Principles of Management-UOK Lecture Notes

PRINCIPLES OF
MANAGEMENT
Lecturer’s Name:
Albert Gisoda Ndayisenga
Tel: 0788694559
Email: gisalberto@gmail.com
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Objectives
The overall aims of this course is to
increase both students knowledge of
management and students ability to
manage effectively.
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Learning Objectives
At the end of the course, students should be able
to do the following:
• Explain what management is and the roles of
managers.
• Evaluate the need for management in an
organization.
• Justify the need for planning across
management levels and global operations.
• Discuss the components of a strategic plan.
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• Outline the steps of the decision-making
process.
• Discuss organizational structures.
• Outline the components of human resource
planning.
• Describe the importance of communication and
information technology.
• Assess different leadership theories.
• Discuss how to motivate employees.

• Discuss the control process and its
elements.
• Discuss the current business landscape
and trends

Course Outline
UNIT 1: INTRODUCTION TO PRICIPLES OF
MANAGEMENT
• Topic 1: What Is Management and Why
Is It Needed?
• Topic 2: X-tics of management
• Topic 3: Principles management
• Topic 4: level of management

• Topic5: Managerial roles
• Topic 6: Managerial skills
UNIT 2: EVALUATION OF MANAGEMENT
• Topic1: Principles of scientific management
• Topic2: Management theory
UNIT 3: ENVIRONMENTAL CONTEXT OF
MANAGEMENT
• Topic1: Management Ethics

UNIT 4: PLANNING AND DECISION
MAKING
• Topic 1: The Importance of Planning
• Topic 2: The Components of a Strategic
Plan
• Topic 3: The Decision-Making Process

UNIT1
Principles of Management
Introduction:
• A principle is a fundamental truth or
proposition that services as the foundation
for a system of belief or behavior for a
chain of reasoning.
• Principles of management are broad and
general guidelines for managerial decision-
making and behavior.

• Management principles are not as rigid
as principles of science as this deals
with human behavior and thus are to be
applied creatively given the demands of
the situation.

• The term “management” origins from the
French “Management” which means directing
and from the Latin “menu agree”, which means
to lead by the hand.
• This clearly indicates that management is
necessary to direct and lead organization. It
directs, coordinates and integrates the
individual activities of group and secure
teamwork to accomplish organizational goal.

• According to Ricky W. Griffen,
“Management is a set of activities
(including planning, organizing, leading
and controlling) directed at an
organization’s resources (human, financial,
physical and informational) with the aim of
achieving organizational goals effectively
and efficiently in a changing environment.
• Similarly, according to Sherlekar and
Sherlekar, “Management is a process involving
coordination of human and material resources
through the functions of planning, organizing,
staffing, leading and controlling in order to
accomplish stated objectives.”
• Thus, management is what manager does in an
organization to accomplish the pre- determined
goal in the changing environment.

Characteristics of Management:
• The various characteristics of management are:
❖ Management is universal: It means that
management is required for every type of
organization. It may be a business organization or
social or political. It may be a small firm or a large
one. Management is required by a school or a
college or university or a hospital or a big firm
Thus, it is a universal phenomenon and is common
and essential element in all organizations.

❖ Management is goal directed: Every
organization is created to achieve certain goals.
For example, for a business firm it may be to
make maximum profit and/or to provide quality
products and services.
Management of an organization is always aimed at
achievement of the organizational goals. Success
of management is determined by the extent to
which these goals are achieved.

❖ Management is a continuous process:
Management is an ongoing process. It
continues as long as the organization
exists. No activity can take place without
management. To perform all activities like
production, sale, storage, operation etc.
management is required. So, as long as
these activities continue the process of
management also continues to operate.

❖ Management is an integrating process: All
the functions, activities, processes and
operations are intermixed among themselves. It
is the task of management to bring them
together and proceed in a coordinated manner
to achieve desired result.
In fact, without integration of men, machine and
material and coordination of individual efforts to
contribute successfully as a team, it will be
difficult to achieve organizational goals.

❖ Management is intangible:
Management is not a place like a
graphic showing Board meeting or a
graphic showing a school Principal at
her office desk which can be seen .It is
an unseen force and you can feel its
presence in the form of rules,
regulation, output, work climate, etc.
❖ Management is multi-disciplinary:
Management of an organization
requires wide knowledge about various
disciplines as it covers handling of man,
machine, and material and looking after
production, distribution, accounting and
many other functions.

• Thus, we find the principles and
techniques of management are mostly
drawn from almost all fields of study
like – Engineering, Economics,
Sociology, Psychology, Anthropology,
Mathematics, Statistics etc.

❖ Management is a social process: The
most important aspect of management
is handling people organized in work
groups. This involves developing and
motivating people at work and taking
care of their satisfaction as social
beings.

❖ Management is situational: The
success of management depends on,
and varies from, situation to situation.
There is no best way of managing. The
techniques and principles of
management are relative, and do not
hold good for all situations to come.

Question
• Is management an art or science?

• Management as an Art
Art implies application of knowledge & skill
to trying about desired results. An art may be
defined as personalized application of
general theoretical principles for achieving
best possible results.
Art has the following characters :

• Practical Knowledge: Every art
requires practical knowledge therefore
learning of theory is not sufficient. It is
very important to know practical
application of theoretical principles.

E.g. to become a good painter, the person
may not only be knowing different colour and
brushes but different designs, dimensions,
situations etc to use them appropriately. A
manager can never be successful just by
obtaining degree or diploma in management;
he must have also known how to apply
various principles in real situations by
functioning in capacity of manager.

• Personal Skill: Although theoretical base may be
same for every artist, but each one has his own
style and approach towards his job. That is why
the level of success and quality of performance
differs from one person to another.
Every manager has his own way of managing things
based on his knowledge, experience and personality,
that is why some managers are known as good
managers (like Aditya Birla, Rahul Bajaj) whereas
others as bad.
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• Creativity: Every artist has an element
of creativity in line. That is why he aims
at producing something that has never
existed before which requires
combination of intelligence &
imagination. Management is also
creative in nature like any other art.

Perfection through practice: Practice
makes a man perfect. Every artist becomes
more and more proficient through constant
practice. Similarly managers learn through an
art of trial and error initially but application
of management principles over the years
makes them perfect in the job of managing.

Goal-Oriented: Every art is result
oriented as it seeks to achieve concrete
results. In the same manner, management
is also directed towards accomplishment
of pre-determined goals. Managers use
various resources like men, money,
material, machinery & methods to
promote growth of an organization.
• Management is both an art and a science.
The above mentioned points clearly reveal
that management combines features of
both science as well as art. It is considered
as a science because it has an organized
body of knowledge which contains certain
universal truth. It is called an art because
managing requires certain skills which are
personal possessions of managers.

• Science provides the knowledge & art
deals with the application of knowledge
and skills.

Management as a Science as well as
an Art
• Management can be considered as both
science as well as an art.
• Management is a science because of
several reasons like - it has universally
accepted principles, it has cause and
effect relationship etc, and at the same
time it is art because it requires
perfection through practice, practical
knowledge, creativity, personal skills etc.

• Management is both an art and a
science. Management combines
features of both science as well as art.
It is considered as a science because it
has an organized body of knowledge
which contains certain universal truth.

• It is called an art because managing
requires certain skills which are
personal possessions of managers.
Science provides the knowledge & art
deals with the application of knowledge
and skills

• A manager to be successful in his
profession must acquire the knowledge
of science & the art of applying it.
Therefore management is a judicious
blend of science as well as an art
because it proves the principles and the
way these principles are applied is a
matter of art.
• Science teaches to ‘know’ and art teaches
to ‘do’.
E.g. it is not sufficient for manager to first
know the principles but he must also apply
them in solving various managerial problems
that is why, science and art are not mutually
exclusive but they are complementary to each
other (like tea and biscuit, bread and butter
etc.).

• Science is characterized by following
main features:
• Universally acceptance principles –
Scientific principles represents basic truth
about a particular field of enquiry. These
principles may be applied in all situations,
at all time & at all places. E.g. – law of
gravitation which can be applied in all
countries irrespective of the time.

• Management also contains some
fundamental principles which can be
applied universally like the Principle of
Unity of Command i.e. one man, one
boss. This principle is applicable to all
type of organization – business or non
business.

• Experimentation & Observation –
Scientific principles are derived through
scientific investigation & researching i.e.
they are based on logic. E.g. the principle
that earth goes round the sun has been
scientifically proved. Management
principles are also based on scientific
enquiry & observation and not only on the
opinion of Henry Fayol.

E.g. it is observed that fair remuneration
to personal helps in creating a satisfied
work force.

• Cause & Effect Relationship –
Principles of science lay down cause
and effect relationship between various
variables. E.g. when metals are heated,
they are expanded. The cause is heating
& result is expansion.

• The same is true for management;
therefore it also establishes cause and
effect relationship. E.g. lack of parity
(balance) between authority &
responsibility will lead to
ineffectiveness.

• Test of Validity & Predictability –
Validity of scientific principles can be
tested at any time or any number of
times i.e. they stand the test of time.
Each time these tests will give same
result. Moreover future events can be
predicted with reasonable accuracy by
using scientific principles.
E.g. principle of unity of command can be
tested by comparing two persons – one
having single boss and one having 2
bosses. The performance of 1st person
will be better than 2nd.

Principle of Management
• Management principles are statements of
fundamental truth. These principles serve
as guidelines for decisions and actions of
managers. They are derived through
observation and analysis of events which
managers have to face in practice
Following are the fourteen principles of
management developed by the Henry Fayol:

Principle of Management
• Division of Work: According to Henry
Fayol under division of work, "The
worker always on the same post, the
manager always concerned with the
same matters, acquire an ability,
sureness and accuracy which increases
their output. In other words, division of
work means specialization.
• According to this principle, a person is not
capable of doing all types of work. Each
job and work should be assigned to the
specialist of his job.
• Division of work promotes
efficiency(competencies), because it
permits an organizational member to work
in a limited area reducing the scope of his
responsibility.

❖ Authority and Responsibility :
Authority and responsibility go together
or co-existing. Both authority and
responsibility are the two sides of a
coin. In this way, if anybody is made
responsible for any job, he should also
have the concerned authority.

❖ Discipline: According to Henry Fayol
discipline means sincerity( honesty) about
the work and enterprise, carrying out
orders and instructions of superiors and to
have faith in the policies and programs of
the business enterprise, in other sense,
discipline in terms of
obedience(compliance, submission,
conformity) and respect to superior.

❖ Unity of Command: A subordinate should take
order from only one boss and he should be
responsible and accountable to him.
Further he claimed that if the unit of command is
violated, authority is undermined, disciplined in
danger, order disturbed and stability
threatened(vulnerable). The violation of this
principle will face some serious consequences.

❖ Unity of direction: Fayol advocates
"One head and one plan" which means
that group efforts on a particular plan
be led and directed by a single person.
This enables effective co-ordination of
individual efforts and energy.

• Subordination of individual interests to
general interests: The interest of the
business enterprise ought to come before
the interests of the praise individual
workers. In other words, principle of
management states that employees should
surrender their personnel interest before
the general interest of the enterprise.
• Fair Remuneration to employees: According
to Fayol wage-rates and method of their
payment should be fair, proper and satisfactory.
Both employees and ex-employers should
agree to it. Logical and appropriate wage-rate
and methods of their payment reduces tension
and differences between workers and
management, create harmonious relationship
and a pleasing atmosphere of work.

• Centralization and Decentralization:
There should be one central point in the
organization which exercises overall
direction and control of all the parts.
But the degree of centralization of authority
should vary according to the needs of
situation. According to Fayol there should be
centralization in small units and proper
decentralization in big organization. Further,

• Fayol does not favor centralization or
decentralization of authorities but
suggests that there should be a proper
and effective adjustment between
centralization and decentralization in
order to achieve maximum objectives of
the business.

• The choice between centralization and
decentralization should be made after
taking into consideration the nature of
work and the efficiency, experience and
decision-making capacity of the
executives.

• Scalar chain: The scalar chain is a chain
of supervisors from the highest to the
lowest rank. It should be short-circuited.
An employee should feel the necessity to
contact his superior through the scalar
chain. The authority and responsibility is
communicated through this scalar chain.
Fayol defines scalar chain as "the chain of
superiors ranging from the ultimate
authority to the lowest rank."
• Order: According to Fayol there should be
proper, systematic and orderly arrangement of
physical and social factors, such as land, raw
materials, tools and equipments and employees
respectively. As per view, there should be safe,
appropriate and specific place for every article
and every place to be used effectively for a
particular activity and commodity.

• There should be selection and
appointment of the most suitable
person to every job. There should be
specific place for everyone and
everyone should have specific place.
This principle also stresses scientific
selection and appointment of
employees on every job.
• Equity: The principle of equality should
be followed and applicable at every
level of management. There should not
be any discrimination as regards caste,
sex and religion. An effective
management always does sympathetic
and human treatment.

• The management should be kind,
honest and impartial (neutral, fair) with
the employees. In other words, kindness
and justice should be exercised by
management in dealing with their
subordinates.

• Stability of use of personnel: Principle of
stability is linked with long tenure of personnel
in the organization. This means production
being a team work, an efficient management
always builds a team of good workers.
• If the members of the team go on changing,
the entire process of production will be
disturbed. It is always in the interest of the
enterprise that its trusted, experienced and
trained employees do not leave the organization

• Initiative: Under this principle, the successful
management provides an opportunity to its employees to
suggest their new ideas, experiences and more convenient
methods of work.
• The employees, who has been working on the specific job

since long discover now, better alternative approach and
technique of work. It will be more useful, if initiative to do
so is provided to employees. In simple, to ensure success,
plans should be well formulated before they are
implemented.

• Spirit of Co-operation (Esprit de
corps): In order to achieve the best
possible results, individual and group
efforts are to be effectively integrated
and coordinated/ team spirit..
• Everyone should sacrifice his personal
interest and contribute his best
energies to achieve the best results.
Frederick Taylor
“Father of Scientific Management.”
• Taylor’s philosophy focused on the belief that
making people work as hard they could was
not as efficient as optimizing the way the
work was done.
• In 1909, he proposed that by optimizing and
simplifying jobs, productivity would increase.
Taylor’s four principles of scientific management are:
1. Develop a science for each element of work
2. 2. scientifically selecting, training, teaching, and
developing workers.
3. Cooperate with the worker
4. Divide the work and responsibility

Question
• Why is it important to study
management as manager?
• What have you learn from these
principles
• How does the theory of Chester
Barnard (1886 – 1961) contribute to the
management. Read about it
Functions of Management
• In every organisation, the managers perform
certain basic functions. These are broadly
divided into six categories viz.,
❖ Planning,
❖ Organizing,
❖ Staffing,
❖ Directing,
❖ Coordinating and
❖ Controlling.

❖ Planning: Planning is deciding in advance
what is to be done, when it is to be done, how it
is to be done. It is basically concerned with the
selection of goals to be achieved and
determining the effective course of action from
among the various alternatives.
This involves forecasting, establishing targets,
developing the policies and programming and
scheduling the action, procedure, etc.,

Thus, planning requires decisions to be
made on what should be done, how it
should be done, who will do it, where it
will be done, and why it is to be done. The
essential part of planning consists of
setting goals and programmes of activities.

• Organizing: After the plans have been drawn,
management has to organise the activities, and
physical resources of the firm to carry out the
selected programmes successfully. It also
involves determining the authority and
responsibility relationships among functions,
departments and personnel at various levels to
ensure smooth and effective function together
in accomplishing the objective.

Thus, the organizing function of
management is primarily concerned with
identifying the tasks involved and grouping
them into units and departments, and
defining the duties and responsibilities of
people in different positions within each
department for well coordinated and
cooperative effort in the organisation.
• Staffing: Staffing is concerned with
employing people for the various activities
to be performed. The objective of staffing
is to ensure that suitable people have been
appointed for different positions. It
includes the functions of recruitment,
training and development, placement and
remuneration, and performance appraisal
of the employees.

• Directing: The directing function of
management includes guiding the
subordinates, supervising their
performance, communicating effectively
and motivating them. A manager should
be a good leader.

• He should be able to command and issue instruction
without arousing any resentment(anger, offence) among
the subordinates. He should keep a watch on the
performance of his subordinates and help them out
whenever they come across any difficulty.
• The communication system, i.e., exchange of information

should take place regularly for building common
understanding and clarity. The managers should also
understand the needs of subordinates and inspire them to
do their best and encourage initiative and creativity.

• Coordinating: Management has to
ensure that all the activities contribute
to the achievement of the objectives of
the business as a whole.

• This requires integration of activities and
synchronization(harmonization) of efforts.
The heads of different departments should
not treat each other as competitors but
should work as organs of one body. As the
proper functioning of every organ of a
human body is important for a healthy
body, the work of every department is
important for the organisation as a whole.

• Managers should, therefore, see that
everybody in the organisation
understands its objectives and works in
co-operation with others to achieve
these objectives. This function of
management is called co-ordination. It
consists of harmonizing group effort so
as to achieve common objectives.
• Controlling: This function of management
consists of the steps taken to ensure that
the performance of work is in accordance
with the plans. It involves establishing
performance standards and measuring the
actual performance with the standards set.
If differences are noticed, corrective steps
are taken which may include revision of
standards, regulate operations, remove
deficiencies and improve performance.
Levels of Management
There are certain levels of management with varying
degree of authority and responsibilities. Some
managers decide about the objectives of the business
as a whole;
some managers perform functions to achieve these

objectives in different departments, like production,
sales, etc, and some of the managers are concerned
with the supervision of day-to-day activities of
workers.

• Managers performing different types of
duties may, thus, be divided into three
categories:
1. Top-Level Management
2. Middle-Level Management
3. Lower-Level Management

BOD •Top Level Management
Depart
mental
Heads •Middle Level Management
&Manag
er
SUPERVIS
OR and
Foreme
•Lower Level Management
n
EMPLOYEES

• The diagram shows that the top level
management includes Board of
Directors and the Chief Executive.
• The chief executive may have the
designation of Chairman, Managing
Director, President, Executive Director
or General Manager.
• This level determines the objectives of
the business as a whole and lays down
policies to achieve these objectives
(making of policy means providing
guidelines for actions and decision).

• The middle-level management
includes heads of various departments,
e.g., production, sales, etc., and other
departmental managers. Sometimes
senior departmental heads are included
in the top management team.

• The objectives of the business as a whole
are translated into departmental objectives
for the middle level management. The
heads of the departments then work out
their own strategies so as to achieve these
objectives.
• Middle level managers are particularly
concerned with the activities of their
respective departments.

• The lower-level management consists of
foremen and supervisors who look after
the operative workers, and ensure that the
work is carried out properly and on time.
• Thus, they have the primary responsibility
for the actual production of goods and
services in the organization.

Managerial Roles
• Mintzbergs a management thinker
identified ten roles and classified them
within three broad categories.
1. Interpersonal Roles
2. Informational Roles
3. Decisional Roles

1 Interpersonal Roles:
❖ Figure head role: In this role a manager
performs symbolic duties required by the status
of his office. His activities include to greet the
visitors attends the employee family functions.
❖ Leader: A Manager is responsible for the
motivation and activation(stimulation) of
subordinates. She/he is responsible for
staffing, training and related duties.

❖ Liaison: It describes a manager’s
relationship with the outsiders. A
manager maintains smooth relation with
other organizations ,government’s
industry groups etc.

2 Informational Roles:
❖ Monitor: A manager scans the environment
and collects internal and external information.
❖ Disseminator: Manager distributes the
information to his subordinates in order to
achieve organizational objectives.
❖ Spokes person: A Manager
transmits(communicate, defuse) the
information’s to the outside of the organization.

3 Decision Roles:
❖ Entrepreneur: Initiates and supervises design of
organizational improvement projects.
❖ Disturbance handler: A manager is responsible for
taking corrective action when organization faces
problem.
❖ Resource allocated: Manager is responsible for
allocation of human, monetary and material
resources.
❖ Negotiator: As a manager he bargains with
suppliers, dealers, trade union, agents etc.
Managerial Skills
• Robert L. Katz identified three kinds of
skills for administrators. To these may
be added a fourth—the ability to design
solutions.

❖ Technical skill is knowledge of and
proficiency in activities involving methods,
processes, and procedures. Thus it
involves working with tools and specific
techniques. For example, mechanics work
with tools, and their supervisors should
have the ability to teach them how to use
these tools. Similarly, accountants apply
specific techniques in doing their job.

❖ Human skill is the ability to work with
people; it is cooperative effort; it is
teamwork; it is the creation of an
environment in which people feel secure
and free to express their opinions.
❖ Conceptual skill is the ability to see the
"big picture," to recognize significant
elements in a situation, and to understand
the relationships among the elements.

• Design skill is the ability to solve problems
in ways that will benefit the enterprise. To be
effective, particularly at upper organizational
levels, managers must be able to do more
than see a problem. If managers merely see
the problem and become "problem
watchers," they will fail. They must have, in
addition, the skill of a good design engineer
in working out a practical solution to a
problem.

Emerging Challenges of
Management:
Introduction
Emerging challenges refer to the
outcome as well as effects to the
respective thing. Here, emerging
challenges for management related to the
effects on the manager

The challenges of the management in the today’s
context are as follows:
❖ Globalization of business: Globalization
means flow of goods, services, information,
manpower etc across nations without any
restrictions. Due to globalization, world is
consider as the small village. The time and the
place gap have been almost overcome by the
help of new technologies.

• There is continuous exchange of new ideas, innovations,
methods and techniques across nations. This bring both
opportunities and threat(menace, danger) to the business
organization.
• A part from this, the regional agreement and World Trade
Organization (WTO) boost up the competitive market and
added more complexity to the manager’s job. Thus,
managers need to understand the process of globalization
and the competition it creates for them and should act
effectively and efficiently to overcome such challenges.

• In this process, a manager’s job is changing with
✓ Increased foreign assignments
✓ Working with people from different cultures
✓ Coping with anti-capitalism backlash
✓ Overseeing movement of jobs to countries with
low-cost labor
✓ There is external competition for markets, and also
for resources.
All these factors and forces present a challenge to
managers.

❖ Technology: Technology is a major drive that
changes the way the people think and act in
their corresponding environment. Technological
advancement in computers and other electronic
data processing equipment have changed the
whole system of managerial functions like
planning, decision making, organizing,
motivating, controlling. Thus, managers need to
recognize and anticipate technological change
and act according to capitalize the
opportunities and neutralize the threats.
❖ Quality Assurance and Productivity: In
today’s context, quality is considered as the
ability to satisfy the customer. However, the
human wants are every growing and providing
the goods and service to satisfy their needs is
bigger challenge for a today’s manager. The
product and services must meet the
expectation of customer in terms cost, time,
and services delivered within the product.

• To improve the quality, Total Quality
Management (TQM) is being used in most of
the organization, targeting continuous
improvement programs that include all the
stakeholders together with suppliers and
customers. A part from this productivity is also
becoming a major issue for today’s
organization. Due to extreme competition
managers are focusing in reducing the
wastages in terms of materials, time and effort
and thus enhancing the productivity.
❖ Ethics and Social Responsibility: Ethics is
concerned with the moral principles or values
that determine whether our action is right or
wrong. Business must follow the ethics in their
policies and practices. However, one of the
major challenges for our managers is to decide
on whether a certain behavior or action of
employee is ethical or not. Thus, managers
must understand the ethical norms and values
and act accordingly.

• Social Responsibility is the duty towards
society. The society includes all the
stakeholders such as customers, suppliers,
creditors, employees, owners, government etc.
So, management must address the expectation
of these stakeholders and fulfill their wants.
Similarly, environmental issues, such as global
warming, pollution, ecology distortion etc are
becoming major challenges to be addressed
effectively in the strategy and practices by the
manger in an organization.
❖ Empowerment: Delegating the power to the
employees is a major challenge to managers in
today’s context. People desire autonomy in their
worksites, they want to take part in decision
making and enhance their creativity in the
organizations.
However, ineffective handling of such delegation may
de-motivate the employees and leads to employee
turnover, absenteeism and stagnations in work. Thus
managers should create self-managed teams or
autonomous work groups to empower the employees.

❖ Work-Force Diversity: It refers to the mix
of people from various backgrounds in
terms of gender, race, ethnicity etc in
today’s labour force. The participation of
women and minorities has been
increasing. Thus, the challenge for a
manager is to accommodate these diverse
groups of people by addressing different
lifestyles, family needs and work styles.

❖ Learning Organization: Organization
must be able to learn from the past and
present scenario and formulate policies
and practices accordingly. A learning
organization is one that had developed the
capacity to continuously learn, adapt and
change. The challenge for the managers is
to change their behavioural style and
transform from the bosses to the team
leaders.
❖ Multicultural effects Involvement of
multicultural people having different
traditions, values, social attitudes,
religious beliefs, and living approaches
create a new challenge to the manager.

UNIT: 2 Evolution of Management
Thoughts
• Understanding the evolution of management
thought is important as it helps determine what
management principles and practices work best
for your team and your organization.
• It can help you manage your team and workplace
more effectively. So, what is the meaning
of evolution of management thought? To
understand this, we need to go back in time.

• The Industrial Revolution in the early 19th century
brought huge changes in the workplace. As factories
were the primary source of employment, management
theorists studied the operations and workforce present
on the factory floors.
• There were times when the demand was high but the
lack of productivity and efficiency held workplaces
back. The Industrial Revolution gave birth to multiple
management theories and concepts that developed over
time and are still relevant today.

• The slide thus, will first elucidate the
evolutionary trends in Europe, America and
Asia before examining that of Africa. This
slide is organized thematically to include
1. pre-classical school,
2. classical school,
3. neo-classical school
4.Modern/contemporary school
• Management is as old as human
civilization.
• Management has evolved over the
years.

Exercise
• Discuss the contributions and failures
made by the following schools:
1. pre-classical school,
2. classical school,
3. neo-classical school
4.Modern/contemporary school

Scientific Management
• Meaning of scientific management:
The term scientific management is the
combination of two words i.e. scientific
and management.

• The word "Scientific" means systematic
analytical and objective (unbiased)
approach while "management" means
getting things done through others.
• In simple words scientific management
means application of principles and
methods of science in the field of
management.
• "Scientific management is the art of knowing
best and cheapest way".
• It is the art of knowing exactly what is to be
done, by whom it is to be done and what is the
best and cheapest way of doing it.
• Scientific methods and techniques are applied
in the field of management i.e., recruitment,
selection, training, placement of workers and
methods of doing work in the best and
cheapest way.

• Definitions of Scientific Management
The main definitions of scientific
management are as follows:
❖ According to Fredrick Winslow Taylor,
"Scientific management means knowing
exactly what you want men to do and
seeing that they do it in the best and the
cheapest way."

❖ According to Peter F. Drucker, "
Scientific management is the organized
study of work, the analysis of work into
its simplest element and the systematic
improvement of the workers".

Principles of Scientific
Management
• Development of Science for each part of

men’s job (replacement of rule of
thumb)
➢ This principle suggests that work assigned
to any employee should be observed,
analyzed with respect to each and every
element and part and time involved in it

➢ This means replacement of odd rule of
thumb by the use of method of enquiry,
investigation, data collection, analysis
and framing of rules.
➢ Under scientific management, decisions
are made on the basis of facts and by
the application of scientific decisions.
• Scientific Selection, Training &
Development of Workers:
➢ There should be scientifically designed
procedure for the selection of workers.
➢ Physical, mental & other requirement
should be specified for each and every job.
➢ Workers should be selected & trained to
make them fit for the job.
➢ The management has to provide
opportunities for development of workers
having better capabilities.
➢ According to Taylor efforts should be

made to develop each employee to his
greatest level and efficiency & prosperity.

• Co-operation between Management &
workers or Harmony not discord
➢ Taylor believed in co-operation and not
individualism.
➢ It is only through co-operation that the
goals of the enterprise can be achieved
efficiently.
➢ There should be no conflict between
managers & workers.
• Division of Responsibility
➢ This principle determines the concrete nature
of roles to be played by different level of
managers & workers.
➢ The management should assume the
responsibility of planning the work whereas
workers should be concerned with execution of
task.
➢ Thus planning is to be separated from
execution.

• Mental Revolution
➢ The workers and managers should have a complete
change of outlook towards their mutual relation and
work effort.
➢ It requires that management should create suitable
working condition and solve all problems
scientifically.
➢ Similarly workers should attend their jobs with
utmost attention, devotion and carefulness. They
should not waste the resources of enterprise.

➢ Handsome remuneration should be
provided to workers to boost up their
moral.
➢ It will create a sense of belongingness
among worker.
➢ They will be disciplined, loyal and sincere
in fulfilling the task assigned to them.
➢ There will be more production and
economical growth at a faster rate.
Management Theory
• The management theory includes;
administrative theory, bureaucracy
theory and behavior management
theory.

Administrative theory
▪ Administrative management focuses on
managing the total organization rather than
individuals. The most important of these
people was Henry Fayol, Urwick, Luther
Gulick, etc.

The contribution of Henry Fayol 1841 – 1925
• He was a qualified mining engineer and
managing director of large French Company. He
focused attention on what should be the work
of a chief executive.
• For this, he propounded five basic elements of
management, planning, organizing,
commanding, coordinating and controlling.

• He equally divided activities in business
organization into six groups namely:
1. Technical Operation: - total commitment of
making use of machines, technology in this
production activities.
2. Commercial Operation: - Concerns the
marketing strategy.
3. Financial Operation: - Centered on raising
money, capital and optimum use of capital
resources of an organization.

4. Accounting Operations:- This is concerned with
keeping records of accounts and checking frauds.
5. Security Operation:- Involves total commitment
towards the protection of goods, machines and other
resources belonging to organization.
6. Administration:- involves the general running of
day – in day out activities of the organization. That
comprises of planning, organizing, directing,
coordinating and controlling the organizational
resources.

• According to Fayol the sixth operational activity i.e.
administration is the most essential because it is
through it all other five operational aspects can be
effectively run. So to achieve a desired goal and
objective the administration should be allowed to take
control of all other five operations.
• Fayol further advanced fourteen principles which was
discussed in previous slides to serve as a main guide
to the sixth operational and administrative operation of
an organization

Questions
• Discuss the Contributions of Gulick and
Urwick to the management of
organizations

Bureaucracy Theory
• Bureaucracy is a term defined in many
ways. The term was derived from
“bureau” connoting a government
department or sub-division of a
department, where bureaucrat denote
official working and guided by a
prescribed stringent rules and
regulations.
• Bureaucracy can therefore best be
described as a special kind of
organizational design guided by rigid
laid down rules and regulation to
accomplish large scale administrative
work through a systematic means of
coordinating large number of employees
in an organization
Max Weber and Bureaucracy
• Max Weber called his formulation of
bureaucracy as 'ideal type'. The ideal
type is a mental map (or mental
construct). In its conceptual purity this
mental construct cannot be found
empirically anywhere in reality

Theory of Authority
• Weber defined power as, 'The
probability that one actor within a social
relationship will be in a position to carry
out his own will, despite resistance,"
while, authority as "the probability that
a command with a given specific
content will be obeyed by a given group
of persons."
• Thus, compared to power, authority is
characterized by legitimacy, that is, voluntary
obedience of the command by the subordinates.
• In other words, legitimacy turns power into
authority. According to Weber, authority is
synonymous to 'authoritarian power of command'
and he called it 'domination'. He stated that, "all
administration means domination." (i.e.
administration means exercise of authority)

• He summarized the components of
authority as;
(i) An individual or a body of individuals who
rule
(ii) An individual or a body of individuals who
are ruled
(iii) The will of the rulers to influence the
conduct of the ruled and an expression of
that will or command
(iv) Evidence of the influence of the rulers
in terms of the objective degree of
command
(v) Direct or indirect evidence of that
influence in terms of the subjective
acceptance with which the ruled obey the
command
• Weber classified authority on the basis of
its claim to legitimacy which are;
• Charismatic Authority: The term
'charisma' literally means the gift of grace.
According to Weber, this authority rests
"on devotion to specific and exceptional
sanctity, heroism or exemplary character of
an individual and of the normative patterns
or orders revealed or ordained by him."

• Thus the ruler under this system, possesses
the superhuman and supernatural qualities and
is obeyed by virtue of personal trust in him and
his revelation.
• The administrative staff under the charismatic
authority system consists of followers who are
given positions on the basis of their charismatic
qualities and their personal devotion to the
leader.

• Traditional Authority: According to Weber, this
authority rests "on an established belief in the
sanctity of immemorial traditions and the legitimacy
of the status of those exercising authority under
them.“
• The extent of authority under this system is
determined by the custom and precedent. In other
words, the obedience under this system is owed to
the ruler who occupies the traditionally sanctioned
position of authority and who is (within its sphere)
bound by tradition.

Causes of Bureaucracy
The following factors and characteristics
gave rise to bureaucratic process to
modern organization.
• Size: Bureaucratic characteristics exist
largely in large institutions and complex
organization, whose size has grown so
big, where the whole activities become
complex and cumbersome.
• Complexity: - The complexity of modern
state and the numerous services it has to
render to the people called for an expert
administration that can handle these
diverse services simultaneously. Therefore,
the public administration should make use
of bureaucratic principle for effective
running and maximum utilization of
resources.

• Environmental Changes: The world‘s
dynamics and the ever growing
changing in needs calls for the use of
bureaucratic process so that efficiency
can be fully realized in modern
organization.

• Technology: - Modern science and technology can
influence an organization to employ and
established the bureaucratic procedures. The need
for effective means of realization of goals
propagated by modern science and the introduction
of machines and computers, calls for the
establishment of calculative precision i.e. rationality
which is an essential element of bureaucracy. So
modern public administration should employ the
bureaucratic principle in order to meet the
challenges of modern science and technological
advancement.
• Strategy: Better skills in managing the
organizational objectives ways to the
establishment of bureaucratic
procedure to organization. So
bureaucracy can evolve from the
organizational plans and the need to
accomplish the organizational
objectives.
Question
• In your respective group, discuss the
Merits and Demerits of Bureaucracy
theory

Behavioral Management Theory
▪ The role of behavior management was to
emphasize individual attitudes and
behaviors, and group processes. It
recognize the importance of behavioral
processes in the workplace.

▪ Under behaviour management theory,
Douglas McGregor (1906-1964) was social
psychologist . He proposed Theory X and
Theory Y concepts of managerial beliefs
about people and work.

Theory X
▪ People do not like work and try to avoid it
▪ People do not like work, so managers have
to control, direct and threaten employees
to get them to work to words organization
goals
▪ People prefer to be directed to avoid
responsibility and to want security, they
have little ambition.

• Employees must be closely directed and
controlled to be motivated
• Managers who adhere to Theory X are
often authoritarian and will micromanage
everything because they don’t trust their
employees.

Theory Y
▪ People do not naturally dislike work, work
is a natural part of their lives
▪ People are internally motivated to reach
objectives to which they are committed
▪ People are committed to goals to degree
that they receive personal rewards when
they reach their objectives

▪ People will both seeks and accept
responsibility under favorable
conditions
▪ People have capacity to be innovative in
solving organizational problems
▪ People are bright but under most
organizational conditions their potential
is underutilized.
EXERCISE
• What is the evolution management thought?
• Your respective groups, discuss 4 stages of
evolution of management thought
• Explain the major factors influencing the
evolution of management thought
• What are the five management evolutions?
• What are the three approaches to the evolution
of management?

UNIT 3: Environmental Context of
Management
• Environment occupies a very significant
place in functioning of organization. It
refers to the forces that create conditions
and influences on the capacity of a
business firm to compete in the market.
The ability to cope with the changing
environment determines the survival of an
organization. Thus, analysis of the
environmental forces is the key to be an
effective organization.
• Business environment is sum total of all forces
surrounding and influencing the life and
development of an organization. According to
Gareth: Business environment is defined as “The
set of forces surrounding an organization that have
the potential to affect the way it operates and its
access to scarce resources”
• Business manager have to understand changes and
complexity of the environment forces to skillfully
exercise them so as to increase firm’s competitive
capacity in the market.

• Organisation – Environment Relationship
Business organizations are viewed as the
open system. There is constant interaction
between a business system and its
environment. Organisation obtains resources
from the environment and transforms them
into outputs that are again returned to the
environment in the form of finished goods
and services

❖ Types of environment: The component of business
environment is classified into two broad categories.
• Internal Environment
• External Environment.
❖ Internal Environment: Internal Environment is

defined as all the forces and conditions within
an organization that influence organizational
behavior. An organization’s internal
environment has the following components:

• Employees: They are the main
components and important assets of an
organization. Employees are responsible to
work as per the direction, goals, rule and
regulation of the company. To work on
these goals and directions, organization
has to motivate and satisfy employees with
specific reward policy. Without the cooperation
of employees and their productivity, organization
cannot attain their expected goals.

• Shareholder and Board of Directors:
Shareholders being the owners of business have a
direct interest in the performance of the
organization. The directors are elected by them
(shareholder), who represent their interest in the
board. The board is responsible to manage
company and formulate appropriate strategy and
long term planning.
• They evaluate overall organization performance and
provide direction to the top level management for
the growth of an organization.

• Culture: Every organization has its own culture. Culture
refers to a set values, beliefs of an organization under
which it is functioning. It helps to bind all employees and
comply with organizational rules and regulation. Culture
has a powerful influence on the process of organizational
change and decision making.
• Labor Unions: Labor Union represents the problems and
feeling of their members to management. The good
relation between labor union and management avoid
unnecessary disturbances in an organization.

❖ External Environment:
• External Environment is the condition and
forces outside the organization that are
relevant to its operation and influence the
organizational activities. There are two
categories of the external environment.
• General Environment
• Task(Specific) Environment
❖ General Environment: General Environment
consists of those forces that put direct pressure on
the organizational activities. They are as follows;
• Economic Environment: General economic
conditions are critical to the success of an
organization. It is defined as the nature and
direction of the economic system of a country and
their impacts in the individual organization. The
economic factors such as, national income, saving,
investment, monetary policy, economic growth,
interest rate, consumption pattern, employment
rate etc. have great impact on functioning of an
organization.
• Managers should devote much of their
time and resources to forecast the
economy and anticipating changes.
• Components :( Economic System,
Economic Policies, Business Cycle,
Capital Market)

• Socio-Culture Environment: The socio-culture
environment affects the behavior of people and
their organization. It includes, values, beliefs,
lifestyle, family-system, opinions, and
assumptions widely held by the citizen of the
particular country. These elements of society
directly influence business organization.
• Components: (Attitude and Beliefs, Religion,
Language, Education, Social Organisation,
Class System)

• Political Environment: It refers to the influence from
government institution, policies of state and local
government, and relationship between government and
business organization .Political Environment is important
to the manager because:
– It imposes certain legal constraint on the business.
– It establishes a market atmosphere that may be pro-business or
anti-business.
– It has the potential to provide stability needed for long term
business planning.
• Components: (Constitution, Political Parties, Government,
International Political Events)

• Technological Environment: Technology is the
practical application of scientific knowledge.
Radical development has occurred over the past
several years in communication, information, and
automation including robotics. This development
brings both opportunity and threats for the
organization. Thus, organization should utilize its
strength to capitalize the opportunity and neutralize
the threats.
• Components: (Up-gradation and Maintenance,
Information & Communication Technology)

❖ Task(Specific) Environment: The specific
environment comprise the following factors:
▪ Customer: Customer exchange resources, usually
in the form of money for a organization’s product
and services .A customer may be individual, a
family, a business house or an institution. Customer
not only buys the product or services they also give
valuable ideas, opinions information and reaction
related to it. Thus mangers should maintain close
relationships with them.

• Suppliers: Suppliers are the organizations
which provide resources (material, men,
machines, capital etc) t to other business
firms. As the quality and price of the raw
materials receive from the suppliers
determine the quality of output, the
business firms try to obtain lower prices,
better quality work, and faster deliveries.
Which strength the competitive position or
an organization.
• Government: The role of the government is to regulate
business systems and to protect the interest of the
consumers and the general public .It has greater influence
on corporate policies, procedures and business practice of
modern organization.
• Competitors: It refers to an organization that competes
for resources with other organization. The organization
must analyze the competition and establish clearly defined
marketing strategy in order to provide superior customer
satisfaction and to increase market share.

• Media: The media keeps eye on the
vital decision or actions of the business
firm having general public interest.
Therefore managers need to have good
communication with both media and
external audiences and deal with them
effectively and promptly.

• Financial institution: Organization depend
on a variety of financial institution such
commercial banks, merchant banks and
insurance companies to supply fund for
maintaining and expanding their activities.
The term and condition of loans and
advances and quality and promptness of
their services have an impact on the
performance of a business.

Management Ethics:
Management Ethics:
• Management ethics is a philosophically
related with moral conduct, duty, and
judgment of our managers.
• The objective of ethical management is to
build cooperation, encourage team
cohesion, but also recognition between
employees and their superiors.

According to Ricky W. Girffen; “Ethics is an
individual’s personal belief about whether a
behavior, action or decision is right and wrong”.
SOURCES OF MANAGEMENT ETHICS:
An organization’s ethics is derived from three
principle sources. They are;
• Social Ethics: The values and standard
embodies in a society’s laws, customs,
practices and norms and values

• Professional Ethics: The value and
standard that groups of managers and
workers use to decide, how to behave
appropriately
• Individual Ethics: Personal values and
standards that results from the influence
of family, peers, upbringing and
involvement in significant social institution.

• Significance of management Ethics:
Organization is a social system. Any
unethical activities may harm all the
stakeholder of an organization. Hence, the
management of a business organization
must be aware of the significance of
maintaining ethical standard for its
existence and sustained growth.
Exercise
• What are the challenges of ethical
management?
• How can you implement an ethical
management plan in your company?

UNIT 4:
Planning and Decision Making
❖ Planning
• Planning is the primary function of management. It
is called primary function because it affects all the
other functions of management. Planning is
concerned with deciding in advance what, when,
where, why and how is to be done and who shall do
it. Thus, planning is a document stating the goals,
outlining the action-oriented strategies to attain
these goals, and assigning organizational resources
to attain them.

• According to Koontz and O’Dennell,
“planning is an intellectual process, the
conscious determination of course of
action, the basing of decisions on
purpose, facts and considered
estimates”

A planning Model
Desired future state: Where we should like to be?
Assessment of
environmental
Strategic Gap Need for
opportunities planning
&Threats
Present State: Where we are now?

• Types of planning: Planning begins with a goal
or targeted outcome that the organization
wishes to achieve. It may be
comprehensive(Complete) or limited in scope.
Although the basic process of planning is same
for every manager, planning can take many
forms and style in practice.
• Thus, we classified planning according to the
managerial hierarchy, they are called, strategic,
tactical and operational plan.

Top
managment Strategic Planning
Middle
Tactical Planning
Management
Lower Managment Operational Planning

• Strategic Plan: Strategic plan is also
called grand plan. It has a strong external
orientation and covers the total
organization. It begins by asking question
regarding the purpose or mission and the
operation(process, actions) to which an
organization is devoted. Senior executives
are responsible for the development of
these plans.

• Tactical plan: Tactical plans translate
broad strategic goals and plans into
specific goals and plans. It mainly focuses
on functional areas of the organization.
Middle level managers who are
responsible for major division or branches
in an organization develop the tactical
plan. Tactical plans focus on the major
actions that a unit must take to fulfill its
parts of the strategic plan.
• Operational plan: Operational plans
identify the specific procedures and
process required at the lower level of the
organization. These plans are prepared by
frontline managers and supervisors. It
mainly focuses on daily activities and
routine jobs. They translate the tactical
objectives into specific operational
activities to be assigned to individual or
groups.
• Besides above classification, business
plans are also classified according to the
time period for which they are established,
they are called, long-range, medium
range, and short range plans. Similarly,
plans are further classified according to
their frequency of use, they are known as
standing plans (such as, policy, procedure
rule), and single use plan, (such as,
program, project, budget etc)
Hierarchy of plans:
The hierarchy of the plans is as follows
• Vision: An organization’s vision is a non-
specified directional and motivational
guidance for the entire organization. Vision
has emotional appeal that encourages
people to commit full energies and mind to
achieve it.

• Mission: An organization’s mission is the
purpose and philosophy that will derive
organization over a longer period of time
usually five to ten year. Mission provide reason
for being in the business
• Goals: Goals provide direction to the activities
of an organization. They state how the mission
will be accomplished over the next year or two.
They are the targeted ends that management
wants to reach.

• Objectives: It is a specific statement of what will
be done to achieve a goal. Objectives are more
specified and are measurable than goals.
Objectives are expected to be SMART (i.e., specific,
measurable, attainable, rewarding and Timed).
• Strategies: Strategized (manipulated, managed)are
the courses of action which allocate resources in
the effective and efficient way for achieving
objectives.

• Methods of planning: Managers operating at different
management levels are involved in planning. According to
the nature and size of an organization, method of planning
varies. Generally, there are three method of planning. They
are:
• Top-Down Planning: It is also called centralized planning
method. Under this method, the central office or
headquarter of an organization develops and provide
guidelines, which include, business definition, mission
statement, economic and social objectives, etc. to other
branches and levels accordingly.

• Button-Up Planning: It is also called
decentralize planning method. Under this
method middle and lower level management
drafted the plan and presented to the higher
level management for its final approval.
Discussion and meeting are held to make
critical review and final approval of the plan at
the top management level. This method
encourages in participation of lower
management in plan formation and ensures
their full commitment.
• Management by Objectives (MBO): MBO is
powerful management tool and is considered as a
strong method of planning. Under this method all
levels of management are involve in goal setting
process. The value of MBO is that it communicates
the mission, goals, and objectives of the
organization to the lower level managers. Lower
level manager’s work out their plans and target in
consultation with their subordinates. These are
sent o higher levels for consideration. This
involvement of employees increases their
motivation and commitment to their work.
The Key features of MBO are:
• The superior and the subordinate meet to
discuss and set goals for the subordinate
for a specified period of time.
• Both the superior and the subordinate
attempt to establish goals that is realistic,
challenging, clear, and comprehensive.

• The standards for measuring and evaluating the
goals are objectives and agreed upon. The superior
and the subordinate establish some intermediate
review dates when the goals will be re-examined.
• The superior plays more of a coaching, counseling
and supportive role.
• The entire process focus on results and on the
counseling of the subordinates, and not on
activities, mistakes and organizational
requirements

Planning Process or Steps in Planning
Planning involves complex process. The major steps in
the planning process include the followings:
• Defining mission and Goals
• Analysis of environmental forces
• Identifying the opportunities and threats
• Analyze the organizational resources
• Formulation plans
• Implementation of plans
• Evaluation and Control
• Defining mission and goals: Planning process starts with the
understanding mission and goals. Mission and goals direct the
organization’s course of action. They maintain organization
within the boundaries of stated mission, and ensure its
continuing existence. Thus for effective planning mission and
goals must be clearly defined.
• Analysis of environmental forces: Environmental forces include
both external and internal components which directly and
indirectly affect the overall functioning of an organization.
Planning and strategy development require a thorough analysis
of the forces. Management must know not only the current
standing of these forces, but also have a fairly clear idea of
where these forces appear to be headed.

• Identifying the opportunities and threats: External
environment forces create both opportunities and threat
for organization. To identify these opportunities and threat
for an organization is also a step of planning. Plan should
be able to capitalize the opportunities and neutralize the
threats.
• Analyze the organizational resources: organizational
resources include its abilities, competencies, information
and other resources that are required to improve
organizational performances. Optimal allocation of
resources improves efficiency and effectiveness of an
organization. Thus, these resources should be determined
and analyzed in the process of planning.

• Formulation plans: After completing the above steps the
draft for future activities are determined (i.e., formulating
plan). Comprehensive and integrated plans are formulated
which covers all the level of management and their
functions.
• Implementation of plans: After the plans are formulated
they are implemented. (i.e., activities related the plans are
performed). In the implementation, manager’s main task is
to ensure the availability of resources and their effective
and efficient use and motivate people to complete the
planned activities with the stated time.

• Evaluation and Control: The final step in
planning process is to monitor progress
of implementation. Regular evaluation
helps management to understand the
deviations and their causes. Feedback
system helps to initiate timely actions
and adjustment in the plan.

• Importance of Planning:
Planning benefits everybody in the organization. It provides
guidance for decision making, clarifies role and
responsibilities of employees and is also a means of
measuring performance. The importance of planning is as
follows:
➢ Provides direction: Where the organization wants to be in
future and what are the activities to be performed for it are
mentioned in planning. Thus, planning is looking ahead,
which gives direction to different level of management in
performing organizational activities.

➢ Reduce uncertainty: An organization has to work in
an environment which is uncertain and ever
changing. Planning involves forecasting
(Predicting)in anticipation of future uncertainties
and meets the future challenges.
➢ Help in coordination: Planning provide the basis for
organized and coordinated effort to the
organization. It integrates the individual activities
together toward a common goals .Thus it helps in
cooperation and coordination between employees.

➢ Ensure better utilization or resources: Planning
primarily ensures the availability of resources as
and when needed. This prevents resources
shortage in an organization. A part from this, better
communication and coordination also help in
controlling the wastages.
➢ Innovation and creativity: Under the ever changing
environment, organization growth depends on the
innovative and creative actions of executives.
Sound planning encourages innovation through and
creative actions.

➢ Basis of control: The control function of
management is directly linked to planning. It
measures progress toward goals and provides
information about the causes of success or failure
so that plans may be adjusted for the futures.
➢ Improves competitive strength: Effective planning
increase the competitive strength of an
organization. Planning enables the organization to
discover new opportunities and thereby shape its
future. It ensures an orderly progress of the
organization.

Strategic Planning
• Strategic Planning is a process of determining how to
pursue the organization’s long term goals with the
resources expected to be available.
• It is a deliberate process that involves the review of
market conditions, customer needs, competitive strengths
and weakness and the availability of resources that lead to
specific opportunities or thereat facing the organization.
• A strategic planning consists of clearly stated
organizational mission, organizational goals and
organizational strategies.

The main features of strategic planning are:
➢ Master Planning: It is the main corporate plan
formulated in head office with the involvement of
(Board of Directors and Chief executive officers)
top level management .The plan includes the
details of future course of action in changing
environment situation.
➢ Top-down Approach: This plan is formulated by
Top-level (especially Plan department) and
disseminate to the other levels for implementation
after its ratification.

➢ Highly Prescribed: Strategic planning
contains details of roles and
responsibilities for branches, divisions and
sub divisions accordingly.
➢ Detailed Control: A centrally controlled
mechanism is developed to monitor the
activities in different parts of the
organization in-order to implement the
strategic planning.

Environmental Scanning:
• Environmental scanning is an important function of
strategic management .It is the method or
technique of acquiring information and
systematically analyzing the emerging trends in the
environment.
• According to Wheeler and Hunger; Environment
scanning is “monitoring(observing), evaluating, and
circulating of information from the external and
internal environments to key people within the
corporation”

• The essence of environmental scanning
is the identifying relevant environmental
changes, monitoring them to determine
their nature and direction, forecasting
their rates of change and their likely
impact, and strategically responding to
them

Steps in Scanning Process
1. Identify potentially relevant environment
changes
2. Monitor, determine nature, direction, rate
of change, magnitude of forces
3. Forecast probability of impact, timing of
potential consequences
4. Develop and implement strategic
responses.
Methods of environmental scanning:
• There are several methods which are used for
comprehensive analysis of environmental forces.
Some of them are as follows;
➢ Extrapolation method: Under this method past data
will be analyzed to explore the future. Several
statistical tools such as trend analysis, regression
analysis are used for analysis.
➢ Intuitive reasoning: Under this method, the scanner
used his/her rational intuition( perception, sixth
sense) to scan the environmental forces.

➢ Scenario Building: Under this method, a situation
that could possibly happen is assumed with logical
causes and effect relationship to one another. This
relation is use in anticipating the effect of
environmental forces.
➢ Delphi Technique: Under this method, experts

opinion is taken individually through several
solicitation and feedback .The opinion are used to
forecast the changing environment forces.

SWOT Analysis:
• SWOT (Strengths, Weakness,
Opportunities, and Threats) analysis is
very important tool in formulating a
strategy. It is used at corporate level or
business units and frequently appears in
marketing plans. It provides a clear picture
of an organization’s position in the market.

• S- Strength: Strength is resources, skills or
other advantages relative to competitors.
Market Leadership, Public Image, Experience,
Financial and Human Resources, Organizational
network, etc are strengths of an organization.
• W -Weakness: Weakness are the limitations
which seriously affect the organization’s
performance .Lack of infrastructure, weak
marketing skill, low capital etc are the
weaknesses of an organization.

• O-Opportunities: It is a situation which is in
favor of an organization; New Market, Higher
economic growth, reduction in competition, etc.
are the examples of opportunities.
• T-Threats: A threat is a situation which does
not favour an organization. The Entry of new
competitor, change in technology, increase of
bargaining power of suppliers and customers
etc. are the examples of threats.

Decision Making
• Decision Making
• A decision may be defined as a choice
made from available alternatives. It
represents a course of action about what
must be done or must not be done.
• Decision making is defined as the
conscious process of selection a course of
action among several alternatives to
achieve a desired goal or solve problems.

Decision making process:
Decision making is step by step process. There are following steps
in decision making process.
➢ Identifying and diagnosing the problem: Decision making
process start when there is a problem occurs in an organization.
Problem definition is an initial step in decision making. Problem
should be accurately identified and thoroughly diagnosed so that
corrective action can be under taken. E.g. declining sales: It may
be due to the poor product development or inadequate
advertising and sales promotion or any other reasons. Therefore,
a decision maker has to collect relevant information, use his
diagnostic skill effectively and recognize the problems properly.

➢ Generating possible alternatives: At this step
decision maker should try to generate all the
possible alternative solutions to the problems.
Relevant information is gathered, analyzed by
using their knowledge, skill and experiences to
generate possible alternatives. It can be costly
and time consuming operation. Typically, the
more important the problem situation the more
time and effort can be spent for the exploration
of alternative solutions

➢ Evaluation of alternatives: After generating
the alternatives the next step is to
evaluate each alternative. It is important to
establish some common framework to
evaluate each alternative to assure
consistency. Manager must ascertain,
whether or not alternative is feasible and
practical? If an alternative is not feasible it
should be eliminated and vice-versa

• Selection of best alternative: After evaluating
each alternative the best alternative which
contribute maximum to the organizational goal is
selected. Important reason for choosing one
alternative over the other are as follows:
– It is less expensive.
– It takes less time.
– It will be more effective.
– It will be preferred by employees.
• It will result in greater productivity.

➢ Implement the selected alternative:
Implementing means putting the selected
solution to work. The ultimate success of
an alternative depends on its ability to be
translated into action. All concerned
parties should be well communicated and
their full cooperation for the
implementation should be obtained.
➢ Evaluating and Controlling: It is the final
step of decision making process. After
decision has been implemented, their
progress should be constantly monitored
and evaluated. If there are any differences
between the decision and the problem, the
decision maker may restart the decision-
making process by setting a new goal.
Types of Decision
• Decisions are taken at various levels of
management. Such decisions made in
organization can be classified according to
their frequency and nature.
• According to their frequency, decision are
classified as programmed and non
programmed decisions

▪ Programmed decisions: Most decision making that
related to the day to day running of an organization is
called programmed decision making. Such decisions
are taken by middle or lower level and are repetitive
and routine type. Decision maker knows in advance
what decision he/she has to take in a particular set of
condition. In most organization programmed decisions
are handled through policies, rules or standard
procedures which have been set by top executives.

– Non-Programmed decisions: Decision are called non-
programmed when they are made for novel, non-recurring
and unstructured problems. They often deal with complex
issues that demand data gathering, forecasting and
strategic planning. Such decisions are taken by the top
executives. E.g. Opening a branch in locality, launching a
new product, establishing strategic alliances etc.

• According to nature, classification of decisions are as
follows:
➢ Operating decisions (internal): Operating decisions are day to day
decisions which aim at maximizing the efficiency and profitability of the
organization’s current operation. These decisions are deal with internal
issues such as production schedule, inventory level, operational
monitoring and control. Low level manger takes such decisions.
➢ Strategic decisions focus on issues that are external to the organization.
These decisions deal with problems such as the goal and objective of the
organization ,selection of a product market-mix, strategies for
diversification, investment and expansion etc. These decisions are
centralized and are responsibility of top level management.

➢Administrative decisions: Administrative decisions act
as a bridge between operative and strategic
decisions. They deal with issues such as rules,
procedures, information flows, reward system,
acquiring resources etc. Mostly middle level
managers are involved in the kind of decisions.

• Decision making styles:
➢ Decision making style as per leader:
• The way of decision making is different in
different circumstances by the same
individual. In other words, style of decision
making would differ as the situation
changes. There are five most common
styles of making decisions they are as
follows:

❖ A. Autocratic:
i. Style I: The manger solves the problems or
makes the decisions himself/herself by using
information available to him/her at that time.
ii. Style II: The manager obtains the
necessary information from his/her sub-
ordinates and then decides on the situations
to the problems himself/herself.

❖ B. Consultative:
i. Style III: The manger shows the problem with
relevant subordinates individually, getting their ideas
and suggestions without bringing them together as a
group. The decision may or may not reflect his/her
sub-ordinates influences.
ii. Style IV: The manger shares the problem with
his/her subordinates as a group, collectively obtaining
their ideas and suggestions. The decision may or may
not reflect his/her sub-ordinates influences.

❖ C. Group Processes:
Style V: The manager shares the problem
with his/her sub-ordinates as a group.
Together he/she generates and evaluates
alternatives and attempts to reach
agreement (consensus). Manager accepts
and implements solution that has the
support of the entire group.
• Decision making under condition of
certainty and uncertainty
• Decision making takes place under
different conditions. These conditions are
grouped into three categories. They are as
follows:
❖ Condition of certainty
❖ Condition of Risk
❖ Condition of uncertainty
• Condition of certainty: A state of certainty exists only
when mangers know the available alternatives as well as
the conditions and consequences of those actions. E.g. to
buy a vehicle, organization can collect all the information
related to vehicle and buy it after comparing the
specification of vehicle and the need of the organization.
• Thus, it is simple and easy to take decision under
condition of certainty.

• Condition of risk: A state of risk exists when the manager is
aware of all alternatives, but is unaware of the consequences. In
other words, risk exists when the probability of an action being
less than 100 percent. Certain degree of risk is always
associated under this condition of decision making.
• Condition of uncertainty: Uncertainty means that managers do
not have enough information about the environment to
understand or predict the future. Under condition of uncertainty,
little is known about the alternative or their outcomes. This
situation arises when the level of ambiguity is higher at the time
of making decision. The decision maker should use his/her
intuition, judgment and experience in making decisions under
condition of uncertainty.

Concept of Problem Solving (Albert Einstein)
• Problem identification is the first step in problem
solving process. So the term problem is a deviation
between the actual and the desired program or
situation.
• Problem solving is defined as the use of
information to minimize the deviation between
current and the desired situation. In other words,
problem solving is the way of selecting alternative,
resolving disputes and making the optimum choice.

• Types of problems:
Problems can be classified on the basis of;
1. Frequency
2. Urgency
3. Impact
4. Sources

• Frequency: Problem can be classified on the
basis of their frequency of occurrence. They are;
• Routine Problem: This type of problem occurs on a regular
basis. E.g. problem related to power supply, machine
breakdown, order cancellation etc. Such problem can be
foreseen and solved through established policies, rules and
regulations.
• Exceptional Problem: It occurs occasionally. E.g. the sudden
appearance of strong multinational competitors in the
market. Management must use their experience, skill etc to
tackle this type of problem.

– Urgency: Under this basis of urgency problems are
classified into urgent and non urgent problems.
• Urgent Problem: This problem which must be solved
immediately. E.g. machine breakdown may cause
problem in production unit. Such problem needs to be
addressed and solved as soon as possible.
• Non-Urgent Problem: Such problem allows the
manager to take their time to consult other, develop
alternatives, and decide on a course of action.

– Impact: There are two types, under this
classification.
• Overall Impact: A problem that affect the total
organization its goals and objectives and an overall
impact. These problems are of serious in nature and
have long-term effect. E.g. reduce in sales and profit.
• Partial Impact: A problem which affects only a segment
(division, units, and section) rather than entire
organization is called partial impact problem.

• Source: Under the source, the problem is
classified as technical and human.
– Technical Problem: Those problems related to
material, suppliers, equipments, production etc lie
under this type. Such problem should be identified
and controlled at time.
– Human Problem: It is a behavioral problem of human
beings. Such as employee motivation, dissatisfactions,
conflict etc. These problems are serious problems and
should be addressed effectively in an organization.

• Problem Solving Strategies
• Solving a problem is an essential skill of
mangers. They must have knowledge to
identify and define the problem, which
enable them to solve it effectively.
• Judith G. Bulin (1996) suggests the
following strategies which can be used by
managers for solving the problems.

• Separate the person from the problem: Allow
the person to express obstruction
(obstacles)and then try to identify the real
problem. Focus the conversation on solving the
problem, not placing blame.
• Listen Carefully: Listen to the whole problem
and ask question to clarify before responding
.Listen not only for what has been said, but
also for what has been avoided.

• Get as much information as possible: Be sure to identify
all the issues and talk to others, who are involved before
making a decision.
• Explore alternative solution: Ask for suggestion for solving
the problem from those who are close to it. Solutions
suggested by those involved are less likely to meet
resistance when implemented.
• Decide what to do: Get agreement and understanding from
those involved about what will happen next. Select an
acceptable alternative that will likely to achieve the
desired results and proceed slowly.

• Create accountability: Define who will be
responsible for each phase of the process and be
sure that everyone knows what each person will do
and by when.
• Monitor progress: Be sure to check if the plan is
working. Be flexible and open to making
adjustment as needed to accomplish your
objectives.
• Give credit where it is due: Be sure to recognize the
contribution of those involved in resolving the
problems.

• Group Decision making
• It is the process of making decision by
groups that affect the welfare of the
organization and the people in it. In a
group, members effectively identify
problems, choosing alternatives and
evaluate decision. Such decisions are
mostly unbiased and very effective.
• Advantages and Disadvantages of Group decision
❖ Advantages:
The following are the advantages of group decision –making
1. Generate more information ideas and solutions.
2. Builds team feeling
3. Communicates information to more people, improving
understanding and morale.
4. Increases commitment to the solution.
5. Shares responsibility
6. Builds interpersonal and leadership skill
7. Particularly suitable to non programmed decision making

❖ Disadvantages:
The following are some of the disadvantages of group decision
making
1. Requires good group management and communication skills
2. Takes more time.
3. May create conflict between supporters of different views.
4. Dilutes responsibility, although the supervisor is ultimately
accountable.
5. Domination of a vocal few, who talk the loudest and longest
6. Group think- a pressure to avoid disagreement or raise
objection may occur.

• Techniques of Group Decision Making:
• Participation, communication, free flow of
information, chances of interaction and
respect for each individual member in
group are the main factors that lead to
improve decision making.
• The following are the technique used in
group decision making:

• Brain- Storming: It is a useful technique for generating ideas
about possible causes of problems, and about potential solution
to problems, once they have been identified. The objective of
brain storming is to generate pool of ideas on a particular
subject. The technique of brain storming includes a strict series
of rules. They are as follows;
1. No idea is too ridiculous. Group members are encouraged to state any
extreme or outlandish idea.
2. Each idea presented belongs to the group , not to the person stating it. In this
way, it is hoped that group members will utilize and build on the ideas of
other.
3. No idea can be criticized.
4. The good ideas are selected later.

• Delphi Technique: A Delphi technique is a systematic
means to obtain consensus from a group or panel of
experts. In this technique participants are asked to give
their ideas, suggestions and views on the decisional
problem.
• All responses are transcribed into a single document and
the results are sent back to the panel members and then
again their reactions to others’ views, ideas and
suggestions are collected. The name of the participants is
kept anonymous. A panel coordinator contacts each
participant usually by mail questionnaire. After obtaining
consensus, from the expert panel the decision will be
made.

• The Nominal Group Technique (NGT) : NGT is a structured
group meeting that proceed as follows:
A group of individuals (7 to 10) sit around a table but do not speak
to one another. The problem is presented to them and they write
their reactions, ideas, suggestions, and views on a sheet of paper.
After this process is over, structured sharing of ideas takes place.
Each person around the table presents his/her ideas. A person
designated as recorder writes the ideas of various members on a
blackboard. At the end of it, there is a list of ideas open for
discussion. Each idea is discussed fully before moving on to the next
one. The next stage involves independent voting in which each
participant selects priorities by ranking or voting and final decision
is made by the majority of the votes cast.

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PRINCIPLES OF

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• The employees, who has been working on the specific job

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• The communication system, i.e., exchange of information

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