Mba Management

MANAGEMENT
Facilitated By: Hisham Sharawy
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MODULE 1:
Management Introduction
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What is Management ???
• Is the process of using what you have

{ RESOURCES }, to do what you want to do
…. {GOALS}
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The Management process…..
Planning
Organizing
Evaluating Coordinating
Staffing
Directing
Controlling
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The Importance of Management
Management –
planning, organizing, directing, & controlling
Achieving objectives requires skilled

management
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Management
Process designed to achieve an organization’s

objectives by using its resources effectively &
efficiently in a changing environment.
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What Managers Do
Make decisions – utilization of resources – achieve objectives:

•Planning
•Organizing
•Staffing
•Directing
•Controlling
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Resource acquisition & coordination
Resources
•People
•Raw materials
•Equipment
•Money
•Information
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Management Functions
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Planning –
Process of determining the organization’s
objectives and deciding how to accomplish them.
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Planning
Vision – Continuous broad results desired by organization
Mission – organization’s purpose, philosophy and tools
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Objectives
Common & Elaborate Organizational Objectives --

•Profit, competitive advantage, efficiency, growth
•Service, ethics, community responsibility
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Plans
Strategic Plans
Tactical Plans
Operational Plans
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Strategic Plans
Executive level managers

•Establish the long-range objectives & overall
strategy to fulfill firm’s mission
•2-10 years forward-looking
•Sustainability
•diversification, divestiture , mergers &
acquisitions,
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Tactical Plans
Short-range – strategy implementation

•1 year or less
•Environmental change
•The way we may compete
•Periodically reviewed & updated
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Operational Plans
Very short-term – actionable, specific

•Individuals, work groups, departments
•1 month, 1 week, 1 day
•Achieve tactical plans
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Crisis Management
Contingency Planning
Focus on potential disasters

•Product tampering
•Oil spills
•Fire, earthquake, terrorist attack
•Unethical/illegal employee activity
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Crisis/Contingency Planning
Crisis Management Teams

– Tecshernobel
– General motors
– Johnson & Johnson
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Organizing –
Structuring of resources & activities to
accomplish objectives efficiently & effectively.
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Organizing
Importance –
– Creates synergy
– Establishes lines of authority
– Improves communication
– Improves competitiveness
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Staffing –
Hiring people to carry out the work of the
organization.
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Staffing
Importance –
– Recruiting
– Determine skills
– Motivate & train
– Compensation levels
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Downsizing –
Elimination of significant numbers of employees
(rightsizing, trimming the fat)
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Directing –
Motivating and leading employees to achieve
organizational objectives.
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Management Functions -- Directing
Motivation
•Incentives (raise, promotion)
•Employee involvement (cost reduction, customer service, new products)
•Recognition and appreciation
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Controlling –
Process of evaluating and correcting activities to
keep organization on course,
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Controlling
Five Activities –
– Measuring performance
– Comparing performance against standards
– Identifying deviations from standards
– Investigating causes of deviations
– Taking corrective action
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Types of Management
Levels of Management –
• Top management
• Middle management
• First-line/supervisory management
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Types of Management
Top Management
•President
•Chief Executive Officer (CEO)
•Chief financial officer (CFO)
•Chief operations officer (COO)
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Levels of Management
Rank CEO Company Total Compensation

($ millions)
1. Lawrence J. Ellison Oracle $192.92
2. Frederic M. Poses Trane $127.10
3. Aubrey K. McClendon Chesapeake Energy $116.89
4. Angelo R. Mozilo Countrywide Financial $102.84
5. Howard D. Schultz Starbucks $98.60
The 5 Highest Paid CEO’s in 2007
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Types of Management
Middle Management
•Responsible for tactical planning

•Implement general guidelines established by
top management
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Types of Management
First-Line
Management
•Supervise workers
•Oversee daily operations
•Directing and controlling primary functions
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Areas of Management
• Finance
• Production
• Operations
• Human Resources
• Marketing
• Administration
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Areas of Management
Financial Management –
Focus on obtaining money necessary for the
successful operations and using funds to further
organizational goals.
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Areas of Management
Production & Operations Management–

Develop & administer activities to transform
resources into goods, services, and ideas for the
marketplace.
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Areas of Management
Human Resources Management –

Handle staffing function and deal with employees
in a formalized manner
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Areas of Management
Marketing Management –
Responsible for planning, pricing, and promoting
products and making them available to
customers
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Areas of Management
Information Technology (IT) Management –

Responsible for implementing, maintaining, and
controlling technology applications in business
(computer networks)
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Areas of Management
Administrative Managers –
Manage an entire business or major segment of
the business. Coordinate activities of specialized
managers.
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Skills Needed by Managers
•Leadership
•Technical expertise
•Conceptual skills
•Analytical skills
•Human relations skills
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Managerial Skills
Leadership –
Ability to influence employees to work toward
organizational goals.
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Managerial Skills
Seven Tips for Successful Leadership
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Skills Needed by Managers
•Autocratic Leaders
•Decision makers, “tell” employees
•Democratic Leaders
•Involve employees in decisions
•Free-rein leaders
•Employees work without interference
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Decision Making
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The Realities of Management
According to J.P. Kotter, management functions boil

down to:
1. Figuring out what to do despite uncertainty,

diversity, and a great deal of potentially relevant
information.
2. Getting things done through a large and diverse

set of people despite having little direct control
over them.
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Module 2:
Management Planning
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Module 2:
Management Planning
Concept of Planning
⚫ Planning is a rational action mixed with a little of

forethought. It is seen everywhere.
In a business, planning is the primary of all managerial
functions as it involves deciding of future course of action.
Thus, planning logically precedes the execution of all
managerial functions. Planning is the process of deciding in
advance what is to be done, where, how and by whom it is
to be done.
.
⚫ Th us, it is basically a process of „thinking before doing‟.
All these elements speak about the futurity of an action
Planning
⚫ The process of establishing goals and a suitable

course of action for achieving those goals.
⚫It requires decision making
⚫ The necessity of planning arises because of the fact
that business organizations have to operate, survive
and progress in a highly dynamic economy where
change is the rule, changes gives rise to the problems
and throw countless challenges
Planning pervades all managerial activity.
Planning is the basic function of managers at all
levels, although the nature and scope of planning will
vary at each level.
Difference between planning and decision-making
⚫Decision-making is the part of the planning process

⚫ Decision-making involves choosing among the
various alternatives.
⚫ It is the process of identifying problems and
opportunities and then resolving them.
FEATURES OF PLANNING
⚫ Planning is goal-oriented
⚫ Planning is primary function
⚫ Planning is all-pervasive
⚫ Planning is mental exercise
⚫ Planning is continuous-process
⚫ Planning involves decision making
⚫ Planning is forward looking
⚫ Planning is flexible
⚫ Planning is an integrated process
⚫ Planning includes efficiency and effectiveness dimension
Nature of Planning
The nature of planning can be highlighted by studying its

characteristics. They are as follows
(a)Planning is a mental activity. Planning is not a
simple process. It is an intellectual exercise and involves
thinking and forethought on the part of the manager.
(b)Planning is goal-oriented. Every plan specifies the
goals to be attained in the future and the steps necessary
to reach them. A manager cannot do any planning, unless
the goals are known.
(c)Planning is forward looking. Planning is in keeping
with the adage, “look before you leap”. Thus planning
means looking ahead. It is futuristic in nature since it is
performed to accomplish some objectives in future.
(d). Planning is Pervasive
•Corporation Level
•Strategic Business Unit (SBU) Level
•Functional or Department Level
•Team or work group level
•Individual level
⚫ (e) Planning is the primary function. Planning
logically precedes the execution of all other
managerial functions, since managerial activities in
organizing; staffing, directing and controlling are
designed to support the attainment of organizational
goals. Thus, management is a circular process
beginning with planning and returning to planning
for revision and adjustment.
⚫ (f) Planning is based on facts. Planning is a
conscious determination and projection of a course of
action for the future. It is based on objectives, facts and
considered forecasts. Thus planning is not a guess work.
⚫ (g) Planning is flexible. Planning is a dynamic
process capable of adjustments in accordance with the
needs and requirements of the situations. Thus planning
has to be flexible and cannot be rigid.
(h) Planning is essentially decision making.
Planning is a choice activity as the planning process
involves finding the alternatives and the selection of the
⚫ best. Thus decision making is the cardinal part of
planning.
Importance of Planning
⚫ According to G.R. Terry, “Planning is the

foundation of most successful actions of all
enterprises.” An enterprise can achieve its objectives
only through systematic planning on account of the
increasing complexities of modern business. The
importance and usefulness of planning can be
understood with reference to the following benefits.
⚫ (a) Minimizes uncertainty: The future is generally
uncertain and things are likely to change with the
passage of time. Planning helps in minimizing the
uncertainties of the future as it anticipates future events.
⚫ (b) Emphasis on objectives: The first step in
planning is to fix the objectives. When the objectives are
clearly fixed, the execution of plans will be facilitated
towards these objectives.
⚫ (c) Promotes coordination. Planning helps to
promote the coordinated effort on account of pre-
determined goals.
(d)Facilitates control. Planning and control are
inseparable in the sense that unplanned actions cannot
be controlled. Control is nothing but making sure that
activities conform to the plans.
(e)Improves competitive strength. Planning enables
an enterprise to discover new opportunities, which give it
a competitive edge.
(f)Economical operation. Since planning involves a lot
of mental exercise, it helps in proper utilization of
resources and elimination of unnecessary activities.This,
in turn, leads to economy in operation.
⚫ g) Encourages innovation. Planning is basically
the deciding function of management. Many new
ideas come to the mind of a manager when he is
planning. This creates an innovative and foresighted
attitude among the managers.
⚫ (h) Tackling complexities of modern
business. With modern business becoming more
and more complex, planning helps in getting a clear
idea about what is to be done, when it is to be done,
where it is to be done and how it is tobe done.
Barriers to effective Planning
⚫ (a) Influence of external factors: The effectiveness

of planning is sometimes limited because of the external
social, political, economical and technological factors
which are beyond the control of the planners.
⚫ (b) Non-availability of data: Planning needs reliable
facts and figures. Planning loses its value unless reliable
information is available.
⚫ (c) People’s resistance: Resistance to change hinders
planning. Planners often feel frustrated in instituting
new plans, because of the inability of people to accept
them.
⚫ (d) Time and Cost: Collection of data and revision of
plans involves considerable time, effort and money.
⚫ (e) Inflexibility: Formal planning efforts can lock an
organization into specific goals to be achieved within
specific timetables. When these objectives were set, the
assumption may have been made that the environment
wouldn‟t change during the time period the objectives
cover. If that assumption is faulty, managers who follow
a plan may have trouble. Rather than remaining flexible
and possibly scrapping the plan-managers who continue
to do what is required to achieve the original objectives
may not be able to cope with the changed environment.
Forcing a course of action when the environment is fluid
can be a recipe for disaster.
Requirements of a Good Plan
⚫
An effective and sound plan should have the following features:
(a)Clear objective: The purpose of plans and their
components is to develop and facilitate the realization of
organizational objectives. The statement on objectives
should be clear, concise, definite and accurate. It should
not be colored by bias resulting from emphasis on personal
objectives.
(b)Proper understanding: A good plan is one which is
well understood by those who have to execute it. It must be
based on sound assumptions and sound reasoning.
(c)Flexible: The principle of flexibility states that
management should be able to change an existing plan
because of change in environment without undue extra cost
or delay so that activities keep moving towards the
established goals. Thus, a good plan should be flexible to
accommodate future uncertainties.
Requirements of a Good
Plan
• (d) Stable: The principle of stability states that
the basic feature of the plan should not be
discarded or modified because of changes in
external factors such as population trends,
technological developments, or unemployment.
• (e) Comprehensive: A plan is said to be

comprehensive when it covers each and every
aspect of business. It should integrate the
various administrative plans so that the whole
organization operates at peak efficiency.
• (f) Economical: A plan is said to be good, if it
is as economical as possible, depending upon the
resources available with the organization
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⚫There are seven essential steps in operating planning process.
Managers use this process in carrying out their jobs .
1- Setting Goals:
Establish the targets for the short and long range future.
For example:
- 25 percent growth over last year sales in present financial year.
- To increase market share by 5 percent in next five years.
2- Analyzing and evaluating the environment:
Analyze the present position and resources available to achieve
objectives through answering the following questions:
- Where are we now?
- What are the limitations in the environment?
- What resources do we have?
- Are there any external factors that can influence the
objectives and their accomplishment?
3 Determining Alternatives:
Construct a list of possible courses of action that will lead
you to your goal.
4 Evaluating the alternative:
Listing and considering the various advantages and
disadvantages of each of your possible course of action.
5 Selecting the Best solution:
Selecting the course of action that has the most advantages
and the fewest serious disadvantages.
6 Implementing the Plan:
Determine, who will be involved, what resources will be
assigned how the plan will be evaluated, and reporting
procedures.
7Controlling and evaluating the Results:
Making certain that the plan is going according to
expectations and making necessary adjustments.
TYPES OF PLANS
⚫ Most organizations of any size offer more than one

product or services, as a result they cannot develop a
single plan to cover all organizations activities, they
must develop plans for multiple levels.
⚫ For this purpose, there are many types of plans and
those different plans are carried out at different
levels of an organization.
TYPES OF PLANS
1) STRATEGIC PLANS
2) TACTICAL PLANS
3) OPERATIONAL PLANS
4) LONG TERM AND SHORT TERM PLANS
5) PROACTIVE PLANS AND REACTIVE PLANS
6) FORMAL AND INFORMAL PLANS
7) STANDING AND SINGLE-USE PLANS
STRATEGIC PLANS
⚫ Strategic planning sets the long-term direction of the org in

which it wants to proceed in future.
⚫ It focus on the broad future of the org. Incorporating both
external information gathered by analyzing the company‟s
competitive environment and the firms internal resources,
managers determine the scope of the business to achieve
the org long-term objectives.
⚫ Strategic planning involves the analysis of various
environmental factors and the competition.
⚫ Most strategic plans focus on how to achieve goals three to
five years into the future.
CONTD…..
⚫ It has the potential to impact dramatically, both

positively and negatively, on the survival and success
of the organization.
⚫Typically 3-5 years of horizon
⚫ Top management is involved in framing the strategic
plans.
TACTICAL PLANS
⚫ Tactical plans translate the strategic plans into

specific goals for specific parts of the organizations.
⚫ They are for shorter time frame and usually focused
for 1-2 years
⚫ Instead of focusing on the entire corporation, tactical
plans typically affect a single business within an
organization.
⚫ Although tactical plans should complement the
organizations overall strategic plan, they are often
somewhat independent of other tactical plans.
Contd….
⚫ Tactical plans are concerned with implementation of

strategic plans by coordinating the work of different
departments in the organization.
⚫ They try to integrate various org units and ensure the
commitment to strategic plans.
OPERATIONAL PLANS
⚫ Operational plans translate the tactical plans into

specific goals and actions for small units of the
organization.
⚫ They typically focus on the short term usually few
months or less.
⚫ These plans are least complex than strategic and
tactical plans, and rarely have a direct effect on other
plans outside of the department or unit for which the
plan was developed.
THE ORGANIZATIONAL LEVELS AT WHICH PLANS ARE
DEVELOPED
1) CORPORATE LEVEL
Most corporation of even moderate size have a
corporate headquarters. The heads of these groups are
typically part of the group of senior executives at the
corporate headquarters. Executives at the corporate
level in large firms include both those in the
headquarters and those heading up the large corporate
groups such as finance, human resources, marketing
etc.
CONTD….
⚫ These corporate-level executives primarily focus on

the questions such as
 What industries should we get into?
 What markets should the firm be in?
 Inwhich business should the corporation invest
money?
 What resources should be allocated to each
business?
⚫BUSINESS LEVEL
At this level managers focus on determining how they
are going to compete effectively in market.
At this level, managers attempt to address questions
such as
 Who are our direct competitors?
 What are their strengths and weaknesses?
 What are our strengths and weaknesses?
 What advantages do we have over competitors?
⚫FUCNTIONAL LEVELS
At this level managers focus on how they can facilitate
the achievement of the competitive plan of the
business. These managers are often the heads of
departments such as finance, marketing, human
resources or product development.
Depending on the business structure this can include
managers responsible for business within a specific
geographic region or managers responsible for specific
retail stores.
⚫ Functional managers attempt to address questions such as:
 What activities does my unit need to perform well in order
to meet customer expectations?
 What information about competitors does my unit need in
order to help the business compete effectively?
The main focus of functional managers planning activities is
on how they can support the business and corporate plans.
Functional level managers are responsible for recognizing
and ensuring effective and efficient operations.
Interrelationship between plan types and levels
Types of plans Organizational levels
Strategic plans Corporate level
Tactical plans Business level
Operational plans Functional plans

PROACTIVE AND REACTIVE PLANS
⚫ Classification of planning into proactive and reactive

is based on the organizations response to
environmental dynamics.
⚫ Proactive planning involves designing suitable
courses of action in anticipation of likely changes in
the relevant environment. In this approach, org do
not wait for the environment to change but take
action in advance.
Contd…..
⚫ In reactive planning, organizations responses come

after the environmental changes have taken place. In
such situation the org lose opportunities to those org
which adopt proactive approach.
FORMAL AND INFORMAL PLANNING
⚫ Formal planning is in the form of well-structured process

involving different steps.
⚫ In large organizations they undertake planning in formal
way in which they create corporate planning cell placed at
sufficiently high level in the organizations.
⚫ Informal planning is undertaken by the smaller
organizations, the planning process is based on managers
memory of events, intuitions and gut-feeling, rather than
based on systematic evaluation of the environment.
SINGLE AND STANDING USE PLANS
⚫ Standing plans are put to use again and again over a

long period of time. Once established they continue
to apply until they are modified or abandoned.
Standing plan help managers in dealing with routine
matters in a pre-determined and consistent manner.
⚫ Examples of standing plans are: organizational
mission and long term objectives, strategies, policies,
procedures and rules.
SINGLE USE PLANS
⚫ Single use plans are relevant for a specified time and after
the lapse of that time, these plans are formulated again for
the next period.
⚫ Single use plans are non-recurring in nature and deal with
problems that probably will not be repeated in the same
form in future.
⚫Generally these plans are derived from the standing plans
⚫Examples: projects, budgets, targets.
⚫Org set their mission and objectives out of which the
strategic actions are determined, in order to put these
actions into operations, projects, budgets etc. are prepared
for the specific time period.
PLANS
STANDING PLANS SINGLE-USE PLAN
1) OBJECTIVES
2) POLICIES & 1) PROGRAMMES
STRATEGIES
2) PROJECTS
3) PROCEDURES
3) BUDGETS
4) METHODS
5) RULES
LONG TERM AND SHORT TERM PLANS
⚫ Long term planning is of strategic nature and involves long

period say 3-5 yrs. The long term plans usually encompass
all the functional areas of the business and are affected
within the existing and long-term framework of economic,
social and technological factors.
⚫ Short term planning is usually a plan made for one year.
These are aimed at sustaining organization in its
production and distribution of current products or services
to the existing markets. These plans directly affect
functional groups( production, marketing, finance)
STRATEGY
⚫ When the term strategy is used in the military sense, it

refers to action taken by opposite party.
⚫ “ strategy is a course of action through which an
organization tries to relate itself with its environment to
develop certain advantages which help in achieving its
objectives”
⚫ Strategy relates the firm to its environment particularly the
external environment.
VISION
⚫ The philosophy and vision of an organization are derived

from the philosophy and vision of key decision makers.
⚫ Vision is the long-term goal where the organization wants
to see itself.
⚫ It is a widely descriptive image of what a company wants to
be known for
⚫ Vision represents the imagination of the future events and
prepares the organization for the same.
⚫ Vision of the company helps in defining the mission and the
objectives, so it has to be set clearly and has to be focused
MISSION
⚫ Mission is the organization's purpose or fundamental

reason for existence.
⚫ A mission statement helps the organization to link its
activities to the needs of the society and legitimize its
existence.
⚫ Mission statements are customer-oriented ( society)
& future-oriented.
⚫ Itdepicts the organization‟s business character and
does so in ways, that distinguish the organization
from other organization.
OBJECTIVES
Planning
Traditional Objective Setting
WHAT ARE OBJECTIVES
⚫ Objectives are the important ends toward which

organizational and individual activities are directed
⚫ An objective is verifiable (provable) when at the end of
the period one can determine whether or not the objective
has been achieved
⚫ Objectives are precise and used to specify the end results
which and org wants to achieve.
⚫ The results can be achieved at the varying time period
⚫ So the objective can be long term objectives which can be
supported by the short term objectives
Objectives form a hierarchy
Organizational
Objectives
Divisional
Objectives
Departmental
Objectives
Individual
Objectives
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ESTABLISHING OBJECTIVES
⚫ TRADITIONAL VIEW: In the traditional approach

for the objective or goal setting, it is set by the top
management, and then the derivate objectives are
formulated for the middle and lower levels.
⚫MODERN VIEW: Management by objectives
MBO
PETER DRUCKER
⚫ IN 1954, Peter Drucker

had provided more
sophisticated approach
to goal setting in
organizations known as
“management by
objectives”
⚫ Management by objectives (MBO) is a systematic and
organized approach that allows management to focus on
achievable goals and to attain the best possible results
from available resources. It aims to increase
organizational performance by aligning goals and
subordinate objectives throughout the organization.
⚫ Ideally, employees together with managers get strong
input to identify their objectives, and time lines for
completion, etc. MBO includes ongoing tracking and
feedback in the process to reach objectives.
Core Concepts OF MBO
⚫ According to Drucker, managers should "avoid the

activity trap", getting so involved in their day to day
activities that they forget their main purpose or
objective. Instead of just a few top-managers, all
managers should: participate in the strategic
planning process, in order to improve the
implementability of the plan, and Implement a range
of performance systems, designed to help the
organization stay on the right track.
Steps in MBO Program
1.The organization‟s overall goals and strategies are

formulated my managers of all level.
2.Major goals are allotted among divisional & department
units.
3.Specific objectives are collaboratively set by managers and
employees.
4.The action plans, defining how objectives are to be achieved
and specified and
agreed upon by managers and employees.
5. Implementation.
6. Periodical review and feedbacks are provided.
7. Evaluation of performance.
8. Rewards and Recognition.
⚫ Managerial Focus
⚫ • MBO managers should focus on results not on the activities.
⚫ • They should delegate the task by “negotiating a contract of
goals” with their subordinates without dictating a detail
roadmap for implementation.
⚫ • MBO is about setting objectives and then breaking down
into more specific goals or key results.
⚫ Main Principle
⚫ • Everyone must have clear understanding of the aims or
objectives.
⚫ •Everyone should be clear about their own roles and
responsibilities and achieving those aims.
⚫ • Employees must be empowered to take actions in their own
way.
⚫Where to Use MBO
⚫ The MBO style is appropriate for knowledge-based
enterprises when your staff is competent. It is
appropriate in situations where you wish to build
employees„ management and self-leadership skills
and tap their creativity, tacit knowledge and
initiative. Management by Objectives (MBO) is also
used by chief executives of multinational
corporations (MNCs) for their country managers
abroad.
BENEFITS OF MBO
⚫Clear goals
⚫Role clarity
⚫Periodic feedback of performance
⚫Participation
⚫Personnel satisfaction
⚫Better morale
⚫Result-oriented philosophy
⚫Basis for organizational change
⚫Feedback and appraisals
Limitations of MBO
⚫Initial time and cost

⚫Frustration
⚫ Problems in quantifying the objectives and setting
the objectives
Module 3:
Management and Leadership
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Introduction (Cont.)
• Leadership
– Social influence process of involving two or
more people
• Leader
• Follower
• Potential follower
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• Leadership (cont.)
– Two dimensions
• Leader intends to affect behavior of another person
• Target of influence effort perceives intent as acceptable
– Target must attribute behavior to a specific person
– Consider the behavior acceptable
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• Find leaders in different places in
organizations
– Formal organization position
– Personal qualities add or detract from leadership
– Emergent leaders within formal and informal
groups in an organization
– Leaders at any organization level
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• Managers sustain and control organizations
• Leaders try to change them
• Leaders have vision and inspire others to
follow it
• Managers follow an organization’s present
vision
• Management and leadership requirements
– Differs in different organizational positions
– Differs at different times in an organization’s
history
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(Cont.)
External environment
Stable Turbulent
Manager Leader
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The Evolution of
Leadership Research
1900: Traits approaches
1950: Behavioral theories
1990s
1960: Contingency theories
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The Evolution of
Leadership Research (Cont.)
Contingency Theories
(person x situation)
Fiedler’s
contingency House’s
theory path-goal
(enduring theory
Behaviors personality-like (behavior
(task and qualities) repertoire)
people)
Traits
1900 1950 1960 1970
Time 7-113
Trait Approaches
to Leadership (Cont.)
• Leadership traits: distinctive physical or
psychological characteristics
– Of successful leaders or distinguished leaders
from followers
– Physical: height, weight
– Social: interpersonal skills, status
– Personality: self-confidence, intelligence
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Trait Approaches
to Leadership (Cont.)
Leadership Traits
Intelligence Drive
Dominance Desire to lead
Self-confidence Honesty/integrity
Energy Self-confidence
Task-relevant Cognitive ability
knowledge Knowledge of the business
“Leaders are bright, self-confident, high-energy people

who know something about the situation they are trying to affect
and take control when they must (p. 221).”
7-115
Behavioral Theories
of Leadership
• Two complementary theories
– University of Michigan Studies
– Ohio State University Leadership Studies
• Major dimensions of leader behavior
– Task-centered behavior
– People-centered behavior
7-116
Behavioral Theories
of Leadership (Cont.)
• The University of Michigan Studies
– Production-centered leader behavior
• Task focused
• Pressured subordinates to perform
• Little concern for people
• Did not trust people to work on their own
7-117
Behavioral Theories
• The University of Michigan Studies (cont.)
– Production-centered leader behavior (cont.)
• Close supervision
• Little understanding of their work unit's social system
• Did not set high performance goals
7-118
Behavioral Theories
– Employee-centered leader behavior
• Focused on people and their personal success
• Understood of their work unit's social system
• Set high performance goals
• Communicated performance expectations to
subordinates
Combined a strong concern for the social aspects of the

work unit with high performance expectations
7-119
Behavioral Theories
– Research results
• Employee-centered leadership: higher work unit
performance than production-centered leadership
• Production-centered leadership: high productivity with
several latent dysfunctions
– Poor employee attitudes
– Higher turnover or absenteeism
– Little group loyalty
– High levels of distrust between subordinates and
leaders
7-120
Behavioral Theories
• The Ohio State Leadership Studies
– Initiating Structure (task-oriented)
• High
– Make individual task assignments
– Set deadlines
– Clearly lay out what needs to be done
– Act decisively
7-121
Behavioral Theories
• The Ohio State Leadership Studies
– Initiating Structure (task-oriented)
• Low
– Tend not to take initiative
– Practice "hands off" management
– Leave people alone; let them define the tasks and
deadlines
7-122
Behavioral Theories
• The Ohio State Leadership Studies (cont.)
– Excessively high Initiating Structure
• High turnover
• High grievance rates
• Low satisfaction
– Moderate initiating structure
• Good task performance when
– People not trained
– Face high task ambiguity
7-123
Behavioral Theories
– Consideration (people-oriented)
• High
– Concern for members of their group
– Empathic and interpersonally warm
– Interested in developing trust-based relationships
with subordinates
– Seek suggestions and opinions of subordinates
– Accept and carry out suggestions
7-124
Behavioral Theories
• Low
– Publicly criticize subordinate's work
– Lack concern for other's feelings
– Little interest in quality of interpersonal
interactions
• Research results
– High Consideration: high job satisfaction, low
turnover, group cohesiveness
– High on both dimensions: positive work attitudes
7-125
of Leadership
• Successful leadership depends on leader's
situation
• Two contingency theories strongly differ
– Leader as unable to change behavior readily
– Leader as able to choose from a behavioral
repertoire
7-126
• Fiedler’s contingency theory of leadership:
person has a behavioral predisposition
– Task-oriented: structures situations, sets
deadlines, makes task assignments
– Relationship-oriented: focuses on people,
considerate, not strongly directive
7-127
• Fiedler’s contingency (cont.)
– Person’s predisposition to behave interacts with
favorableness of situation
– Determines leader effectiveness
– Dimensions of situations
• Leader-member relations
• Task structure
• Position power
See text book Figure 12.1
7-128
• Fiedler’s contingency (cont.)
– Leader-member relations
• Quality of the relationship between subordinates and
leader
• Amount of trust between leader and subordinates
• Leader is liked and respected by subordinates
7-129
• Fiedler’s contingency theory (cont.)
– Task structure
• Extent to which work is well defined and standardized
or ambiguous and vague
• High task structure: work is predictable and can be
planned
• Low task structure: ambiguous situation with changing
circumstances and unpredictable events
7-130
– Position power: formal authority of leader
• High position power: leader hires people; rewards or
punishes behavior
• Low position power: policies may constrain leader
from using rewards or punishments
7-131
– Classify situations on the three dimensions
– Favorableness of situation for leader's influence
• Favorable situations allow high leader influence
• Unfavorable situations allow little leader influence
– Task-oriented leaders more effective in highly
favorable or highly unfavorable situations
– Relationship-oriented leaders more effective in
situations between those two extremes
7-132
– Difficult to select leaders to match situations
– Not optimistic about effectiveness of leadership
training
– Fiedler argued for changing the situation to fit a
leader's predispositions--”'engineer' the job to fit
the [leader]”
– Or leader learns ways to change situation to fit
predisposition
7-133
• House’s path-goal theory of leadership
– Leaders affect a subordinate's motivation to reach
desired goals
– Rewards when person reaches desired goals
– Supportive while person tries to reach goals
– Makes inherently motivating task assignments
– Clears barriers to goal accomplishment
– Clearing subordinates' paths so they can reach
desired goals
7-134
• House’s path-goal theory (cont.)
– Leader behaviors: a repertoire
• Directive (task-centered): what, when, how
• Supportive (people-centered): concern for people and
the needs they try to satisfy
• Participative: consults with subordinates; seriously
considers their ideas
• Achievement-oriented: emphasizes excellence in
performance; sets high performance goals
See text book Figure 12.2
7-135
– Contingency factors
• Personal factors of subordinates
• Work environment factors
7-136
– Subordinates’ personal factors
• Perception of their ability
• Locus of control
• Authoritarianism
7-137
– Work environment factors
• Tasks
• Formal authority
• Primary work group
7-138
– Behavior repertoire
• Choose behavior based on leader's skills and
personality
• Circumstances facing the leader (contingency factors)
7-139
– Subordinates's ability
• Low: likely respond positively to directive leader
behavior
• High: directive leader behavior is redundant; they
already know what to do
7-140
– Locus of control
• Internal control (self in control)
– Responds positively to participative behavior
– Less positively to directive behavior
• External control
– Responds positively to low participative behavior
– Responds positively to directive leader behavior
7-141
– Authoritarianism
• Low: tend not to defer to authority; prefer participative
behavior
• High: accept directive leader behavior
7-142
– Work environment factors: affect degree of
ambiguity
• Routine tasks
• Clearly defined role relationships
• Standard operating procedures
• Less ambiguity than tasks done in a more fluid setting
• Formal authority
– Lets leader clearly define work roles
– Helps set clear goals
7-143
– Primary work group
• People strongly identified with each other
– Develop well-defined work procedures
– Creates unambiguous environment
• People not strongly identified with each other
– Do not develop well-defined work procedures
– Creates ambiguous environment
7-144
– Low ambiguity
• Directive leader behavior redundant
• Use supportive behavior
– High ambiguity
• Directive leader behavior
– Clarifies work requirements
– Reduces uncertainty
7-145
Alternative Views
of Leadership
• The Leadership Mystique
• Transformational Leadership
• Charismatic Leadership Theories
7-146
Alternative Views
of Leadership (Cont)
• The Leadership Mystique
– Sense of mission: a vision of a future state for the
organization. It does not now exist but it will exist
– Capacity for power: ability to get and use power
to pursue the mission
– Will to survive and persevere
In Jenning’s words:
“. . . a will to persevere against a discourteous,
unbelieving world of sometimes total opposition.”
7-147
Alternative Views
• Transformational Leadership
– Three elements
• Charisma: from the Greek, charisma, meaning a gift. A
talent to inspire devotion and allegiance that enable a
person to influence one or more without authorities.
• Individualized consideration
• Intellectual stimulation
7-148
Alternative Views
• Transformational Leadership (cont.)
– Individualized consideration
• Recognizes subordinates’ individual differences
• Emphasizes continual growth and development
• Knows her or his subordinates well
– Intellectual stimulation
• Builds high awareness of problems and solutions
• Stimulates people to image new future states
• Induces changes in beliefs and values of followers
7-149
Alternative Views
• Transformational Leadership (cont.)
– Strive for big increases in performance
– Bring excitement to workplace
– Build strong emotional bonds between self and
subordinates
– Often bring dramatic changes to an organization's
culture
– High organizational performance
7-150
Alternative Views
• Charismatic Leadership Theories
– Attract devoted followers
– They energetically pursue leader's vision
– Move followers to extraordinary heights of
performance
– Profoundly affect aspirations
– Build emotional attachment to leader
7-151
Alternative Views
• Charismatic Leadership Theories (cont.)
– Win commitment to leader's vision
– Develop and widely communicate an inspirational
vision
– Form bonds of trust between themselves and
their followers
– Impatient with the present
– Press for continuous improvement
7-152
Implicit Leadership Theory:
“We Know a Leader
When We See One”
• Leadership categorization
– People observe behavior
– Quickly compare it to their cognitive category of a
leader
• Leadership prototype: a person’s cognitive image of
leader traits and characteristics
• Leadership exemplar: a specific person regarded as a
leader
7-153
Perspective Offered
by Each Theory
Qualities needed Behavior needed
Traits Behavioral
Leadership
requirements of
an organization
Contingency
Alternative views
Assess person
Vision, charisma, knowledge and situation
7-154
Women, Men, and Leadership
• Do women and men exhibit different
leadership behavior?
– Women: nurturing and caring
– Men: competitive and aggressive
Results of their socialization?
7-155
(Cont.)
• Limited empirical evidence of differences
between men and women
– Women described themselves
• Sharing power
• Encouraging subordinates self-worth
• Sharing information
– Men described themselves
• Using position authority
• Relying on rewards and punishments
7-156
(Cont.)
• Limited empirical evidence (cont.)
– People who worked for men high on consideration
and initiating structure had the most positive
attitudes in one study
– Women behaved more democratically than men
7-157
Leadership and
Self-Managing Teams
• The increasing use of self-managing teams will
change traditional patterns of decision
authority in organizations
• Such teams take on much decision authority
formerly held by managers and supervisors
• Changes the roles of managers and
supervisors outside the team
• Defines new roles for team members
7-158
Leadership and
Self-Managing Teams (Cont.)
• Managers and supervisors outside the team
have redefined roles
– Long-range planning
– Team guidance and development
– Resource support
– Political support
• Behavior focused on developing the self-
managing part of self-managing teams
7-159
Ethical Issues in
Leadership and Management
• Leadership uses social influence to
deliberately affect another person's behavior
– Such changes in a person's behavior can happen
without a person consciously deciding to change
– Ethical issue: Are such efforts are an unethical
manipulation of other people's behavior?
7-160
Ethical Issues in
(Cont.)
• Behavior changes may also change a
attitudes, values, and beliefs
– Example: move toward Quality Management
and transform an organization's values
– Individual employees may undergo similar
changes
• Some observers suggest that leadership
may have a brainwashing-like effect on
people 7-161
Ethical Issues in
(Cont.)
• Qualities of ethical and unethical leaders
– Ethical leader
• Confronts moral dilemmas
• Rewards ethical behavior
• Builds an ethical organizational culture
• Transformational leaders
– Can get strong commitment to their vision
from followers
– Can clearly have ethical or unethical results
7-162
Module 4:
Mangers and Decision Making
7-163
Decision Making
• Decision
– Making a choice from two or more alternatives.
• The Decision-Making Process
– Identifying a problem and decision criteria and
allocating weights to the criteria.
– Developing, analyzing, and selecting an alternative
that can resolve the problem.
– Implementing the selected alternative.
– Evaluating the decision’s effectiveness.
6–164 7-166
The Decision-Making
Process
6–165 7-166
Step 1: Identifying the Problem
• Problem
– A discrepancy between an existing and desired
state of affairs.
• Characteristics of Problems
– A problem becomes a problem when a manager
becomes aware of it.
– There is pressure to solve the problem.
– The manager must have the authority,
information, or resources needed to solve the
problem. 6–166 7-166
Step 2: Identifying Decision Criteria
• Decision criteria are factors that are
important (relevant) to resolving the
problem.
– Costs that will be incurred (investments required)
– Risks likely to be encountered (chance of failure)
– Outcomes that are desired (growth of the firm)
Step 3: Allocating Weights to the Criteria
• Decision criteria are not of equal importance:
 Assigning a weight to each item places the items in
the correct priority order of their importance in the
decision making proce6s–1s67. 7-167
Criteria and Weights for Computer Replacement Decision
Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3
6–168 7-168
Step 4: Developing Alternatives
• Identifying viable alternatives
– Alternatives are listed (without evaluation) that
can resolve the problem.
Step 5: Analyzing Alternatives
• Appraising each alternative’s strengths and

weaknesses
 An alternative’s appraisal is based on its ability to
resolve the issues identified in steps 2 and 3.
6–169 7-168
Exhibit 6–3 Assessed Values of Laptop Computers Using
Decision Criteria
6–170 7-168
Step 6: Selecting an Alternative
• Choosing the best alternative
– The alternative with the highest total weight is
chosen.
Step 7: Implementing the Alternative
• Putting the chosen alternative into action.
 Conveying the decision to and gaining commitment
from those who will carry out the decision.
6–171 7-168
Exhibit 6–4 Evaluation of Laptop Alternatives Against
Weighted Criteria
6–172 7-168
Step 8: Evaluating the Decision’s
Effectiveness
• The soundness of the decision is judged by its
outcomes.
– How effectively was the problem resolved by
outcomes resulting from the chosen alternatives?
– If the problem was not resolved, what went
wrong?
6–173 7-168
Exhibit 6–5 Decisions in the Management Functions
6–174 7-168
Making Decisions
• Rationality
– Managers make consistent, value-maximizing
choices with specified constraints.
– Assumptions are that decision makers:
• Are perfectly rational, fully objective, and logical.
• Have carefully defined the problem and identified all
viable alternatives.
• Have a clear and specific goal
• Will select the alternative that maximizes outcomes in
the organization’s interests rather than in their personal
interests. 6–175 7-175
Exhibit 6–6 Assumptions of Rationality
6–176 7-176
Making Decisions (cont’d)
• Bounded Rationality
– Managers make decisions rationally, but are limited
(bounded) by their ability to process information.
– Assumptions are that decision makers:
• Will not seek out or have knowledge of all alternatives
• Will satisfice—choose the first alternative encountered
that satisfactorily solves the problem—rather than
maximize the outcome of their decision by considering
all alternatives and choosing the best.
– Influence on decision making
• Escalation of commitment: an increased commitment
to a previous decision despite evidence that it may
have been wrong. 6–177 7-177
The Role of Intuition
• Intuitive decision making

– Making decisions on the basis of experience,
feelings, and accumulated judgment.
6–178 7-178
Exhibit 6–7 What is Intuition?
Source: Based on L. A. Burke and M. K. Miller, “Taking the Mystery Out of Intuitive
Decision Making,” Academy of Management Executive, October 1999, pp. 91–99.
6–179 7-178
Types of Problems and Decisions
• Structured Problems
– Involve goals that clear.
– Are familiar (have occurred before).
– Are easily and completely defined—information
about the problem is available and complete.
• Programmed Decision
– A repetitive decision that can be handled by a
routine approach.
6–180 7-178
Types of Programmed Decisions
• Policy
– A general guideline for making a decision about a
structured problem.
• Procedure
– A series of interrelated steps that a manager can
use to respond (applying a policy) to a structured
problem.
• Rule
– An explicit statement that limits what a manager
or employee can or ca6–n18n1 ot do. 7-181
Policy, Procedure, and Rule
Examples
• Policy
– Accept all customer-returned merchandise.
• Procedure
– Follow all steps for completing merchandise
return documentation.
• Rules
– Managers must approve all refunds over $50.00.
– No credit purchases are
6–182
refunded for cash. 7-182
Problems and Decisions (cont’d)
• Unstructured Problems
– Problems that are new or unusual and for which
information is ambiguous or incomplete.
– Problems that will require custom-made solutions.
• Nonprogrammed Decisions
– Decisions that are unique and nonrecurring.
– Decisions that generate unique responses.
6–183 7-182
Exhibit 6–8 Programmed versus Nonprogrammed Decisions
6–184 7-182
Decision-Making Conditions
• Certainty
– A situation in which a manager can make an
accurate decision because the outcome of every
alternative choice is known.
• Risk
– A situation in which the manager is able to
estimate the likelihood (probability) of outcomes
that result from the choice of particular
alternatives.
6–185 7-182
Exhibit 6–9 Expected Value for Revenues from the
Addition of One Ski Lift
Expected
Expected × Probability = Value of Each
Event Revenues Alternative
Heavy snowfall $850,000 0.3 = $255,000
Normal snowfall 725,000 0.5 = 362,500
Light snowfall 350,000 0.2 = 70,000
$687,500
6–186 7-182
Decision-Making Conditions
• Uncertainty
– Limited information prevents estimation of
outcome probabilities for alternatives associated
with the problem and may force managers to rely
on intuition, hunches, and “gut feelings”.
• Maximax: the optimistic manager’s choice to maximize
the maximum payoff
• Maximin: the pessimistic manager’s choice to maximize
the minimum payoff
• Minimax: the manager’s choice to minimize maximum
6–187
regret. 7-187
Exhibit 6–10 Payoff Matrix
6–188 7-188
Exhibit 6–11 Regret Matrix
6–189 7-188
Decision-Making Styles
• Dimensions of Decision-Making Styles
– Ways of thinking
• Rational, orderly, and consistent
• Intuitive, creative, and unique
– Tolerance for ambiguity

• Low tolerance: require consistency and order
• High tolerance: multiple thoughts simultaneously
6–190 7-188
Decision-Making Styles (cont’d)
• Types of Decision Makers
– Directive
• Use minimal information and consider few alternatives.
– Analytic
• Make careful decisions in unique situations.
– Conceptual
• Maintain a broad outlook and consider many
alternatives in making decisions.
– Behavioral
• Avoid conflict by working well with others and being
receptive to suggestio6n–1s9.1 7-191
Exhibit 6–12 Decision-Making Matrix
6–192 7-192
Exhibit 6–13 Common Decision-Making Errors and Biases
6–193 7-192
Decision-Making Biases and Errors
• Heuristics
– Using “rules of thumb” to simplify decision
making.
• Overconfidence Bias
– Holding unrealistically positive views of one’s self
and one’s performance.
• Immediate Gratification Bias

– Choosing alternatives that offer immediate
rewards and that to a6v–1o94id immediate costs. 7-194
(cont’d)
• Anchoring Effect
– Fixating on initial information and ignoring
subsequent information.
• Selective Perception Bias
– Selecting organizing and interpreting events
based on the decision maker’s biased
perceptions.
• Confirmation Bias
– Seeking out information
6–195
that reaffirms past 7-195
choices and discounting contradictory
(cont’d)
• Framing Bias
– Selecting and highlighting certain aspects of a
situation while ignoring other aspects.
• Availability Bias
– Losing decision-making objectivity by focusing on
the most recent events.
• Representation Bias
– Drawing analogies and seeing identical situations
when none exist.
• Randomness Bias
– Creating unfounded meaning out of random
6–196 7-196
events.
(cont’d)
• Sunk Costs Errors
– Forgetting that current actions cannot influence
past events and relate only to future
consequences.
• Self-Serving Bias
– Taking quick credit for successes and blaming
outside factors for failures.
• Hindsight Bias
– Mistakenly believing that an event could have
been predicted once the actual outcome is
known (after-the-fact6)–1.97 7-197
Exhibit 6–14 Overview of Managerial Decision Making
6–198 7-198
Decision Making for Today’s World
• Guidelines for making effective decisions:
– Understand cultural differences.
– Know when it’s time to call it quits.
– Use an effective decision-making process.
• Habits of highly reliable organizations (HROs)
– Are not tricked by their success.
– Defer to the experts on the front line.
– Let unexpected circumstances provide the
solution.
– Embrace complexity.
6–199 7-199
Characteristics of an Effective
Decision-Making Process
• It focuses on what is important.
• It is logical and consistent.
• It acknowledges both subjective and objective thinking and
blends analytical with intuitive thinking.
• It requires only as much information and analysis as is
necessary to resolve a particular dilemma.
• It encourages and guides the gathering of relevant
information and informed opinion.
• It is straightforward, reliable, easy to use, and flexible.
6–200 7-200

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MANAGEMENT

Facilitated By: Hisham Sharawy

• Is the process of using what you have

Achieving objectives requires skilled

Process designed to achieve an organization’s

Make decisions – utilization of resources – achieve objectives:

Resource acquisition & coordination

Vision – Continuous broad results desired by organization

Mission – organization’s purpose, philosophy and tools

Common & Elaborate Organizational Objectives --

Executive level managers

Short-range – strategy implementation

Very short-term – actionable, specific

Focus on potential disasters

Crisis Management Teams

Rank CEO Company Total Compensation

The 5 Highest Paid CEO’s in 2007

•Responsible for tactical planning

Production & Operations Management–

Human Resources Management –

Information Technology (IT) Management –

Seven Tips for Successful Leadership

According to J.P. Kotter, management functions boil

1. Figuring out what to do despite uncertainty,

2. Getting things done through a large and diverse

⚫ Planning is a rational action mixed with a little of

⚫ The process of establishing goals and a suitable

⚫Decision-making is the part of the planning process

The nature of planning can be highlighted by studying its

⚫ According to G.R. Terry, “Planning is the

⚫ (a) Influence of external factors: The effectiveness

• (e) Comprehensive: A plan is said to be

⚫ Most organizations of any size offer more than one

⚫ Strategic planning sets the long-term direction of the org in

⚫ It has the potential to impact dramatically, both

⚫ Tactical plans translate the strategic plans into

⚫ Tactical plans are concerned with implementation of

⚫ Operational plans translate the tactical plans into

⚫ These corporate-level executives primarily focus on

Types of plans Organizational levels

Strategic plans Corporate level

Tactical plans Business level

Operational plans Functional plans

⚫ Classification of planning into proactive and reactive

⚫ In reactive planning, organizations responses come

⚫ Formal planning is in the form of well-structured process

⚫ Standing plans are put to use again and again over a

STANDING PLANS SINGLE-USE PLAN

⚫ Long term planning is of strategic nature and involves long

⚫ When the term strategy is used in the military sense, it

⚫ The philosophy and vision of an organization are derived

⚫ Mission is the organization's purpose or fundamental

⚫ Objectives are the important ends toward which

⚫ TRADITIONAL VIEW: In the traditional approach

⚫ IN 1954, Peter Drucker

⚫ According to Drucker, managers should "avoid the

1.The organization‟s overall goals and strategies are

⚫Initial time and cost

1950: Behavioral theories

1960: Contingency theories

1900 1950 1960 1970

“Leaders are bright, self-confident, high-energy people

Combined a strong concern for the social aspects of the