise broad view of the environment Exploratory process tries to explore the unknown future choices,

seeking clarification of the assumptions about future, etc

Continuous activity it is a continuous process of picking up new

signals from the environment

COMPONENTS OF EXTERNAL ENVIRONMENT

Economic how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and other economic factors. Social how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population. Political Legal how changes in government policy might affect the business e.g. a decision to the way in which legislation in society affects the business. E.g. changes in how the rapid pace of change in production processes and product subsidize building new houses in an area could be good for a local brick works. employment laws on working hours. . Technological Ethical innovation affect a business. what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights.

ECONOMIC ENVIRONMENT
Economic environment refers to all forces which have an economic impact on business Economic factors throw light on the nature and direction of the economy in which a firm operates The various economic factors are : National Income Savings Investment Prices, wages, Productivity Capital Market Policy Initiatives International Transactions Sectoral Growth

SOCIO-CULTURAL ENVIRONMENT
Refers to the influence exercised by certain factors which are beyond the company s gate The social factors that affect a firm include the values, attitudes, beliefs, opinions and life-styles of persons in the firm s external environment Social factors change continually The various factors are : Demographic factors Cultural factors Religious, Ethical and moral factors

POLITICAL AND LEGAL ENVIRONMENT

Political environment refers to
the political factors which influence the managers formulation and

implementation of strategic direction.

Legal Environment refers to

the environment influence exerted by the three political institutions, viz.,

legislature, executive and the judiciary in shaping, directing, developing and controlling business activities

TECHNOLOGICAL ENVIRONMENT
It exercises considerable influence on business Technological factors represent major opportunities and threats that must be taken into account while formulating strategies Technological advantage advancements can create competitive

NATURAL ENVIRONMENT
It comprises of ecological, geographical and topographical factors Because of the environmental activities and the knowledge of different type of pollutions that affect the earth, most of the companies come out with Eco-friendly products Modified processes Redesigned production equipment Recycled by-products

INTERNATIONAL OR GLOBAL ENVIRONMENT

International factors influence the companies by new global competitors Fluctuations of the rupee against foreign currencies International factors assume greater importance when domestic companies

directly depend imports or exports on certain countries

Advances in transportation and communication technology has made the

world as a global village and no part of it is cut off from the rest

ETHICAL ENVIRONMENT
Application of moral principles to business problems is known as business

ethics
Unethical behaviors:-

a) Providing false information b) Blocking the stock c) Padding expenses account

d) Exposure of trade secrets to competitors companies e) Usage of company s property for the personal use f) g) Cheating customers, overselling, unfair credit policies Unfair wages and providing the employees with bad working conditions, etc.,