UNIT I

INTRODUCTION TO MANAGEMENT
AND ORGANIZATION
 Definition
• Management is the process of designing and
maintaining an environment in which
individuals are working together in groups
efficiently to accomplish selected aims.
• It is defined as the art of getting things done
by others
 Nature of Management
1. Multidisciplinary in nature –It draws ideas from
various disciplines as economic , statistics,
mathematics, psychology, sociology,
anthropology.
2. Continuous process – continues till the objective
is achieved.
3. Universal activity- management is not
applicable to business undertakings. It is
applicable to political, education,. Required
when group effort is required.
4. Management is science or art
Definite principles of management –art
Predetermined objectives can be achieved by
application of these principles - science
5. Dynamic not static – adapt itself to social
changes.
6. Profession – Established principles of
management are being applied in practice and
involves specialized training
It is governed by ethical code arising out of
social obligations.
7. Group activity – common objective and group effort
8. Aims at obtaining wealthy results – manager’s primary
job is assure productivity through planning, direction
and control.
Rational utilization of available resources to maximize
the profit is the economic function of manager.
9. Implies skills and experiences in getting things done
through people.
Profitable return cannot be achieved without people
co-operation
10. System of authority- power to make others act in
predetermined manner.
Management formalizes a standard set of rules and
procedure to be followed by the sub-ordinates.
11. Intangible – cannot be seen through eyes
and evidenced by quality of organization and
results.
12. Implies good leadership – manager must
have ability to lead and get desired course of
action from the sub-ordinates.
 Scope of management
1. FUNCTIONAL AREAS OF MANAGEMENT
Financial management includes forecasting, cost
control, budgetary management, statistical control,
financial planning.
HR management covers marketing management,
production mgt, material management, purchase
management, maintenance management, office
management.
Marketting management includes marketting of
goods, sales promotion, advertisement and publicity.
Production management includes planning , quality
control and inspection.
Material management includes purchase of materials,
issue of materials, storage and maintanence of
records.
2. Subject matter of management- made up of basic
management functions like planning, organizing,
staffing, directing, controlling.
3. Inter-disciplinary approach- commerce,
economics, sociology
4. Principle of management – universal applications
to achieve common goals
5. Agent of change – technique of management can
be improved by proper research and
development.
6. The essentials of management includes scientific
method, human relations, and quantitative
techniques.
 What Is Management?
• Managerial Concerns
– Efficiency
• “Doing things right”
– Getting the most output
for the least inputs
– Effectiveness
• “Doing the right things”
– Attaining organizational
goals

1–9
Exhibit 1–3 Effectiveness and Efficiency in
Management

1–10
Functions of Management
Functions of Management

POSDC – planning, organizing, staffing, directing and Controlling

POSDCORB – planning, organizing, staffing, directing, coordinating,

reporting & budgeting
 Planning

Defining goals, establishing

strategies to achieve goals,
developing plans to integrate and
coordinate activities.
• Planning involves
1. Determination of goal
2. Formulating policy, rules, procedures
3. Forecasting the future based on the past and
present activities.
 Organizing

•Arranging and structuring

work to accomplish
organizational goals.
Process
1. Identification and analysis of goals
2. Assignment of duties to individual
concern.
3. Follow up the activities.
 Staffing
• The selection and training of individuals for
specific job functions, and charging them with
the associated responsibilities.
• The act of keeping positions filled in
organization structure

1–17
 Leading/Directing
Involves motivating subordinates,
influencing individuals or teams as
they work, selecting the most
effective communication channels
• Motivation, leadership, communication are
three important sub functions of directing
• Communication provides a proper information
to the subordinates for improved and effective
management.
• Leadership is the process by which a manager
guides and it influences the work of his
subordinates.
 Controlling

Monitoring,
comparing, and
correcting work.
 CONTROLLING
• Checking and verifying the activities against
predetermined standards.
• Process of ensuring the proper activities with
planned activities.
PROCESS
• Establishing standards
• Measuring current performance
• Comparing with established standards
• Taking corrective action if deviation is detected
IS MANAGEMENT A SCIENCE OR
AN ART
• Management is the oldest of science and
youngest of art.
• Science :
It is a systematized body of knowledge which
establishes relationship between cause and
effect
Characteristics of science
1. It is the existence of a systematic body of
knowledge with array of principles
2. Based on scientific enquiry.
3. Principle should be verifiable.
4. It is reliable basis for predicting future events.
• Science is classified as exact and inexact
• Management is inexact
1. HR are different in attitudes aspirations and
perceptions. So standard result are not
obtained.
2. Readymade and standard solutions cannot
be obtained.
3. Mgt is complex and unpredictable.
4. Every organization decisions are influenced
by environment . But the environment is so
complex and unexpected.
• Art : bringing about of desired results through
the application of skills.
• Entirely on the inherent capacity of a persons.
• Learned from practice and experience.
 Important characteristics of mgt
• Application of science. Putting principles into
mgt.
• Practice or experiences is needed to become
skilful.
• It is undertaken for accomplishing an end
through deliberate efforts.
 Management is the art
• Because
1. Involves the use of practical knowledge and
personal skills.
2. Creative.
3. Implies capacity to apply accurately the
knowledge to solve the problems.
• Management is both science and art
• Science – because contain general principles.
• Art- requires certain personal skills
Management vs Administration
 1. Administration is above
Management
• According to Oliver sheldon, Milward Lansberg
• Administration is concerned with decision-
making and policy formulation
• Mgt is concerned with execution laid down by
administration
 2. Administration is a part of
Management
• Administration become a subordinate
function to overall Management function-
according to E.F.L. Brech
 3. Administration and Management
are same

• Manager performs both

administrative and functional
activities
S.No Administration Management

1. Top level function Middle or lower level function

2. Owner Employee

3. Concerned with decision Concerned with execution of decision

making
4. Acts through mgt Acts through the organisation

5. Lay down board policies and Executes these policies into practice
principles for guidance

6. Function is broad and Narrow and operation

conceptual
7. External factors are affecting Internal factors affecting the decision
the decision

8. Employer – Employee Between employee

relation
Entrepreneurs and owners
S.No Entrepreneur Manager

1. Starts business Runs the business

2. Considers various risk Does not get any risk

3. Driven by opportunity or Uses present available resources to

demand in the present market produce the final product

4. Rights to implement the changes Can only follow the rules

5. Owner Hired

6. All kinds of rewards from public Fixed rewards in term of salary.

7. More risk taker Less risk taker

8. Desire for the control over the Delegation of authority

business

9. One man army Leader of team

10. Aims to implement creativity and Establish and preserve the status of
innovation company

11. Informal and flexible Not informal

12. Sensitive in decision making Collect and wait for advice

13. Full responsible for accident and Avoids mistakes and failures
failures
Types of Managers/Managerial levels/Types of
Management

Top level
Managers

Middle level Managers

Lower level Managers

 Top level management or manager

▪ Having the authority and ultimately responsible for the

entire organisation
▪ Titles such as executive vice president,president,managing
director,chief operating officier,chief executive officier or
chairman of the board
▪ Main functions are
*Formulate the goals, policies & budgets
*Appoint the top executives
*Provide the overall direction & leadership of the company
*Decide the distribution of profits
 Middle level managers
• Directly supervise other managers below them
• Titles such as department head, project leader, plant
managers or division manager
• Main functions are
*Monitor & control the operating performance of sub units
and individual managers
*Implement the overall organisational plans
*Train, motivate & develop the supervisory level
*Implement changes or strategies by top managers
*Coordinate among themselves to integrate the various
activities of a department
 Lower level or supervisory managers

• Having the least authority

• Responsible for work of operating employees
• Main functions are,
*Train & develop the efficiency of workers
*Assign job to workers
*Give orders & instructions
*Maintain discipline & good human relations among workers
*Report feedback information about workers
 Managerial roles or roles of manager
• Roles of manager classified into
1.Interpersonal roles
a)Figurehead
b)Leader
c)Liasion
2.Informational roles
a)Monitor
b)Disseminator
c)Spokesperson
• 3.Decisional roles
a)Entrepreneur
b)Disturbance handler
c)Resource allocator
d)Negotiator
 Interpersonal roles
1.Figurehead role
ceremonial and symbolic duties such as
Greeting visitors and signing legal documents
2.Leader
Directs and motivates subordinates
3.Liasion
Maintains the information link both inside &
outside organisation.
 Informational roles
1.Monitor
Person who seeks & receives information &
maintains the personal contact with stakeholder.

2.Disseminator
Forward information to organisation members via
memos, reports and phone calls
3.Spokesperson
Transmits the information to outsiders via
reports, memos and speeches
 Decisional roles
1.Entrepreneur
Initiates improvement in project & identifies new ideas
2.Disturbance handler
Takes corrective action during disputes
3.Resource allocator
Decides who gets resources and determines priorities
4.Negotiator
person who represents the department during
negotiation
 Managerial skills
1.Technical Skill
2.Human Skill
3.Conceptual Skill(design and problem solving)
 Technical skills
• Reflects both understanding and a proficiency
in a specialized field such as engineering ,
accounting or manufacturing
• More important at low level mgt.
 Human skills
• Ability of the manager to work effectively as a
group member and to build cooperative team.
• Know how to communicate, motivate, lead,
inspire, enthusiasm and trust.
 Conceptual skills
• Also called design and problem solving skills.
• To understand how its various parts and
function mesh together.
• To foresee how changes in any one of them
may affect all of the others.
T Conceptual skills

Human skills
M

Technical skills
L
Evolution of management thought
❖Pre-scientific or pre-classical management period
❖Classical management theory
Administrative management of Fayol
Scientific management of Taylor
Bureaucratic management theory
❖Neo classical or behavioural theory
❖Modern theory
Systems approach
Contingency approach
 1.Pre-scientific management period
✓ Certain pioneers tried to challenge the traditional character of
management by introducing new ideas & approaches.
1.Robert Owen (1771- 1858)
❖ Group Textile mills in lanark,scotland
❖ He used Ideas of human relations
❖ Promoter of co-operative and trade union in England
❖ Worker’s performance based on working condition & treatment the
workers
❖ Shorter working hours, housing facilities, training workers in
hygiene, education of their children, provision of canteen
❖ Father of personnel management
 Pre-scientific management period
2. Charles Babbage (1792- 1871)
❖Father of modern computing
❖Professor of maths at Cambridge university
❖Manufactures little use of science &
mathematics
❖Accurate observation, Measurement and precise
knowledge for taking business decision
❖Profit sharing to improve productivity.
 Pre-scientific management period
3.Henry Robinson Towne (1844- 1924)
❖President of the famous lock manufacturing
company Yale and town
❖Combination of engineers and economists as
industrial managers
❖Successful management of industrial workers.
 2.CLASSICAL MANAGEMENT THEORY
*Developed industrial revolution when new
problems related to the factory system started
to appear.
*Managers dont know how to train the
employees and dont know how to deal with
labour dissatisfaction.
*As a result classical management theory
developed to find “one best way” to perform
and manage task.
• SCIENTIFIC MANAGEMENT THEORY
• ADMINISTRATIVE MANAGEMENT THEORY
• BUREAUCRATIC MANAGEMENT THEORY
 Henri Fayol's administrative management theory
➢ It concentrates on developing the organisational structure that leads to
high efficiency & effectiveness
➢ Father of modern theory of general and industrial management
Book-“The general and industrial administration” in which Fayol
divides the industrial activities into 6 categories
▪ Technical (production, manufacture)
▪ Commercial (buying, selling, exchange)
▪ Financial (search for and optimum use of capital)
▪ Security (protection of property and persons)
▪ Accounting (balance sheets, cost statistics)
▪ Management (Planning, Organising, Co-ordinating, Directing,
Controlling)
 Henri Fayol's administrative management theory
▪ DIVISION OF WORK OR SPECIALIZATION(divide the work & already work
allotted)
▪ AUTHORITY AND RESPONSIBILITY(power & superior)
▪ DISCIPLINE(all levels – smooth running)
▪ UNITY OF COMMAND (receive orders and instructions from superior)
▪ UNITY OF DIRECTION (group of activities having one head and one plan, coordinate
work)
▪ SUBORDINATION OF INDIVIDUAL TO GENERAL INTEREST (earn money)
▪ REMUNERATION (employees and employers, satisfy the workers)
▪ CENTRALIZATION (power is distributed subordinates)
▪ LINE OF COMMAND/SCALAR CHAIN (instructions & orders from top to bottom)
▪ ORDER (material & social)
▪ EQUITY (treatment employees equally)
▪ STABILITY OF STAFF(turnover equally)
▪ INITIATIVE (thinking & execution of plan, employees idea also concern)
▪ ESPRIT DE CORPS (union)
 1.Division of work
• Specialization increases output by
making employees more efficient.
2.Authority and responsibility
• Managers must be able to give
orders, and authority gives them
this right.
3.Discipline
• Employees must obey and respect
the rules that govern the
organization.
4.Unity of command
• Every employee should receive
orders from only one superior.
5.Unity of direction
• The organization should have a
single plan of action to guide
managers and workers.
6.Subordination of individual
interest to general interest
• The interests of any one employee
or group of employees should not
take precedence over the interests
of the organization as a whole.
7.Remuneration of personnel
• Workers must be paid a fair wage
for their services.
8.Centralization
• This term refers to the
degree to which
subordinates are involved in
decision making.
9.Scalar chain
• The line of authority from top
management to the lowest ranks
is the scalar chain.
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
• 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
• Union is strength
• Promoting team spirit will build
harmony and unity within the
organization.
 Scientific management theory

▪ Developed for - Increase productivity & efficiency

▪ One best way for a job to be done
✓ Examining how the work process was actually accomplished
✓ Scrutinizing the skills of the workforce
1.Frederick W.Taylor (1856-1915)
▪ Father of scientific management
▪ Bethlehem steel plant
▪ Time and motion study – eliminating unnecessary motions
▪ Shoveling & pig-iron handling
▪ 1898,47.5 ton daily & 12.5 ,500 - 140
principles such as:
Time and Motion Study
• Invent science for every workers job which will
alter the rules of thumb.
Differential payment
• Established Standards related to every method
and time for each task.
• Wage incentives carry internal structure of every
job work.
Drastic Reorganisation of supervision
• The work should be planned by foreman and not
by worker.
• Specialised job should be need of every job.
Scientific recruitment and training
• Make sure about good selection involving training
and construction of workers.
Intimate Friendly cooperation
• Management and labour had a common interest
in increasing productivity.
 Scientific management theory

2.Henry Gantt (1861-1919)

▪ Bar graph – planned & completed work of each stage
of production
▪ Based on time instead of quantity,volume or weight,
the visual display chart is used.
▪ Daily work, bonus
 Scientific management theory

3.Frank Gilbreths (1868-1924) & Lillian Gilbreths (1878-1972)

▪ Husband & wife team studied job motions

▪ Time and motion study
▪ Each of its component actions and analyze every
individual actions
▪ Find better ways to perform each component action
▪ Less cost of time and effort
▪ 1000 – 2700 bricks/day
 Scientific management theory
F.W.Taylor’s scientific management:
▪ Labor at Midvale steel company in U.S.A 1878
▪ Became Chief engineer 1884
▪ Publised Journal “price rate system” and “ shop management”
▪ Book “principle of scientific management” in 1911
▪ Scientific approach four types
1.Study each part of the task scientifically & develop the best
method
2.Carefully select workers & train them
3.Cooperate fully with workers
4.Divide the work and responsibility
 Bureaucratic management theory
Max Weber (1864 – 1920)
▪ German sociologist
▪ Specific rules were followed was important
▪ He thought that authority should do something which was the
part of person’s job & passed from individual to individual.
▪ 3 types of authority,
1.Traditional –custom or tradition(king,queen)
2.Charismatic-special personal qualities (gandhi, nehru,
Dr.A.P.J Abdual Kalam)
3.Rational – position held by the supervisor (police officer,
executives, supervisors)
 Bureaucratic system of administration
is based on the following
characteristics
▪ A well-defined hierarchy (higher control to lower level)
▪ Division of labor and specialization (all responsibilities &
particular task)
▪ System of written rules and regulations
▪ Impersonal relationship between managers and employees
▪ Selection and evaluation system
▪ Records
 3.Behavioral management theory

▪ Pointed out Psychology and sociology in understanding of

individual and group behaviour in an organisation
1.Mary Parker Follett(1868-1933)
*Management ignores the employee’s contribution to the
organisation.
*managers are needed to coordinate and harmonize group
effort rather than force and compel people.
2.Elton Mayo(1880-1949)
*Conducted experiments known as Hawthorne studies
✓ Informal groupings
✓ Informal relationship
✓ Patterns of communication
✓ Patterns of informal leadership
3.Hawthorne studies(1924-1932)
(i)Illumination experiment
(ii)Relay assembly test room experiment
(iii)Bank wiring test room experiment
(iv)Mass interview programme-upward communication in an
org creates a positive attitude in the work environment
4.Abraham Maslow(1908-1970)
*Developed hierarchy of needs theory
*Theory of motivation based on consideration of human needs
*Maslow divided the needs of hierarchy into 5 types,
1.Physiological needs
2.Safety needs
3.Belonging and love needs
4.Esteem needs
5.Self-actualization needs
5.Douglas McGregor(1906-1964)
*believed 2 basic kinds of managers(Theory X &
Theory Y managers)
*Theory X manager has negative view of employees
*Theory Y manager has good opinion about employees
6.Chester barnard(1886-1961)
*President of new Jersey bell Telephone company
*Executives serve 2 primary functions,
i)Establish & maintains communication among
employees
ii)Establish organisation objective and motivate
employees
 4.Modern Theory
i)System approach
*Based on belief that organisation can be visualized as system of interrelated
parts or subsystems operate as a whole to achieve common goal.
1.Input 2.Transformation process 3.Output
4.Feedback 5.Environment
The following terminologies important for system approach,
(i)closed system –interacts less with external environment
(ii)Open system - interacts more with external environment
(iii) Entropy-breakdown overtime
(iv)Synergy-making the output is higher
*Managerial levels based on system Approach
1.Technical level 2.organizational level 3. institutional level (activities of
org)
Organisation as an open system
 Contingency approach
*Contingency approach/Situational approach
*Depends on experience and judgement of manager in a given
organisational environment.
Task of manager is to identify which technique will be suitable
in particular situation under particular circumstances.
▪ Characteristics of environment
▪ Determine the design of an organization’s structure and control
systems
✓ Organizations in stable environment(centralized authority)
✓ Organizations in changing environment(decentralized authority)
 Types of Business organisation
• Classified into 2 types,
1.Individual organisation
i)Sole trades
ii)partnership
iii)Joint stock company
iv)Co-operative
v)Multinational companies
2.Government organisation
i)Departmental undertaking
ii)Public corporation
iii)Government company state enterprises
 1.Sole Trading
• Business unit owned and controlled by a single individual
called sole trading concern
• Use his own savings for his business
• Purchases, sells and maintains accounts on his own
• He alone enjoys all profits & losses in business
• Sole trader-person who contributes capital and manages the
business
• According to Wheeler, The sole proprietorship is that form
of business organisation which is owned & controlled by a
single individual. He receives all the profits & risks all of
his property in the success or failure of the enterprise.
Characteristics of sole proprietorship

1.One man ownership and control

2.Unlimited liability(responsiblity)
3.Enjoyment of entire profit
4.No separate legal entity
5.Simplicity
6.Self employment
7.Secrecy
Advantages
*Easy to form & close the business
*Easy for decision making
*Full control of business activities
*Promotes self employment of individual
*Liberal legal formalities to start the business
*Easy to expand or reduce the size of the business
*Easy to accessibility of consumers
*Easy to maintain healthy relations with employee
Disadvantages:
1.Limited resources
2.Short life
3.Lack of consultation
4.Risk of entire loss
5.Uncertainty
 Partnership

• Association of persons who agree to combine their

financial resources & managerial abilities to run a
business & share profits in an agreed ratio
• Need for expansion of business with more capital,better
supervision and control,division of work and spreading
of risk.
• According to Indian partnership act, The relation between
person who have agreed to share the profits of a business
carried on by all or any of them acting for all.
 Features of partnership
1.Agreement
2.Multiplicity of person
3.Lawful business-legal
4.Sharing of profits
5.Contractual relations
6.Mutual agency-dual role in orgnisation
7.Unlimited liability
8.Registration
9.Common management
10.Utmost good faith
 Kinds of partners
1.Active partner-represents all others in business
orgnisation
2.Sleeping or dormant partner- does not express
his intention
3.Normal partner
4. Partner in profit only
5. Partner by estoppel- for outsiders belief
6.Sub-partner-strange to contact
7.Secret partner- whose name is not disclosed
8.Minor as a partner-below 18 years.
 Rights of partner

1.Right to express his option

2.Right of participation
3.Right of access to books
4.Right to share profits
5.Right to get interest on the capital
6.Right of indemnity -protection
Advantages:

*Easy to formation
*Registration is not compulsory
*Larger financial resources
*Promptness in decision making
*Risk of business is shared by more persons
*More possibility of growth & expansion of business
*Close supervision is possible and reduces wastages.
*Easy dissolution
Disadvantages:

*Unlimited liability increases the dissolution of

firm
*Lack of harmony among partners
*Difficulties in expansion & modernization
*lack of public faith
*Limited resources
*Limitation on transfer of share
 Joint stock company
• As per the definition, there must a group of persons
who voluntarily agree to form a company.
• Once formed the company becomes a separate legal
entity with a distinct name of its own.
• Its existence not affected by change of members.
• According to lord justice lindleg, By a company,
we mean an association of many persons who
contribute money or money’s worth to a common
stock and employ it in some trade or business and
also share the profit and loss as the case may be
arising there from.
Advantages
*Limited liability
*More stable
*Shares are freely transferable
*Company can easily expand
*Company is charged lesser amount of taxes
*Democratic setup is made
*possible for large financial resources
Disadvantages
*Time consuming legal formalities
*Lack of motivation
*difficult to maintain resources
*Promotion of frauds
*Delayed decisions and actions
 Types of companies
(i)On the basis of formation
(a)Statutory company-by special act of parliament
(b)Registered company- companies act
(c)Government company- 51 % is held by the central
government
(ii)On the basis of public interest
(a)Private limited company-minimum paid up capital
(b)Public limited company- large scale
(iii)On the basis of control
(a)Holding company -for ex if company A hold more than
51% of paid up share capital of company B
Then A- holding company, B- subsidiary company
(b)Subsidiary company
(iv) On the basis of Nationality
(a)Indian company
(b)Foreign company
(v) On the basis of Area
(a)National company
(b)Multi national company
 Private limited company

• Minimum paid up capital is Rs.1,00,000

• Minimum number of members is 2
• Limits the number of its members to 50
• Restricts the right to transfer the shares
• Prohibits any invitation to the public to
subscribe the shares
 Public limited company
• Minimum paid up capital is Rs.5,00,000
• Minimum number member is 7,the maximum
is unlimited
• Capital is collected from the public by issuing
shares
• No restriction on the transfer of shares
• Company should send the financial statement
to members and registrar
• Must have 3 directors
• Necessary to follow certain legal formalities
 Public Enterprises
• Form of business organisation owned and
managed by the state government or any other
public authority(departmental undertaking)
• Owned and controlled by local or state or central
government
• Whole or most of the investment is made by the
government
• According to N.N.Mallya, Public enterprises are
autonomous or semi autonomous corporations and
companies established, owned and controlled by the
state and engaged in industrial and commercial
activities
Characteristics of public enterprises

1.Financed by government
2.Financial Independence
3.Government management
4.Public services
5.Legislative control
6.Monopoly enterprises(eg: Railway, post &
energy production enterprises)
Merits:
*Helps in implementing government policy
*Complete government control
*Income for government
*Useful for developing enterprises
*Funds are properly used
Demerits:
*Excessive government interference
*Shortage of competent staff
*Tax burden to public
*Delay
 Public corporation
• Created by special act of state or central
government (ONGC,FCI)
• Such act defines the power, duties, privileges
and pattern of management of these organisation
• Power of government but possessed with
flexibility & initiative of private enterprises
Merits:
*Finance from government
*Internal autonomy
*Free from government interference
*Protect public welfare
*Service to society
*Flexibility
Demerits:
*Limited autonomy
*Misuse of power
*Inefficient operation
*Lack of interest
*Government control
 Cooperative Organization

• It is a voluntary association of persons for

mutual benefits and it aims are accomplished
through self help and collective effort.
• Every state government has appointed a
registrar of co-operative societies for
registering controlling and supervising the
societies.
 Organization culture
• Can be characterized in a similar way we
classify people, for example rigid, friendly.
• Attributes and behavior can be predicated with
the use of these behaviors.
• Organization culture prescribes norms and
procedures for the employee’s actions towards
client’s competitors, supervisors,
subordinates.
• Organization culture is a system of shared
assumptions, values, beliefs which govern how
people behave in organization.
• These shared values have a strong influence on
the people in the organization and dictate how
they dress, act, and perform their jobs.
• This culture provides guidelines and
boundaries for the behavior of the people in
one organization.
• The attributes and behavior of the people in
one org will vary in other organization.
 Definition
• A system of informal rules that spells out how
people have to behave most of the time.
- Deal and Kennedy

• Organisational culture is a relatively uniform

perception held by organisation. It has common
characteristics.
- Stephen P. Robbins
 Characteristics of organizational
culture
• Risk tolerance- employees are encouraged to
be innovative and risk taking
• Direction – org culture creates clear objective
and performance expectations.
• Unit integration – org culture leads to
coordination
• Management contract – clear communication
assistance and support to sub-ordinates
• Identity – members identify the org as whole
rather than particular work group
• Reward system- salary increase, incentives,
promotions
• Conflict tolerance – conflicts and criticism openly
• Control – rules and regulation to control employ
behaviour
• Communication patterns- org communication are
restricted to the hierarchy of authority
• Individual initiative – resposibility , freedom
 Sources of culture
• Rituals
• Language
• Material symbols
• Stories
1.Rituals – are repetitive sequence of activities
which express and reinforce the key values of
organization
• If an organization organizes annual award
meeting, sales persons are awarded for
achieving the targets
• The meeting conveys achieving target and
performing better through hard work is
important
• One of the best-known corporate rituals is
Mary Kay Cosmetics’ annual awards ceremony
for its sales representatives.
• “ritual” plays a significant role in establishing
desired levels of motivation and behavioral
expectations
 Language
• Many organizations and units within
organizations use language as a way to identify
and unite members of a culture.
• By learning this language, members attest to
their acceptance of the culture and their
willingness to help preserve it.
 Language
• organizations often develop unique terms to
describe equipment, key personnel, suppliers,
customers, processes, or products related to its
business.
• Cranium, a Seattle board game company,
“chiff ” is used to remind employees of the
need to be incessantly innovative in everything
they do. “Chiff ” stands for “clever, high
quality, innovative, friendly, fun.
 Material symbol
• The layout of an organization’s facilities, how
employees dress, the types of automobiles
provided to top executives, and the availability of
corporate aircraft are examples of material
symbols.
• Others include the size of offices, the elegance of
furnishings, executive “perks”, employee fitness
centers or on-site dining facilities, and reserved
parking spaces for certain employees.
 Material symbol
• Extra benefits provided to managers such as
health club memberships, use of company-
owned facilities, and so forth.
• Material symbols convey to employees who is
important and the kinds of behavior that are
expected and appropriate.
• (for example, risk taking, conservative,
authoritarian, participative, individualistic, and
so forth)
 Stories
• Parents tell stories of outstanding personalities
to children and children try to transfer them
into practice
• Organisation are also conveying the stories of
successful organisations through seniors which
have a great influence in building culture
 Stories
• Organizational “stories” typically contain a
narrative of significant events or people
including such things as the organization’s
founders, rule breaking, reactions to past
mistakes, and so forth.
• Example: Managers at Southwest Airlines tell
stories celebrating employees who perform
heroically for customers.
 Components of culture
• Support orientation
• Rules orientation
• Innovation orientation
• Co-ordination orientation
Dimension of Organization Culture
 Types of org culture
1.Subculture –set of values shared by a minority
2. Dominant culture-
• majority of the organizational members share
the core value.
• This kind of sharing of the core values is the
dominant culture.
• It is macro(general) view of culture
3. Strong culture
Core values of the org are being accepted and
followed with commitment by more numbers
of the org.
4. Weak culture
core values of the org are not being accepted
and followed with commitment by more
members of the org
5.Authoritarian culture:
leader of the org exercise full control over
subordinates
6. Participative culture
superiors motivate their subordinates to
attain the goals
7. Normative culture
The employee behave in an ideal way and
strictly adhere to the policies of the
organization.
8. Pragmatic culture
customer satisfaction is the main motive of
the employee.
9.Academy culture
• Hire skilled individual
• Roles and responsibilities are delegated
according to the back ground , educational
qualification and work experiences.
10. Fortress culture
• Employee are not sure about their longevity
• Such organization follows the fortress culture
• The employee are terminated if the
organization is not performing well.
contrasts strong and weak cultures
Strong Cultures
Values widely shared
Culture conveys consistent
messages about what’s important
Most employees can tell stories
about company history or heroes
Employees strongly identify with
culture
Strong connection between
shared values and behaviors
Weak Cultures
Values limited to a few people—
usually top management
Culture sends contradictory
messages about what’s important
Employees have little knowledge
of company history or heroes
Employees have little
identification with culture
Little connection between shared
values and behaviors
Creating culture:
•Mission and vision, hard work and competitive
spirit created a disciplined organizational culture
for improving the performance
Managing culture:
(i)Selection process- select individuals with
knowledge skills and competence to perform job
(ii)Actions of top management-rewards, dress,
promotions
(iii)Socialization – new employ aware of culture
(iii)Socialization
Process that adopts employees to the
organization culture.
1.Pre-arrival stage – is the period of learning
before a new employee join
2.Encounter stage- if the expectation and reality
differ he may resign.
3.Metamorphosis stage- new member become
comfortable with the org and job
Sustaining Organisational Culture

1.Work commitment and involvement

2.Labour turnover
3.Absenteeism
4.Punctuality
5.Superior-subordinates relationship
6.Product quality
7.Customer service
Changing organizational culture:
1.Recruit personnel with previous experience
2.Reward system can be changed
3.Set unique goals
4.Make changes from top to bottom
5.Include employees in making rules and
policies
6.Managers create new role model & new
stories to help employees understand about
what is happening around them
 Organization & the
environmental factors

1–143
External and Internal Environment

Internal
Environment

The
Manager

General
Task
Environment
Environment
1–144
The External Environment

3–145
 Internal & External Environment classification:
Internal Environment
1. Resources
2. Capabilities
3. Culture
External Environment:
1. specific environment
a. Customers b. Suppliers
c. Competitors d. Pressure Groups
2. General Environment
a. Economic conditions b. Political/Legal Conditions
c. Socio-cultural Conditions d. Demographic Conditions
e. Technological Conditions f. Global conditions
 Internal Environment
i) Resources:
• Tangible resources are the easiest to identify
and evaluate: financial resources and physical
assets are identifies and valued in the firm’s
financial statements.
• Intangible resources are largely invisible, but
over time become more important to the firm
than tangible assets because they can be a
main source for a competitive advantage.
 Internal Environment
ii) Capabilities:
• Resources are not productive on their own.
The most productive tasks require that
resources collaborate closely together within
teams.
• The term organizational capabilities are used
to refer to a firm’s capacity for undertaking a
particular productive activity.
 Internal Environment
iii) Culture:
• It is the specific collection of values and norms
that are shared by people and groups in an
organization and that helps in achieving the
organizational goals.
 External environment
• External environment refers to force and
institutions outside organization that
potentially affect an organizations
performance

• General and Specific Environment

 External environment- Specific
Environment

• Specific Environment that is directly relevant

to achievement of an org’s goal
• Customers, competitors, suppliers, pressure
groups
 Specific Environment
Customers
Customers:customers who absorbs
organizational outputs
They represent potential uncertainty to an
organization,Their taste can change,they can
become dissatisfied with organization’s
product or service
 Specific Environment Competitors:

• Competitors: Organizations cannot afford to

ignore its competitors.
Managers must be prepared to respond to
competitors policies regarding pricing new
products,services offered and other
incentives it is giving to customers
 Specific Environment-Suppliers

• Suppliers:Any party that provides input for the

business. E.g financial institutions are provider
of money, colleges are suppliers of human
resources
• Managers need to have steady and and reliable
flow of inputs to meet the goals
 Specific Environment- Pressure
groups
• Pressure groups: Managers must recognize
the special interest groups that attempt to
influence organization
 General Environment Economic
conditions:
• Economic conditions: It includes the impact of
economic factors like Interest rates, changes in
disposable income, stock market fluctuations
and the stage of general business cycle
• e.g : when consumer’s incomes fall, their
confidence about job security declines, they
will postpone purchasing any thing that is not
necessary
 General Environment Political/legal
conditions:
• Political/legal conditions: Federal, state and
local government laws, as well as global laws
and laws of other countries influence what org
can and cannot do
• It also includes a country’s political conditions
and stability.
 General Environment Demographic
Conditions:
• Demographic Conditions: Trends in the
physical characteristics of population such as
age, race, gender, education level, geographic
location, income, and family composition.
General Environment- Socio-cultural
Conditions

• The sociocultural component is concerned

with societal and cultural factors such as
values, attitudes, trends, traditions,
lifestyles, beliefs, tastes, and patterns of
behavior.
• Managers must adapt their practices to
the changing expectations of the
society in which they operate.

159
 General Environment- Technological
Conditions
• The technological component is concerned
with scientific or industrial innovations.
• The whole area of technology is radically
changing the fundamental ways that
organizations are structured and the way that
managers manage.

160
 General Environment- Global
conditions
• The global component encompasses those
issues associated with globalization and a
world economy.
• Globalization is one of the major factors
affecting managers and organizations

161
 Current trends and issues in
management
1. Workforce diversity
worker with different cultural values and life
style preferences should be accommodated
by addressing their different life style, family
needs and work style.
2. Changing demographics of workforce
demography-statistical study of human
populations
workfolk increases,
young workers,
increasing life expectancy
increasing tendency of family working in the
same org
these are factors changing the demographics
of workforce.
3.Changing employee expectations
job security
good and attractive salary
housing facility
empowerment
4. Internal environment
Creating an environment which is responsive
to external changes.
5. Building organizational capabilities
managers will be required to evaluate the
environmental changes to develop business
strategies.
6. Job design and organizational structure
designing an organization with foreign
concepts such as quality circle, TQM etc
7. Changing psycho-social system
human participation not only on technical
functions but also in establishing the
democratic humanistic system
8. Technological advances
constant upgradation in every technological
field. Unemployment resulting from
modernization could be liquidated by
properly assessing manpower needs and
training of redundant employees in alternate
skills
9. Management of human relations –avenue for
self fulfillment
10.Changes in legal environment
It's important that every business must
function according to the law (passed by the
government as well as the decisions rendered
by the various commissions and agencies at
every level of the government)
11.Changes in industrial relations
workers are prepared to play a
co-determinator to resolve the conflicts.
12.Expanding globalization
the integration of national economies into
the international economy through trade,
foreign direct investment capital flow,
migration and the spread of technology
 Challenges in Managing Diversity
• Despite the benefits that we know workforce
diversity brings to organizations, managers
still face challenges in creating
accommodating and safe work environments
for diverse employees.
• Bias is a term that describes a tendency or preference
toward a particular perspective or ideology. It’s
generally seen as a “one-sided” perspective.
• prejudice, a preconceived belief, opinion, or judgment
toward a person or a group of people.
• A major factor in prejudice is stereotyping, which is
judging a person on the basis of one’s perception of a
group to which he or she belongs.
• Both prejudice and stereotyping can lead to someone
treating others who are members of a particular group
unequally. That’s what we call discrimination
• In the 1980s, the term glass ceiling, first used
in a Wall Street Journal article, refers to the
invisible barrier that separates women and
minorities from top management positions.
• The idea of a “ceiling” means that there is
something blocking upward movement and
the idea of “glass” is that whatever’s blocking
the way isn’t immediately apparent.
 PART B
1. Is management an art or science? Discuss.
2. Describe the various functions of
Management.
3. Discuss the principles and techniques of
scientific management.
4. Examine the fourteen principles of
management advocated by Henry Fayol.
5. Express the different types of business
organizations.
6. Give the current trends & issues in
management
7. Identify the different types of culture in an
organization?