Management Principles Topics

This guide is help for you to prepare for the exam. I will provide you with the main
topics and ideas, what you need to learn. Use slides as primary source
When you read the slides and book excerpt, there are guidance topics and questions:

1. Management description. Can you describe the management concept by using

different theories? For example, Define management by using Scientific
Management theory. In this question, you should be able to use the main
principles of the theory to formulate a clear management definition.

2. Levels of Management. Examples of different levels and areas for the

manager. Can you explain different levels and recognize areas? You can check
cases and information in the book and the slides. This is the picture which is
on this topic. (Book ref 1)
Top managers CEO of Starbucks Howard (ex), complex and varied job; they
make decisions about activities such as acquiring other companies, investing
in research and development, entering or abandoning various markets and
building new plants and office facilities. Spend time in meeting or on
telephone. President, vice president, CEO
Middle managers (largest group) Common middle-management titles include
plant manager, operations manager, and division head. Middle managers are
primarily responsible for implementing the policies and plans developed by
top managers and for supervising and coordinating the activities of lower level
managers. Plant manager, operations manager, division head
First line managers supervise and coordinate the activities of operating
employees. Common titles for first-line managers are supervisor, coordinator,
and office manager. Positions like these are often the first held by employees
who enter management from the ranks of operating personnel. Supervisor,
coordinator, office manager.
Marketing manager function – getting customers and clients to buy products
or services. These areas include new product development and promotion.
Financial manager function – to deal with campaigns financial resources
Operations managers function – creates and manages the systems that create
an organizational prosucts and services.
Human resources function – to hire and develop employees.
 Administrative and general managers function -

3. Functions of management (POLC framework). This framework is described in

the book and in my slides. Can you explain separate elements? Do you know,
what is inside POLC framework? Can you explain the parts of this
framework? (Book ref 3)
Planning involves setting objectives and determining a course of action for achieving
those objectives. Process begins with environmental scanning.
Strategic planning analyzing competitive opportunities and threats, as well as the
strengths and weaknesses of the organization, and then determining how to position
the organization to compete effectively in its environment. Strategic planning has a
long-time frame, often three years or more. Strategic planning generally includes the
entire organization and includes formulation of objectives. Strategic planning is often
based on the organization’s mission, which is its fundamental reason for existence.
Tactical planning refers to intermediate-range (one to three years) planning that is
designed to develop relatively concrete and specific means to implement the strategic
plan. Middle-level managers often engage in tactical planning.
Operational planning generally assumes the existence of organization-wide or subunit
goals and objectives and specifies ways to achieve them. Operational planning is
short-range (less than a year) planning that is designed to develop specific action steps
that support the strategic and tacti- cal plans.
Organizing is the management function that involves developing an organizational
structure and allocating human resources to ensure the completion of objectives, often
through the design of individual jobs with organization.
Job design was based on principles of division of labor and specialization, which
assumed that the more narrow the job content, the more proficient the individual
performing the job could become.
Leading involves social and informal sources of influence used to inspire others to
take action utilizing knowledge of personalities, values, attitudes, and emotions.
Personality research and studies of job attitudes provide important information as to
how managers can most effectively lead subordinates. For example, this research tells
us that to become effective at leading, managers must first understand their
subordinates’ personalities, values, attitudes, and emotions.
Controlling involves ensuring that managerial actions do not deviate from standards
by creating processes and procedures that ensure consistent behavior.
Controlling consists of three steps, which include (1) establishing performance
standards, (2) comparing actual performance against standards, and (3) taking
corrective action when necessary.

4. Mintzberg management roles (examples, explanations). Can you explain roles

and different situations? Can you recognize roles? (Book ref 2)
In the figurehead role, the manager represents the organization in all matters
of formality. The top-level manager represents the company legally and
socially to those outside of the organization. The supervisor represents the
work group to higher management and higher management to the work group.
In the liaison role, the manager interacts with peers and people outside the
organization. The top-level manager uses the liaison role to gain favors and
information, while the supervisor uses it to maintain the routine flow of work.
The leader role defines the relationships between the manager and employees.

In the monitor role, the manager receives and collects information. In the role
of disseminator, the manager transmits special infor- mation into the
organization. The top-level manager receives and transmits more information
from people outside the organization than the supervisor. In the role of
spokesperson, the manager dis- seminates the organization’s information into
its environment. Thus, the top-level manager is seen as an industry expert,
while the supervisor is seen as a unit or departmental expert.

In the entrepreneur role, the manager initiates change. An example of such

change is found at Hello Sunshine, the production company founded by Reese
Witherspoon to place the voices of women at the forefront of the film indus-
try.
In the disturbance handler role, the manager deals with threats to the
organization. Such skills were critical for Volkswagen in the wake of the
resignation of their CEO, Martin Winterkorn, following the revelation that the
auto manufacturer had manipulated emissions tests with several of the diesel
vehicles in 2015. In the resource allocator role, the manager chooses where
the orga- nization will expend its efforts. Such skills are critical for managers
such as Lawrence Culp, CEO of General Electric, due to their involvement in
a number of diverse industries ranging from avia- tion to healthcare and home
appliances. In the negotiator role, the manager negotiates on behalf of the
organization. Such skills are as valuable to small business owners, corporate
CEOs, and politi- cians charged with negotiating peace between disputing
nations. The top-level manager makes the decisions about the organization as
a whole, while the supervisor makes decisions about his or her particular work
unit.
5. Classical management theory. Rational economic view. Can you explain what
a rational economic view is? Do you understand it? (Book ref 4, 5)
Tools to manage people – love and fear.
Classical management theory – emphasis on the economic rationality of the
individual employee at work.
Context - Productivity was a serious business problem. Labor was in short
supply.
Rational economic view
• people are motivated by economic gains (money)
• an individual is primarily a passive resource to be manipulated, controlled,
and motivated by the organization.
• irrational emotions must be kept from interfering with economic rationality.
• organizations can be designed in ways to control irrational emotions
Classical management perspective: Scientific management and Administrative
management.
6. Principles of scientific management. Can you explain the main principles of
scientific management? The context of this theory, main keywords, and
definitions associated with this theory. Critics? (Book ref 4, 5)
Father of scientific management – Frederick W. Taylor
Shovel principle – you need to give the same shovels (tools) to everyone, then
you can measure the performance, compare their productivity. Scientific
management was introduced in an attempt to create a mental revolution in the
workplace:
<it defined as the systematic study of work methods in order to improve
efficiency>
He had invented definition soldiering—employees deliberately working at a
pace slower than their capabilities.
What he have done?
Each worker should be producing, and then he designed the most efficient way
of doing each part of the overall task.
He implemented a piecework pay system. Rather than paying all employees
the same wage, he began increasing the pay of each worker who met and
exceeded the target level of output set for his or her job.
Principles of Scientific Management
• job should be broken down into elements, and a scientific way to perform
each element
 • workers should be scientifically selected and trained to do the work in the
designed manner
• good cooperation between management and workers so that tasks are
performed in the designed manner
• division of labor between managers and workers
Critic – Frank Gilberth
7. Administrative principles. Henri Fayol management principles. Can you
explain what Henry Fayol has done? What main ideas did he have? Also, can
you recognize principles? (Book ref 4, 5) Organization vs individual
Henri Fayol
<management activities>
• planing, organising, commanding, coordinating, controlling
Fayol management principles
 Division of work (assigns each employee a task that they can
become proficient at. Productivity increases as employees
become more skilled, assured and efficient.
 Authority and responsibility (Managers must possess the
authority to give orders, and recognize that with authority
comes responsibility. As well as rank, Fayol argues that a
manager's intelligence, experience and values should command
respect)
 Discipline (everyone should follow the rules)
 Unity of command (An employee should receive orders from
one supervisor only, otherwise, authority, discipline, order and
stability are threatened.
 Unity of direction (Teams with the same objective should be
working under the direction of one manager, using one plan.
That, Fayol wrote, "is the condition essential to unity of action,
coordination of strength and focusing of effort.")
 Subordination of individual interest to general interest
(individuals should pursue team interests over personal ones –
including managers)
 Remuneration of employees (Employee satisfaction depends on
fair remuneration for everyone – financial and non-financial.
Fayol said pay should be fair and reward "well-directed effort."
)
 Centralization (balancing centralized decision making (from the
top) with letting employees make decisions. Or as Fayol wrote
“A place for everyone in his place”)
 Hierarchy
 Order (the right man in the right place forms an effective social
order)
 Equality (managers should be fair to employees)
 Stability of personnel (organizations should minimize staff
turnover and role changes to maximize efficiency)
 Initiative (employees should be encouraged to develop and
carry out plans for improvement)
 Espirit de corps (Organizations should strive to promote team
spirit, unity, and morale.)
8. Bureaucratic organization (BO) principles. Can you explain the positive and
negative things about BO? Do you understand the need for such a type of
management? (Book ref 4, 5) Principles of bureaucratic organization
 a division of labor by functional specialization;
 a well-defined hierarchy of authority;
 a system of rules covering the rights and duties of employees;
 a system of procedures for dealing with work situations;
 impersonal relations between people;
 promotion and selection based on technical competence
Advantages
 employee behavior is consistent overlapping or conflicting job
duties are eliminated
 behavior is predictable because of supervision
 hiring and promotion are based on merit or expertise
 employees develop expertise in their jobs
 there is continuity in the organization
Disadvantages
 There is too much red tape and too much paperwork;
 Employees do not care about the organization;
 Employees are treated impersonally (according to the rules);
 Regulations result in conformity in behavior. Relying on rules
and policies stifles the growth of employees;

9. Neoclassical theory. Elton Mayo’s scientific research and main findings. Can
you explain the main principles of Mayo's research? Why he found out? Why
it was important? Why it is called Neoclassical theory? (Book ref 4, 5)
Neoclassical theory: human relations approach (late 1920, early 1950)
Characteristic of neoclassical ideas is the emphasis on the social needs, drives,
and attitudes of individuals. Mayo's idea was that logical factors were far less
important than emotional factors in determining productivity efficiency.
Furthermore, of all the human factors influencing employee behaviour, the
most powerful were those emanating from the worker's participation in social
groups. Mayo's management theory states that employees are motivated far
more by relational factors such as attention and camaraderie than by monetary
rewards or environmental factors, such as lighting, humidity and more.
10. Abraham Maslow’s theory of needs. Can you explain Maslow’s pyramid
implementation in practice? Could you give examples from the work
environment to satisfy the needs? How managers could help employees to
focus on their needs. (Book ref 6)
 11. Douglas McGregor's theory X and Y. Can you explain the main points of this
theory? (Book ref 6)
Theory X is based on the assumptions that employees don't really want to work, lack
ambition, only work to collect a paycheck, and need constant supervision. Theory Y
is based on the assumptions that employees want to work, want to take responsibility,
and do not need much supervision.
12. Frederick Herzberg's motivation theory. Can you explain motivators and
hygiene factors? Can you analyze and give examples? Can you critique this
theory? (Book ref 6)

One criticism is that the findings in Herzberg’s initial interviews are subject to
different explanations. Another charge is that his sample was not repre-
sentative of the general population and that subsequent research often failed to
uphold the theory9

13. Douglas McLealand theory. Acquired needs theory. Can you explain
different needs in the context of work situations? Can you recognize different
needs?
The need for achievement; The need for affiliation(acceptance); the need for
power
14. Process-based theories (Equity theory, Expectancy theory). Can you explain
those theories? Do you know the main principles? (Book ref 6)
Expectancy theory suggests that motivation depends on two things—how
much we want something and how likely we think we are to get it. Effort to
 performance expectancy; performance to outcome expectancy; outcomes and
valences; the porter lawler extension.
Equity theory contends that people are motivated to seek social equity in the
rewards they receive for performance. The theory suggests that people view
their outcomes and inputs as a ratio and then compare it to someone else’s
ratio.
15. Management Science/Operational Research.
Management Science tends to focus on quantitative tools and the soft skills
necessary to manage projects successfully. Operations Research gives the
essential scientific contribution to the success of project management through
the development of models and algorithms.
16. Lean management. Can you explain Lean? What is Lean House? Can you
explain it?

17. System theory. Do you understand system theory? Can you explain its
managerial impact and application in real life? (Book ref 7)
A system is an entity made up of two or more interdependent parts that
interact to form a functioning organism.
1945-55 General Systems Theory
(proposed by Ludwig von Bertalanffy and others)
K. Boulding elaborated the types or levels of system based on the complexity
of their parts and the nature of the relations among the parts in system.
holism over reductionism, organism over mechanism.
Systems theory focuses on organization and interdependence of relationships.
A system is composed of regularly interacting or interdependent groups of
activities/parts the emergent relationship(s) of which form the (a) whole.
System theory is basically concerned with problems of relationships, of
structures, and of interdependence, rather than with the constant attributes of
object.

18. Types of system. Boulding classification of systems Types of systems: closed

and open system.
Closed system
*systems are independent of environmental influences
*focus on internal components such as variables of size, technology, location,
ownership, managerial strategies, and leadership style.
 Open system
*Are systems that interact with their environment.
*Organizations as a special classof open systems haveproperties of their own,
butthey share other properties in common with all open systems.
Subsystems
*Production and Technical Subsystem. This subsystem is concerned with
converting inputs into outputs and may also be classified as a productive or
economic part, which creates wealth, manufactures goods, and provides
services, that is an organization that provides services.
This subsystem is concerned with converting inputs into outputs and may also
be classified as a productive or economic part, which creates wealth,
manufactures goods, and provides services, that is an organization that
provides services.
Supportive Subsystem
*Two major functions of concern here:
*(a) procuring input and disposing output; and
*(b) promoting and maintaining good relationships with the between the
organization and its environment
Activities of this subsystem deal with personnel in the organization in all
facets
(e.g. role, arrangements, recruiting, selecting, motivating, disciplining, and
socializing). The focus is on maintaining stability of the organization.
Adaptive subsystem
*The functions of this subsystem are designed to insure that the organization
can meet the changing needs of the environment (e.g. research, planning,
development and so on).
Managerial subsystem
*The function of this subsystem is to coordinate the functions of the other
subsystems, settle conflicts among them and hierarchical levels, and relate the
total organization to its environment.
Synergy
*Two or more subsystems working together to produce more than the total of
what they might produce working alone.
*Entropy is a process that leads to system decline.
System thinking
Machine thinking - analysis
System thinking – synthesis
analysis vs. synthesis = knowledge vs. understanding = description of object
vs. explanation
Organizations as systems
Each element has impact on other elements behavior.
Each element has impact on whole system.
Elements could be grouped without independent impact
19. Management thinkers: Peter Drucker. What are the main theoretical findings
of Peter Drucker, and why is he important?
management theory lie the concepts of decentralization, knowledge work (in
fact, he coined the term “knowledge worker”), management by objectives
(MBO), and the SMART goal method. Decentralization means that managers
should empower employees by delegating tasks.
20. Planning and strategy. Can you explain the strategy process?
 Strategic planning is a process in which an organization's leaders define their
vision for the future and identify their organization's goals and objectives. The
process includes establishing the sequence in which those goals should be
realized so that the organization can reach its stated vision.
The mission, the goals, alignment with short-term goals, evaluation and
revision.
Steps: identify, prioritize, develop, implement, update.
21. Types of objectives. Effective objective criteria. SMART objectives. Can you
explain the hierarchy of the objectives? Can you formulate examples of
SMART objectives? (Book ref 8)
Specific, measurable, achievable, realistic(relevants), timely
SMART objectives (or SMART goals) are a form of objective setting which
allows managers and employees to create, track and accomplish, short-and-
long-term goals.
22. Business environment. Types and primary elements of the environment. Do
you know all the elements? (book ref 10)
A business environment is an ecosystem which consists of factors, people, and
resources used to manage operations and problems and deliver solutions to
clients.

1. Micro Environment
A microenvironment can be described as a collection of elements that affect
the functioning of the business. It's completely internal and does not include
third parties and external vendors.

2. Macro Environment
When a business environment lies outside the market and microenvironments,
it is called a macro business environment. Gross Domestic Product (GDP)
Inflation, employment rates, expenditure, and monetary/fiscal policies are a
part of macro environments.

3. Market Environment
A business's market environment combines internal and external factors that
influence an organisation's marketing activities. It determines their business
strategy and may involve launching specific campaigns for increased customer
acquisition and sales.

4. Natural Environment
Natural environments refer to a collection of natural resources used by
businesses to conduct operations.
Features of business environment.
1. External and internal forces
2. Uncertainty
3. Complexity
4. Relativity
Factors
1. Technological
2. Political and legal
3. Demographics
4. Competitive factors
 5. Social factors
6. Global factors
23. PESTEL analysis. Main elements of the analysis.
Political, economical, socio-cultural, technological, environmental, legal
factors.
Political
• Political Stability:
• Image of the country, regulations for investment (Doing business in...)
• Foreign policy
• Laws Governing Business
Economical:
• Economic Policies: includes Monetary Policy, Fiscal Policy
• Economic Indices: includes Gross Domestic Product, Consumer Price
index, Per Capita Income etc.
• Financial Market
• Industrial Infrastructure etc.
• Energy prices, etc.
• Main economic indicators
Socio cultural
• Demographics
• Carrier views
• Mobility
• Lifestyle
• Cultural barriers
• Ageing
• Entrepreneurial spirit
Technological
• Innovation
• Speed of technological changes and diffusion
• Use new processes and technologies
• Technology transfer
• Impact of Technology cost, quality and value chain
• Automation
• R&D activities
• Technology incentives
24. Rational decision-making process (Book ref 9)
The classical decision model is a prescriptive approach that tells managers
how they should make decisions. It rests on the assumptions that managers are
logical and rational and that they make decisions that are in the organization’s
best interests. These steps in rational decision making help keep the decision
maker focused on facts and logic and help guard against inappropriate
assumptions and pitfalls.
25. Decision making process steps (Book ref 9)|
 26. Organisation function. Organisation process. Organisational structures (OS).
Can you explain the positive and negative factors of OS? Can you Recognize
structures?
Process, which involves the assignment of tasks, the grouping of tasks into
departments and the assignment of authority and allocation of resources across the
organization.

Organizing process
1. Identification activities (what should be done)
2. Grouping and classification of activities
3. Assignment of responsible people for each activity
4. Vertical and horizontal coordination of tasks
organizational structure - formalized company relations system
Benefits
1. Workers will get qualification through specialization
2. Easier to execute coordinator
3. Easier to manage motivation
4. Easier to organize control
Formal and informal structure
Structure forms (formal)
Spans and levels –
flat structure
Benefits
1. Delegation of activities to subordinates
2. Clear set of organizational goals
 3. Excellent staff selection criteria
Negative aspects
1. Managers could be overloaded with work
2. Difficult control process
3. High qualification managers
Tall structure
Benefits
1.Good control of subordinates
2.Fast direct colaboration between subordinates and managers
Negative aspects
1. Multilayer management
2. High management costs
3. High distance between lowest and highest spans
4. Manager influence subordinates job
5. Very good coordination between departments is crucial
Informal team structures
Manager – subordinate
Benefits
1. Good control of subordinates
2. Fast direct colaboration between subordinates and managers
3. Fast decision-making process
4. Low management costs
Negative aspects
1. Weak specialization
2. Need for qualified managers
3. Manager could be overloaded
4. Difficulties in controlling subordinates
Linear structure (formal)vertically
Benefits
1. Specialization
2. Manager isnt overloaded
3. Fast cirrection of decisions
Negative aspects
1. Workers only implement commands
2. Without general manager is difficult to manage
3. For manager is difficult to implement all management functions
Functional structure (formal) The basis of this structure is an arrangement where a
worker has different managers for different areas of the organization operation.
Benefits
1. Logical functional divisions
2. Ensures implementation of main functions
3. Specialization of workers
4. Easier training of workers
5. Easier control
6. Easier to coordinate activities.
Negative aspects
1. Functional goals could be higher that overall goals
2. To big specialization narrows workers thinking
3. Difficult coordination between functions
4. Profit is responsibility for top level
 5. Weak adoption to environment changes
Matrix structure
Benefits
1. Possibilities to connect different expertise
2. Minimizes coordination efforts, because of team work
3. Good collaboration skills
4. Minimize costs
Negative aspects
1. Adoption difficulties
2. Flexibility for organization
3. Weak hierarchy