MODULE I

NATURE AND CONCEPT OF MANAGEMENT

Objectives:

1. discuss the meaning and functions of management

2. Identify the scope of management
3. Recognize the importance of effectiveness and efficiency in organization.
4. explain the various types of management theories
5. Describe characteristics of a manager
6. Examine the levels of manager in the organization
7. Compare the types of managers
8. explain the functions, roles, and skills of a manager
9. Describe the nature of an organization
10. Identify the basic principles of management and organization

INTRODUCTION

The satisfaction of human wants is a universal concern and this is the basic reason why
organizations are established. Governments, business firms, and even nonprofit organizations
are expected to manage their resources properly, or they will fail in the attempt to contribute
their share in the alleviation of property and want.
WHAT IS MANAGEMENT?

Management involves coordinating and overseeing the work activities of others so that
their activities are completed efficiently and effectively. Or simply, Management is the art of
getting work done through others.

FUNCTIONS OF MANAGEMENT

EFFICIENCY AND EFFECTIVESS: A BASIC REQUIREMENT

Efficiency means getting the most output from the least amount of inputs
 “doing things right”
 concern with means(ways) of getting things done
 getting work done with a minimum effort, expense, or waste
 use resources – people, money, raw materials wisely and cost-effectively

Effectiveness means do those work activities that will help the organization reach its goals

 “doing the right things”

 concern with ends(result) of organizational goal achievement
 accomplish tasks that help fulfill organizational objectives
 make the right decisions and successfully carry them out to accomplish the
organization’s goal
1. EVOLUTION OF MANAGEMENT THEORIES

The simplest definition of management is getting things done through people. It implies that
an organization, whether small, medium, or large, is composed of people. A business
organization exists for a purpose.

1910s-1940s: Management as Science

Management as Science was developed in the early 20th century and focused on increasing
productivity and efficiency through standardization, division of labor, centralization, and
hierarchy. A very ‘top-down’ management with strict control over people and processes
dominated across industries.

1950s-1960s: Functional Organizations

Due to growing and more complex organizations, the 1950s and 1960s saw the emergence
of functional organizations and the Human Resource (HR) movement. Managers began to
understand the human factor in production and productivity and tools such as goal-setting,
performance reviews, and job descriptions were born.

1970s: Strategic Planning

The focus is from measuring function to resource allocation and tools like Strategic
Planning, Growth Share Matrix, and SWOT (identification and analysis of the company’s
Strengths, Weaknesses, Opportunities, and Threats) were used to formalize strategic
planning process. After several decades of ‘best practice’ and ‘one size fits all’ solutions,
academics began to develop contingency theories.

1980s: Competitive Advantage

As the business environment grew increasingly competitive and connected, and with a
blooming management consultancy industry. Competitive Advantage became a priority for
organizations in the 1980s. Tools like Total Quality Management (TQM), Six Sigma, and Lean
Management were used to measure processes and improve productivity. Employees were
more involved by collecting data, but decisions were still made at the top, and goals were
used to manage people and maintain control.

1990s: Process Optimization

Benchmarking and business process reengineering became popular in the 1990s, and by the
middle of the decade, 60% of Fortune 500 companies claimed to have plans for or have
already initiated such projects. TQM, Six Sigma, and Lean remained popular and more
 holistic, organization-wide approach and strategy implementation took the stage with tools
such as Strategy Maps and Balance Scorecards.

2000s: Big Data

Largely driven by the consulting industry under the banner of Big Data, organizations in the
2000s started to focus on using technology for growth and value creation. Big data is a
broad term for data sets so large or complex that traditional data processing applications
are inadequate. Accuracy in big data may lead to more confident decision-making. And
better decisions can mean greater operational efficiency, cost-reductions, and reduced risk.

After several decades of trying to manage people through the different management
theories, one has to realize that what worked before just simply is not enough anymore.
Traditional Management is fine if one wants compliance, but if one wants innovation and
growth, management has to engage its people on a whole new level. Top down control is a
thing of the past. Succeeding in today’s environment requires a management style that
inspires and is participatory.

WHAT IS A MANAGER?

Manager is one who plans, organizes, leads

and controls other individuals in the process
of pursuing organizational goals. Managers
are vested titles like president, department
head, dean, administrator, supervisor, team
leader and the like.
 The Famous Theories on the Functions Of Management
As experts began studying and theorizing the essence of management, different ideas and
concepts regarding the functions were born. Here are a few of the most influential theories
and theorists, who’ve outlined their ideas about the functions of management.

a. Henri Fayol
Henri Fayol was the first to attempt classifying managerial activities into specific
functions. The French engineer established the first principles of the Classical
Management Theory at the start of the last century.

Henri Fayol is claimed to be the real father of modern management. He was a

Frenchman born in 1841 and was working as an engineer with a mining company. He
improved the condition of the company from virtual bankruptcy to high success. He
brought out some 14 basic management principles, which he felt, could be used in all
management situations, irrespective of the organizational framework.

BASIC PRINCIPLES OF MANAGEMENT

1. Division of labor
It is the concept of specialization of work. It refers to breaking down large tasks into
their components parts and assigning workers to each part. It suggests the more people
specialize; the more efficiently they can perform their job.

2. Authority
It is the right to give orders and the power to exact obedience.

3. Discipline
 This represents obedience, good behavior and outward marks of respect.

4. Unity of command
This indicates that each employee must receive instructions from only one person.

5. Unity of direction
Refers to those operations within the organization that have the same objective must be
directed by only one manager using one plan.

6. Subordination of individual interest to the general interest

Implies the interest of employees should not take precedence over the interest of
organization as a whole: the interest of one person or group should be subordinate to
those at the organization.
 7. Remuneration
It represents the compensation of personnel for service rendered. It denotes
compensation should be both fair to employees and employers.

8. Centralization
It is the process of concentrating decision-making authority to the center.

9. Scalar of chain
It is often called as hierarchy; the chain of supervisors ranging from the ultimate
authority to the lowest ranks. Hierarchy refers to the line of authority from top-level
management to lower level management.

10. Order
It indicates that materials and people should be in the right place at the right time.
People, in particular, should be in the jobs or positions they best suited to.
 
11. Equity
Combines kindliness and justice or resulted from kindness and justice. Managers should
be both friendly and fair to their subordinates

12. Stability of tenure of personnel

This means creating an atmosphere of suitability of permanent status (tenure) for
employees. High employee turnover rate undermines the efficient functioning of an
organization.

13. Initiative
This indicates that subordinates have to be given the freedom to conceive and carry
their plans even though some mistakes may result.
 
14. Esprit de corps
This denotes a sense of harmony and unit among the members of an organization.
WHAT IS AN ORGANIZATION?

Organizations consist of people who, more or less, share common objectives or

purpose. The behavior of the organization is directed towards the attainment of these
objectives. The members who compromise the organization work jointly in groups and
cooperate together in interdependent relationships.

Charitable organizations like the Red Cross, provide assistance to the poor and the sick.
Lo9cal governments are organizations that run the political affairs of provinces and
municipalities. The various types of organization are illustrated in Figure 3.

Figure 3
Types of Organizations

COMMON CHARACTERISTICS OF ORGANIZATION

1. Coordination of Effort
2. Common Goal or Purpose
3. Division of Labor
4. Hierarchy of Authority
PRINCIPLES OF ORGANIZATION
1. Principle of Objective
The enterprise should set up certain aims for the achievement of which various
departments should work. A common goal so devised for the business as a whole and
the organization is set up to achieve that goal.

2. Principle of Analysis

Managers in organizations must be able to break a problem down to its components,

analyze these components, and then come up with a feasible solution.

3. Principle of Simplicity
The organizational structure should be simple so that it is easily understood by each and
every person. The authority, responsibility and position of every person should be made
clear so that there is no confusion about these things.

4. Principle of Functionalization
Business firms are not supposed to be organized to accommodate individuals. Rather it
should be built around the main functions of the business.
 Chapter Test

1.is a process of planning, organizing, leading, and controlling activities in

an organization in a systematic way in order to achieve a common goal.

2. means mobilizing the material and human resources of the

organization to put plans into effect.

3. refers to the recruitment, placement and training of qualified

personnel to the organization’s work

4. are responsible for using materials and talents in the most economical
and productive manner.

5. are those who direct the activities of other managers and sometimes
also those of operating employees.

6. are managers in charge of units that provide support to the line units.

7. refers to the ability of manager to see the organization as a whole and

to solve problems to benefit the total system.

8. are roles played by the manager when he interact with others.

9. is a collection of people working together to achieve a common

purpose.

10. means breaking a job into specialized tasks to increase productivity.

 Module 2
The Firm and its Environment

Objectives
1. Identify various forces/elements of the firm’s environment
2. Summarize these forces using the PEST and SWOT analyses.
3. Describe the local and international business environment
4. Discuss the different phases of economic development
5. differentiate the various forms of business organizations

Environmental forces and environmental scanning

The business environment may be classified into two types:
EXTERNALBUSINESSENVIRONMENT - refers to the forces/factors outside the
organization which my affect, either positively or negatively, the performance of the
organization.
GENERAL EXTERNAL BUSINESS ENVIRONMENT includes:
Economic
Socio-cultural
Politico-legal
Demographic
Technological
World and ecological situations

SPECIFIC EXTERNAL BUSINESS ENVIRONMENT includes:

Stakeholders
Customers
Pressure groups
Investors
Employees
 Competitors are other organizations that compete for
resources.
 Customers are whoever pays money to acquire an
organization's product or service.
 Suppliers are organizations that provide resources for
other organizations.
 a. INTERNALBUSINESS ENVIRONMENT - refers to the forces/factors within the organization which my
affect, either positively or negatively, the performance of the organization.
INTERNAL BUSINESS ENVIRONMENT includes:
• The organizations’ resources
• Research and development
• Production
• Procurement of supplies
• Products and services offered

1. The local and international business environment of the business environment of thefirm
ENVIRONMENTAL SCANNING
 Involves the seeking for and sorting through data about the organization’s environment.
 is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes.
 It is monitoring and interpreting sweep of social, political, economic, ecological, and technological
events to spot budding trends that could eventually impact industry