Managerial Function and Process - Topical Notes

Concept and Foundations of Management

Management in all business and organizational activities is the act of getting people together to
accomplish desired goals and objectives using available resources efficiently and effectively.
Management comprises planning, organizing, staffing, leading or directing, and controlling an
organization (a group of one or more people or entities) or effort for the purpose of accomplishing a
goal. Resourcing encompasses the deployment and manipulation of human resources, financial
resources, technological resources, and natural resources.

While management has been present for millennia, several writers have created a background of
works that assisted in modern management theories.

By about 1900 one finds managers trying to place their theories on what they regarded as a
thoroughly scientific basis (see scientism for perceived limitations of this belief). Examples include
Henry R. Towne's Science of management in the 1890s, Frederick Winslow Taylor's The Principles of
Scientific Management (1911), Frank and Lillian Gilbreth's Applied motion study (1917), and Henry L.
Gantt's charts (1910s). J. Duncan wrote the first college management textbook in 1911. In 1912 Yoichi
Ueno introduced Taylorism to Japan and became first management consultant of the "Japanese-
management style". His son Ichiro Ueno pioneered Japanese quality assurance.
The first comprehensive theories of management appeared around 1920. The Harvard Business
School invented the Master of Business Administration degree (MBA) in 1921. People like Henri Fayol
(18411925) and Alexander Church described the various branches of management and their inter-
relationships. In the early 20th century, people like Ordway Tead (18911973), Walter Scott and J.
Mooney applied the principles of psychology to management, while other writers, such as Elton Mayo
(18801949), Mary Parker Follett (18681933), Chester Barnard (18861961), Max Weber (1864
1920), Rensis Likert (19031981), and Chris Argyris (1923 - ) approached the phenomenon of
management from a sociological perspective.
Peter Drucker (19092005) wrote one of the earliest books on applied management: Concept of the
Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors until 1956)
commissioning a study of the organisation. Drucker went on to write 39 books, many in the same vein.

H. Dodge, Ronald Fisher (18901962), and Thornton C. Fry introduced statistical techniques into
management-studies. In the 1940s, Patrick Blackett combined these statistical theories with
microeconomic theory and gave birth to the science of operations research. Operations research,
sometimes known as "management science" (but distinct from Taylor's scientific management),
attempts to take a scientific approach to solving management problems, particularly in the areas of
logistics and operations.
Some of the more recent developments include the Theory of Constraints, management by
objectives, reengineering, Six Sigma and various information-technology-driven theories such as agile
software development, as well as group management theories such as Cog's Ladder.

As the general recognition of managers as a class solidified during the 20th century and gave
perceived practitioners of the art/science of management a certain amount of prestige, so the way
opened for popularised systems of management ideas to peddle their wares. In this context many
management fads may have had more to do with pop psychology than with scientific theories of
management.

Evolution of Management Thoughts

Taylorism

Fundamentals of Scientific Management:

Taylor argued that the principal object of management should be to secure the maximum prosperity
for the employer, coupled with the maximum prosperity for each employee. He also showed that
maximum prosperity can exist only as the result of maximum productivity. He argued that the most
important object of both the employee and the management should be the training and development
of each individual in the establishment, so that he can do the highest class of work for which his
natural abilities fit him.Taylor was writing at a time when factories were creating big problems for the
management. Workmen were quite inefficient. According to Taylor, there were three reasons for the
inefficiency. They were the:

1. Deceptive belief that a material increase in the output of each man or each machine in the trade
would throw people out of work
2. Defective management systems, which made it necessary for each workman to soldier, or work
slowly to protect his own best interests
3. Inefficient rule of thumb methods, which were almost universal in all trades, which cost much
wasted effort

The Principles of Scientific Management:

In this section, Taylor explained his principles of scientific management. Taylor's scientific
management consisted of four principles:

1. Replace rule of thumb work methods with methods based on a scientific study of the tasks.
2. Scientifically select and then train, teach, and develop the workman, whereas in the past the
employee (or workmen) chose his own work and trained himself as best he could.
3. Provide "Detailed instruction and supervision of each worker in the performance of that worker's
discrete task"
4. Divide work nearly equally between managers and workers, so that the managers apply scientific
management principles to planning the work and the workers actually perform the tasks.

According to F. W. Taylor, the above combination of the initiative of the employee, coupled with the
new types of work done by the management, that makes scientific management so much more
efficient than the old plans.

Under the management of "initiative and incentive", the first three elements exist in many cases, but
their importance is minor. However, under the scientific management, they form the very essence of
the whole system.

According to Taylor, the summary of the fourth element is: Under the management of "initiative and
incentive" practically the whole problem is "up to the workman," while under scientific management
fully one-half of the problem is "up to the management."

Fayolism

Fayol's work was one of the first comprehensive statements of a general theory of management.He
proposed that there were six primary functions of management and 14 principles of management.

Functions of management:
1. forecasting
2. planning
3. organizing
4. commanding
5. coordinating
6. controlling

Principles of Management:

1. Division of work. This principle is the same as Adam Smith's 'division of labour'. Specialisation
increases output by making employees more efficient.
2. Authority. Managers must be able to give orders. Authority gives them this right. Note that
responsibility arises wherever authority is exercised.
3. Discipline. Employees must obey and respect the rules that govern the organisation. Good
discipline is the result of effective leadership, a clear understanding between management and
workers regarding the organisation's rules, and the judicious use of penalties for infractions of the
rules.
4. Unity of command. Every employee should receive orders from only one superior.
5. Unity of direction. Each group of organisational activities that have the same objective should be
directed by one manager using one plan.
6. Subordination of individual interests to the general interest. The interests of any one employee or
group of employees should not take precedence over the interests of the organisation as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralisation. Centralisation refers to the degree to which subordinates are involved in decision
making. Whether decision making is centralised (to management) or decentralised (to subordinates)
is a question of proper proportion. The task is to find the optimum degree of centralisation for each
situation.
9. Scalar chain. The line of authority from top management to the lowest ranks represents the scalar
chain. Communications should follow this chain. However, if following the chain creates delays, cross-
communications can be allowed if agreed to by all parties and superiors are kept informed.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. High employee turnover is inefficient. Management should provide
orderly personnel planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of
effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the organisation.

Fayol's work has stood the test of time and has been shown to be relevant and appropriate to
contemporary management. Many of todays management texts including Daft have reduced the six
functions to four: (1) planning; (2) organizing; (3) leading; and (4) controlling. Daft's text is organized
around Fayol's four functions.

Managerial Functions

Management operates through various functions, often classified as planning, organizing, staffing,
leading/directing, controlling/monitoring and Motivation.

1. Planning: Deciding what needs to happen in the future (today, next week, next month, next year,
over the next 5 years, etc.) and generating plans for action.
2. Organizing: (Implementation) making optimum use of the resources required to enable the
successful carrying out of plans.
3. Staffing: Job Analyzing, recruitment, and hiring individuals for appropriate jobs.
4. Leading/Directing: Determining what needs to be done in a situation and getting people to do it.
5. Controlling/Monitoring: Checking progress against plans.
6. Motivation : Motivation is also a kind of basic function of management, because without motivation,
employees cannot work effectively. If motivation doesn't take place in an organization, then
employees may not contribute to the other functions (which are usually set by top level management).

Planning,
Planning means looking ahead and chalking out future courses of action to be followed. It is a
preparatory step. It is a systematic activity which determines when, how and who is going to perform a
specific job. Planning is a detailed programme regarding future courses of action. It is rightly said
Well plan is half done. Therefore planning takes into consideration available & prospective human
and physical resources of the organization so as to get effective co-ordination, contribution & perfect
adjustment. It is the basic management function which includes formulation of one or more detailed
plans to achieve optimum balance of needs or demands with the available resources.
According to Urwick, Planning is a mental predisposition to do things in orderly way, to think before
acting and to act in the light of facts rather than guesses. Planning is deciding best alternative among
others to perform different managerial functions in order to achieve predetermined goals.
According to Koontz & ODonell, Planning is deciding in advance what to do, how to do and who is to
do it. Planning bridges the gap between where we are to, where we want to go. It makes possible
things to occur which would not otherwise occur.
Steps in Planning Function

Planning function of management involves following steps:-

1. Establishment of objectives

a. Planning requires a systematic approach.

b. Planning starts with the setting of goals and objectives to be achieved.
c. Objectives provide a rationale for undertaking various activities as well as indicate
direction of efforts.
d. Moreover objectives focus the attention of managers on the end results to be
achieved.
e. As a matter of fact, objectives provide nucleus to the planning process. Therefore,
objectives should be stated in a clear, precise and unambiguous language. Otherwise the activities
undertaken are bound to be ineffective.
 f. As far as possible, objectives should be stated in quantitative terms. For example,
Number of men working, wages given, units produced, etc. But such an objective cannot be stated in
quantitative terms like performance of quality control manager, effectiveness of personnel manager.
g. Such goals should be specified in qualitative terms.
h. Hence objectives should be practical, acceptable, workable and achievable.

2. Establishment of Planning Premises

a. Planning premises are the assumptions about the lively shape of events in future.
b. They serve as a basis of planning.
c. Establishment of planning premises is concerned with determining where one tends
to deviate from the actual plans and causes of such deviations.
d. It is to find out what obstacles are there in the way of business during the course of
operations.
e. Establishment of planning premises is concerned to take such steps that avoids these
obstacles to a great extent.
f. Planning premises may be internal or external. Internal includes capital investment
policy, management labour relations, philosophy of management, etc. Whereas external includes
socio- economic, political and economical changes.
g. Internal premises are controllable whereas external are non- controllable.

3. Choice of alternative course of action

a. When forecast are available and premises are established, a number of alternative
course of actions have to be considered.
b. For this purpose, each and every alternative will be evaluated by weighing its pros
and cons in the light of resources available and requirements of the organization.
c. The merits, demerits as well as the consequences of each alternative must be
examined before the choice is being made.
d. After objective and scientific evaluation, the best alternative is chosen.
e. The planners should take help of various quantitative techniques to judge the stability
of an alternative.

4. Formulation of derivative plans

a. Derivative plans are the sub plans or secondary plans which help in the achievement
of main plan.
b. Secondary plans will flow from the basic plan. These are meant to support and
expediate the achievement of basic plans.
c. These detail plans include policies, procedures, rules, programmes, budgets,
schedules, etc. For example, if profit maximization is the main aim of the enterprise, derivative plans
will include sales maximization, production maximization, and cost minimization.
d. Derivative plans indicate time schedule and sequence of accomplishing various
tasks.

5. Securing Co-operation

a. After the plans have been determined, it is necessary rather advisable to take
subordinates or those who have to implement these plans into confidence.
b. The purposes behind taking them into confidence are :-
i. Subordinates may feel motivated since they are involved in decision making
process.
ii. The organization may be able to get valuable suggestions and improvement
in formulation as well as implementation of plans.
iii. Also the employees will be more interested in the execution of these plans.

6. Follow up/Appraisal of plans

a. After choosing a particular course of action, it is put into action.

b. After the selected plan is implemented, it is important to appraise its effectiveness.
c. This is done on the basis of feedback or information received from departments or
persons concerned.
d. This enables the management to correct deviations or modify the plan.
e. This step establishes a link between planning and controlling function.
f. The follow up must go side by side the implementation of plans so that in the light of
observations made, future plans can be made more realistic.

Organizing,

Organizing is the function of management which follows planning. It is a function in

which the synchronization and combination of human, physical and financial
resources takes place. All the three resources are important to get results.
Therefore, organizational function helps in achievement of results which in fact is
important for the functioning of a concern. According to Chester Barnard,
Organizing is a function by which the concern is able to define the role positions,
the jobs related and the co- ordination between authority and responsibility. Hence, a
manager always has to organize in order to get results.
A manager performs organizing function with the help of following steps:-
1. Identification of activities - All the activities which have to be performed in a
concern have to be identified first. For example, preparation of accounts, making
sales, record keeping, quality control, inventory control, etc. All these activities have
to be grouped and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to combine and
group similar and related activities into units or departments. This organization of dividing the whole
concern into independent units and departments is called departmentation.
3. Classifying the authority - Once the departments are made, the manager likes to classify
the powers and its extent to the managers. This activity of giving a rank in order to the managerial
positions is called hierarchy. The top management is into formulation of policies, the middle level
management into departmental supervision and lower level management into supervision of foremen.
The clarification of authority help in bringing efficiency in the running of a concern. This helps in
achieving efficiency in the running of a concern. This helps in avoiding wastage of time, money, effort,
in avoidance of duplication or overlapping of efforts and this helps in bringing smoothness in a
concerns working.
4. Co-ordination between authority and responsibility - Relationships are established among
various groups to enable smooth interaction toward the achievment of the organizational goal. Each
individual is made aware of his authority and he/she knows whom they have to take orders from and
to whom they are accountable and to whom they have to report. A clear organizational structure is
drawn and all the employees are made aware of it.

Controlling;

What is Controlling?

Controlling consists of verifying whether everything occurs in confirmities with the plans adopted,
instructions issued and principles established. Controlling ensures that there is effective and efficient
utilization of organizational resources so as to achieve the planned goals. Controlling measures the
deviation of actual performance from the standard performance, discovers the causes of such
deviations and helps in taking corrective actions
According to Brech, Controlling is a systematic exercise which is called as a process of checking
actual performance against the standards or plans with a view to ensure adequate progress and also
recording such experience as is gained as a contribution to possible future needs.
According to Donnell, Just as a navigator continually takes reading to ensure whether he is relative to
a planned action, so should a business manager continually take reading to assure himself that his
enterprise is on right course.
Controlling has got two basic purposes
1. It facilitates co-ordination
2. It helps in planning
Features of Controlling Function

Following are the characteristics of controlling function of management-

1. Controlling is an end function- A function which comes once the performances are made in
confirmities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at all levels
and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without past being
controlled. Controlling always look to future so that follow-up can be made whenever required.
4. Controlling is a dynamic process- since controlling requires taking reviewal methods,
changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two inseperable functions
of management. Without planning, controlling is a meaningless exercise and without controlling,
planning is useless. Planning presupposes controlling and controlling succeeds planning.

Decision making;

Definition of Decision Making

According to the Oxford Advanced Learners Dictionary the term decision making means - the process
of deciding about something important, especially in a group of people or in an organization.
Trewatha & Newport defines decision making process as follows:, Decision-making involves the
selection of a course of action from among two or more possible alternatives in order to arrive
at a solution for a given problem.
As evidenced by the foregone definitions, decision making process is a consultative affair done by a
comity of professionals to drive better functioning of any organization. Thereby, it is a continuous and
dynamic activity that pervades all other activities pertaining to the organization. Since it is an ongoing
activity, decision making process plays vital importance in the functioning of an organization. Since
intellectual minds are involved in the process of decision making, it requires solid scientific knowledge
coupled with skills and experience in addition to mental maturity.

Further, decision making process can be regarded as check and balance system that keeps
the organisation growing both in vertical and linear directions. It means that decision making
process seeks a goal. The goals are pre-set business objectives, company missions and its vision. To
achieve these goals, company may face lot of obstacles in administrative, operational, marketing
wings and operational domains. Such problems are sorted out through comprehensive decision
making process. No decision comes as end in itself, since in may evolve new problems to solve.
When one problem is solved another arises and so on, such that decision making process, as said
earlier, is a continuous and dynamic.

A lot of time is consumed while decisions are taken. In a management setting, decision cannot be
taken abruptly. It should follow the steps such as
1. Defining the problem
2. Gathering information and collecting data
3. Developing and weighing the options
4. Choosing best possible option
5. Plan and execute
6. Take follow up action
Since decision making process follows the above sequential steps, a lot of time is spent in this
process. This is the case with every decision taken to solve management and administrative problems
in a business setting. Though the whole process is time consuming, the result of such process in a
professional organization is magnanimous.

Decision making under uncertainty

Managers in contemporary organizations are confronted with uncertainty and ambiguity in their
everyday lives. Not only do they have to contend with rapidly changing trends and fluid situations, the
data they get from the ground or from market research becomes redundant with no time. This has
given rise to confusion and chaos in the way organizations approach the future. This situation can be
remedied by the use of scenario based decision-making where the managers draw up possible
scenarios that the company might have to contend with in the short term, medium term, and longer
term.
By drawing up scenarios that consist of simulations of the best-case situation and the worst-
case situation, the managers would be better able to take the right decision when the situation
manifests itself . The point here is that looking into the future is impossible except for oracles and
clairvoyants. Hence, some sort of grip on the future must be firmed up by planning for all possibilities.

Over the last couple of years, global businesses had to contend with multiple economic shocks
starting with the bankruptcy of the investment bank, Lehmann Brothers that nearly brought down the
global financial system. Next, the Eurozone crisis erupted that threatened to bring entire governments
to their knees. Now, we have the specter of diminishing resources and runaway inflation. In this
context, it becomes important for managers to draw up scenarios that would happen with a certain
degree of probability. For instance, it would be better for managers to think of the eventuality of
Greece leaving the Eurozone and then planning for it accordingly. For managers in sectors that do not
have exposure to financial instruments in a major way (after all, which sector is immune from financial
shocks?), they can simulate models and scenarios where a war in the Middle East is predicted and
then base their strategies accordingly.

The point here is that when there is so much uncertainty, it becomes tough to anticipate events.
Hence, by drawing up scenarios that simulate the worst and the best as well, decisions can be taken
that would derive advantage to the organizations. When one adds complexity to the uncertainty and
ambiguity that pervades the current world, one is even more muddied and muddled to take decisions.
For this, managing the present, it is a challenge and hence many organizations leave future forecasts
to consultants and management experts. However, this need not be the case and in-house expertise
can be developed to deal with emerging scenarios.

A case in point is NASSCOM (the Apex body of IT and ITES companies in India) that has been
advising IT companies in India to plan for the downturn and the possible aftershocks from the
Eurozone crisis and the upcoming fiscal cliff in the United States. NASSCOM has also been asking
IT companies to draw up scenarios for these events that if not planned for have the potential to blow
up on everyones face. Unfortunately, many organizations are rushing into the future without any
thought or idea on how they would deal with Black Swan events. A Black Swan event is a low
probability but high impact event that can surprise people with its occurrence.

Role of Manager,

A manager wears many hats. Not only is a manager a team leader, but he or she is also a planner,
organizer, cheerleader, coach, problem solver, and decision maker all rolled into one. And these
are just a few of a manager's roles.
In addition, managers' schedules are usually jam-packed. Whether they're busy with employee
meetings, unexpected problems, or strategy sessions, managers often find little spare time on their
calendars. (And that doesn't even include responding to e-mail!)
In his classic book, The Nature of Managerial Work, Henry Mintzberg describes a set of ten roles that
a manager fills. These roles fall into three categories:

Interpersonal: This role involves human interaction.

Informational: This role involves the sharing and analyzing of information.
Decisional: This role involves decision making.

Table contains a more in-depth look at each category of roles that help managers carry out all five
functions described in the preceding Functions of Managers section.

TABLE 1 Mintzberg's Set of Ten Roles

Category Role Activity
Informational Monitor Seek and receive information; scan periodicals
and reports; maintain personal contact with
stakeholders.
Disseminator Forward information to organization members via
memos, reports, and phone calls.
Spokesperson Transmit information to outsiders via reports,
memos, and speeches.
 Category Role Activity
Interpersonal Figurehead Perform ceremonial and symbolic duties, such as
greeting visitors and signing legal documents.
Leader Direct and motivate subordinates; counsel and
communicate with subordinates.
Liaison Maintain information links both inside and outside
organization via mail, phone calls, and meetings.
Decisional Entrepreneur Initiate improvement projects; identify new ideas
and delegate idea responsibility to others.
Disturbance Take corrective action during disputes or crises;
handler resolve conflicts among subordinates; adapt to
environments.
Resource Decide who gets resources; prepare budgets; set
allocator schedules and determine priorities.
Negotiator Represent department during negotiations of union
contracts, sales, purchases, and budgets.

Managerial skills;

Not everyone can be a manager. Certain skills, or abilities to translate knowledge into action that
results in desired performance, are required to help other employees become more productive. These
skills fall under the following categories:

Technical: This skill requires the ability to use a special proficiency or expertise to perform
particular tasks. Accountants, engineers, market researchers, and computer scientists, as examples,
possess technical skills. Managers acquire these skills initially through formal education and then
further develop them through training and job experience. Technical skills are most important at lower
levels of management.
Human: This skill demonstrates the ability to work well in cooperation with others. Human
skills emerge in the workplace as a spirit of trust, enthusiasm, and genuine involvement in
interpersonal relationships. A manager with good human skills has a high degree of self-awareness
and a capacity to understand or empathize with the feelings of others. Some managers are naturally
born with great human skills, while others improve their skills through classes or experience. No
matter how human skills are acquired, they're critical for all managers because of the highly
interpersonal nature of managerial work.
Conceptual: This skill calls for the ability to think analytically. Analytical skills enable
managers to break down problems into smaller parts, to see the relations among the parts, and to
recognize the implications of any one problem for others. As managers assume ever-higher
responsibilities in organizations, they must deal with more ambiguous problems that have long-term
consequences. Again, managers may acquire these skills initially through formal education and then
further develop them by training and job experience. The higher the management level, the more
important conceptual skills become.
Although all three categories contain skills essential for managers, their relative importance tends to
vary by level of managerial responsibility.
Business and management educators are increasingly interested in helping people acquire technical,
human, and conceptual skills, and develop specific competencies, or specialized skills, that contribute
to high performance in a management job. Following are some of the skills and personal
characteristics that the American Assembly of Collegiate Schools of Business (AACSB) is urging
business schools to help their students develop.

Leadership ability to influence others to perform tasks

Self-objectivity ability to evaluate yourself realistically
Analytic thinking ability to interpret and explain patterns in information
Behavioral flexibility ability to modify personal behavior to react objectively rather than
subjectively to accomplish organizational goals
Oral communication ability to express ideas clearly in words
Written communication ability to express ideas clearly in writing
Personal impact ability to create a good impression and instill confidence
Resistance to stress ability to perform under stressful condition
Entrepreneurship ;

Entrepreneurship is the act and art of being an entrepreneur or "one who undertakes innovations,
finance and business acumen in an effort to transform innovations into economic goods". This may
result in new organizations or may be part of revitalizing mature organizations in response to a
perceived opportunity. The most obvious form of entrepreneurship is that of starting
new businesses (referred asStartup Company); however, in recent years, the term has been extended
to include social and political forms of entrepreneurial activity. When entrepreneurship is describing
activities within a firm or large organization it is referred to as intra-preneurship and may include
corporate venturing, when large entities spin-off organizations.

It has been recognized worldwide that the key to any business success and survival today is: Driving
Growth through Innovation

In order to achieve this, the need for an entrepreneurial business culture has become the key
competitive advantage of any company small or large.
In order to implement this vision, the following has been formulated:

Entrepreneurship = Creativity + Innovation

In simple terms this means: how to create new ideas (Creativity) and how to implement them
successfully (Innovation).

This formula is supported by the Timmons Model of the Entrepreneurship Process as shown below:
Corporate Entrepreunership
Yet for corporate entrepreneurship to thrive, it needs more. It requires the structure and culture.
Assuming the right people are in place, leadership must provide divisional and business unit
autonomy. How can you lead your organization to a climate of corporate entrepreneurship?
Like innovation, Define what entrepreneurship means. The phrase "Corporate
Entrepreneurship" must mean the same thing organization-wide. Moreover, leadership must delineate
objectives and point the way as part of its vision and mission.

Incubate and nurture. Corporate entrepreneurship doesn't flourish without guidance. It starts
small - and grows through encouragement. Begin with small projects heavily supported by leadership.
Those success stories should be heavily communicated as such. They then will become the lead
project to pull the rest of the group or other entrepreneurial-minded teams along.

Create a reward system. Risk and reward, when properly aligned, can foster accountability.
Rewards - whether in the form of praise from immediate managers, attention from leadership, or the
chance to lead future projects or task forces - are powerful motivators. They also can help solidify the
creation of stronger corporate entrepreneurs.

So look around your organization. Are you surrounded by employees - or entrepreneurs? The
difference may be not only the way they think, but they way they're being nurtured.

Social Entrepreunership

Social Entrepreneurship is the process that creates change, both economic and social, through
leadership and the application of business practices while maintaining the focus on the organizations
mission.
In developing countries, social entrepreneurship focuses on creating income opportunities for many
people held in the grips of poverty. Within developed nations, social entrepreneurship helps non-profit
organizations explore income generating businesses that focus on the double bottom line of both the
financial and social returns on their investment.
Social entrepreneurship initiatives are usually introduced and lead by the social entrepreneur. These
individuals will champion the project usually taking a holistic approach to the problem. They identify
the sources (or bottlenecks) that prevent change within the society. These areas sometimes relate to
the basic welfare of the populations such as food, clothing, and shelter. However, they can take a
community approach in areas like education, clean water, basic medical need, or major global
concerns of global warming and the environment.

Sometimes new innovations are created to help address a critical need. These new products often
address the Bottom of the Pyramid. This market is the lowest tier. It is very large, but has little
resources. Social Entrepreneurs will use business skills to commercialize the product, in much the
same manner as any other inventor. The difference is, they look for sustainability not Maximum
Return on Investment. They may patent their product to protect the integrity of their research and
prevent others from making profits on their work. They might create new and interesting alliances with
for-profit companies, Non-Governmental Organizations, and/or Non-profit Organizations. They may
also lobby legislator to create new business entities to help them serve the mission. One such new
business is the Low-Profit Limited Liability Company (L3C), consider a hybrid, combining funding
sources of a nonprofit with the management of a for-profit.

Management of innovation ;

Innovation management is the discipline of managing processes in innovation. It can be used to

develop both product and organizational innovation. Without proper processes, it is not possible for
R&D to be efficient; innovation management includes a set of tools that allow managers and
engineers to cooperate with a common understanding of goals and processes. The focus of
innovation management is to allow the organization to respond to an external or internal opportunity,
and use its creative efforts to introduce new ideas, processes or products.

Importantly, innovation management is not relegated to R&D; it involves workers at every level in
contributing creatively to a company's development, manufacturing, and marketing. By utilizing
appropriate innovation management tools, management can trigger and deploy the creative juices of
the whole work force towards the continuous development of a company.The process can be viewed
as an evolutionary integration of organization, technology and market by iterating series of activities:
search, select, implement and capture.

Innovation processes can either be pushed or pulled through development. A pushed process is
based on existing or newly invented technology, that the organization has access to, and tries to find
profitable applications to use this technology. A pulled process tries to find areas where customers
needs are not met, and then focus development efforts to find solutions to those needs. To succeed
with either method, an understanding of both the market and the technical problems are needed. By
creating multi-functional development teams, containing both engineers and marketers, both
dimensions can be solved.

The lifetime (or product lifecycle) of new products is steadily getting shorter; increased competition
therefore forces companies reduce the time to market. Innovation managers must therefore decrease
development time, without sacrificing quality or meeting the needs of the market.

Common tools include brainstorming, virtual prototyping, product lifecycle management, idea
management, TRIZ, Phasegate model, project management, product line planning and portfolio
management.
Managing in a global environment,

International managers face intense and constant challenges that require training and understanding
of the foreign environment. Managing a business in a foreign country requires managers to deal with
a large variety of cultural and environmental differences. As a result, international managers must
continually monitor the political, legal, sociocultural, economic, and technological environments.

The political environment

The political environment can foster or hinder economic developments and direct investments. This
environment is ever-changing. As examples, the political and economic philosophies of a nation's
leader may change overnight. The stability of a nation's government, which frequently rests on the
support of the people, can be very volatile. Various citizen groups with vested interests can undermine
investment operations and opportunities. And local governments may view foreign firms suspiciously.
Political considerations are seldom written down and often change rapidly. For example, to protest
Iraq's invasion of Kuwait in 1990, many world governments levied economic sanctions against the
import of Iraqi oil. Political considerations affect international business daily as governments
enact tariffs (taxes), quotas(annual limits), embargoes (blockages), and other types of restriction in
response to political events.
Businesses engaged in international trade must consider the relative instability of countries such as
Iraq, South Africa, and Honduras. Political unrest in countries such as Peru, Haiti, Somalia, and the
countries of the former Soviet Union may create hostile or even dangerous environments for foreign
businesses. In Russia, for example, foreign managers often need to hire bodyguards; sixteen foreign
businesspeople were murdered there in 1993. Civil war, as in Chechnya and Bosnia, may disrupt
business activities and place lives in danger. And a sudden change in power can result in a regime
that is hostile to foreign investment; some businesses may be forced out of a country altogether.
Whether they like it or not, companies are often involved directly or indirectly in international politics.

The technological environment

The technological environment contains the innovations, from robotics to cellular phones, that are
rapidly occurring in all types of technology. Before a company can expect to sell its product in another
country, the technology of the two countries must be compatible.
Companies that join forces with others will be able to quicken the pace of research and
development while cutting the costs connected with utilizing the latest technology. Regardless of
the kind of business a company is in, it must choose partners and locations that possess an available
work force to deal with the applicable technology. Many companies have chosen Mexico and
Mexican partners because they provide a willing and capable work force. GM's plant in Arizpe,
Mexico, rivals its North American plants in quality.

Consumer safety in a global marketplace

The United States leads the world in spending on research and development. As products and
technology become more complex, the public needs to know that they are safe. Thus, government
agencies investigate and ban potentially unsafe products. In the United States, the Federal Food and
Drug Administration has set up complex regulations for testing new drugs. The Consumer Product
Safety Commission sets safety standards for consumer products and penalizes companies that fail to
meet them. Such regulations have resulted in much higher research costs and in longer times
between new product ideas and their introduction. This is not always true in other countries.

The sociocultural environment

Cultural differences, which can be very subtle, are extremely important. An organization that enters
the international marketplace on virtually any level must make learning the foreign country's cultural
taboos and proper cultural practices a high priority. If a business fails to understand the cultural
methods of doing business, grave misunderstandings and a complete lack of trust may occur.
Management differences also exist. In China, a harmonious environment is more important than day-
to-day productivity. In Morocco, women can assume leadership roles, but they are usually more self-
conscious than American women. In Pakistan, women are not often found in management positions, if
they're in the workplace at all.
In addition, the importance of work in employees' lives varies from country to country. For example,
the Japanese feel that work is an important part of their lives. This belief in work, coupled with a
strong group orientation, may explain the Japanese willingness to put up with things that workers in
other countries would find intolerable.
Likewise, culture may impact what employees find motivating, as well as how they respond to rewards
and punishments. For example, Americans tend to emphasize personal growth, accomplishment, and
getting what you deserve for performance as the most important motivators. However, in Asian
cultures, maintaining group solidarity and promoting group needs may be more important than
rewarding individual achievements.
Finally, language differences are particularly important, and international managers must remember
that not all words translate clearly into other languages. Many global companies have had difficulty
crossing the language barrier, with results ranging from mild embarrassment to outright failure. For
example, in regards to marketing, seemingly innocuous brand names and advertising phrases can
take on unintended or hidden meanings when translated into other languages. Advertising themes
often lose or gain something in translations. The English Coors beer slogan get loose with Coors
came out as get the runs with Coors in Spanish. Coca-Cola's English Coke adds life theme
translated into Coke brings your ancestors back from the dead in Japanese. In Chinese, the English
Kentucky Fried Chicken slogan finger-lickin' good came out as eat your fingers off.
Such classic boo-boos are soon discovered and corrected; they may result in little more than
embarrassments for companies. Managers should keep in mind that countless other, more subtle
blunders may go undetected and damage product performance in less obvious ways.

The economic environment

Managers must monitor currency, infrastructure, inflation, interest rates, wages, and taxation. In
assessing the economic environment in foreign countries, a business must pay particular attention to
the following four areas:

Average income levels of the population. If the average income for the population is very
low, no matter how desperately this population needs a product or service, there simply is not a
market for it.

Tax structures. In some countries, foreign firms pay much higher tax rates than domestic
competitors. These tax differences may be very obvious or subtle, as in hidden registration fees.

Inflation rates. In the U.S., for example, inflation rates have been quite low and relatively
stable for several years. In some countries, however, inflation rates of 30, 40, or even 100 percent per
year are not uncommon. Inflation results in a general rise in the level of prices, and impacts business
in many ways. For example, in the mid-1970s, a shortage of crude oil led to numerous problems
because petroleum products supply most of the energy required to produce goods and services and
to transport goods around the world. As the cost of petroleum products increased, a corresponding
increase took place in the cost of goods and services. As a result, interest rates increased
dramatically, causing both businesses and consumers to reduce their borrowing. Business profits fell
as consumers' purchasing power was eroded by inflation. High interest rates and unemployment
reached alarmingly high levels.

Fluctuating exchange rates. The exchange rate, or the value of one country's currency in
terms of another country's currency, is determined primarily by supply and demand for each country's
goods and services. The government of a country can, however, cause this exchange rate to change
dramatically by causing high inflationby printing too much currency or by changing the value of the
currency through devaluation. A foreign investor may sustain large losses if the value of the currency
drops substantially.

When doing business abroad, businesspeople need to recognize that they cannot take for granted
that other countries offer the same things as are found in industrialized nations. A country's level of
development is often determined in part by its infrastructure. The infrastructure is the physical
facilities that support a country's economic activities, such as railroads, highways, ports, utilities and
power plants, schools, hospitals, communication systems, and commercial distribution systems.
When doing business in less developed countries, a business may need to compensate for
rudimentary distribution and communication systems.

The legal enviroment

The American federal government has put forth a number of laws that regulate the activities of U.S.
firms engaged in international trade. However, once outside U.S. borders, American organizations are
likely to find that the laws of the other nations differ from those of the U.S. Many legal rights that
Americans take for granted do not exist in other countries; a U.S. firm doing business abroad must
understand and obey the laws of the host country.
In the U.S., the acceptance of bribes or payoffs is illegal; in other countries, the acceptance of bribes
or payoffs may not be illegalthey may be considered a common business practice. In addition,
some countries have copyright and patent laws that are less strict than those in the U.S., and some
countries fail to honor these laws. China, for example, has recently been threatened with severe trade
sanctions because of a history of allowing American goods to be copied or counterfeited there. As a
result, businesses engaging in international trade may need to take extra steps to protect their
products because local laws may be insufficient to protect them.

Flexible Systems Management;

Flexible Systems Management is an emerging paradigm that relates with management of

organizations placed in a chaotic business environment. The business environment has been
changing over a period of time, which at times may be fairly turbulent and dramatic. This creates
uncertainties and dynamics of high order. In order to cope with it, both for survival and growth in a
competitive manner, business organizations have to look for innovative strategies and mechanisms.
The paradigm of flexible systems management (the focus of this Journal) is associated with multiple
perspectives such as holistic management of organizational paradoxes with systemic flexibility;
business agility infused by new information and communication technologies; innovation, strategic
change and risk; and
flexibility in various operations for achieving business excellence.

Social responsibility and managerial ethics;

Corporate Social Responsibility (CSR) has been defined in various ways by scholars, authors and
institutions, but one of the more ideal definitions has been provided by the World Business Council for
Sustainable Development, which says "Corporate Social Responsibility is the continuing commitment
by business to behave ethically and contribute to economic development while improving the quality
of life of the workforce and their families as well as of the local community and society at large."

CSR is not only about doing Philanthropic activities but is now growing to become an integral part of
the Strategy of the company. These days all the stakeholders including Employees, Stockholders,
Consumers, Suppliers, Distributors, Community, Environment expect a higher degree of accountability
from businesses. There fore the way a company goes on carrying its business and other activities and
how it is perceived by the various stakeholders has become paramount for the company.

In the past few years, India has been registering the 2nd highest growth levels year on year globally.
To make this growth sustainable, India needs an inclusive growth strategy, considering the large
social inequality/divide existing in the country. With corporate being the drivers of growth of our
country, they realize that they need to play a substantial part in this inclusive growth. Government of
India has already made it mandatory for Public Sector Units to spend certain % of profit on CSR.
Process and customer orientation;

A group of actions taken by a business to support its sales and service staff in considering client
needs and satisfaction their major priorities. Business strategies that tend to reflect a customer
orientation might include: developing a quality product appreciate by consumers; responding promptly
and respectfully to consumer complaints and queries; and dealing sensitively with community issues.

The following six features and concepts are key to understanding social marketing and have been
incorporated into the 'customer triangle' model below:
 Customer or consumer orientation: A strong 'customer' orientation with importance
attached to understanding where the customer is starting from, their knowledge, attitudes and beliefs,
along with the social context in which they live and work
Behaviour and behavioural goals: A clear focus on understanding existing behaviour and
key influences upon it, alongside developing clear behavioural goals. These can be divided into
actionable and measurable steps or stages, phased over time
'Intervention mix' and 'marketing mix': Using a mix of different methods to achieve a
particular behavioural goal. When used at the strategic level this is commonly referred to as the
'intervention mix', and when used operationally it is described as the 'marketing mix'
Audience segmentation: Clarity of audience focus using audience segmentation to target
effectively
'Exchange': Use of the 'exchange' concept - understanding what is being expected of people,
and the real cost to them
'Competition': Use of the 'competition' concept - understanding factors that impact on people
and that compete for their attention and time

Managerial processes on direct and indirect value chain.

Using Porter's Value Chain

To identify and understand your company's value chain, follow these steps.
Step 1 Identify subactivities for each primary activity.
For each primary activity, determine which specific subactivities create value. There are three different
types of subactivities:
Direct activities create value by themselves. For example, in a book publisher's marketing
and sales activity, direct subactivities include making sales calls to bookstores, advertising, and selling
online.
Indirect activities allow direct activities to run smoothly. For the book publisher's sales and
marketing activity, indirect subactivities include managing the sales force and keeping customer
records.
Quality assurance activities ensure that direct and indirect activities meet the necessary
standards. For the book publisher's sales and marketing activity, this might include proofreading and
editing advertisements.
Step 2 Identify subactivities for each support activity.
For each of the Human Resource Management, Technology Development and Procurement support
activities, determine the subactivities that create value within each primary activity. For example,
consider how human resource management adds value to inbound logistics, operations, outbound
logistics, and so on. As in Step 1, look for direct, indirect, and quality assurance subactivities.
Then identify the various value-creating subactivities in your company's infrastructure. These will
generally be cross-functional in nature, rather than specific to each primary activity. Again, look for
direct, indirect, and quality assurance activities.
Step 3 Identify links.
Find the connections between all of the value activities you've identified. This will take time, but the
links are key to increasing competitive advantage from the value chain framework. For example,
there's a link between developing the sales force (an HR investment) and sales volumes. There's
another link between order turnaround times, and service phone calls from frustrated customers
waiting for deliveries.
Step 4 Look for Opportunities to Increase Value.
Review each of the subactivities and links that you've identified, and think about how you can change
or enhance it to maximize the value you offer to customers (customers of support activities can
internal as well as external).