CHAPTER ONE

Nature of Management

Dr. Aye Thu Htun

Professor
Dept. of Commerce
Yangon University of Economics
 Definition of Management

• Management is the attainment of organizational goals in an

effective and efficient manner through planning, organizing,

leading, and controlling organizational resources

2
Definition of Management?

• Managerial Concerns
• Efficiency
• Getting the
most output
for the least
inputs
• Effectiveness
• Attaining organizational
goals

3
 Management

The process of
 Determining the objectives of an enterprise,
 Deciding how these objectives are to be achieved in general
terms,
 Devising an appropriate organization to pursue the
objectives,
 Providing funds which will enable the organization to be
supplied with staff, equipment & other items necessary,
 Working initial arrangement to commence operations &
 Keeping then under constant review
 Management

Responsibilities involve:

 Judgement and decision in determining plans

 The development of procedures to assist control of

performance and progress against plans

 The guidance, integration, motivation, supervision and

carrying out enterprise operations

Top management refers to management above departmental

level
 Management vs Administration

 Management has even more meanings than administration

 “A process whereby a suitable environment is created for effort to

be organized to accomplished desired goals “

 “A social process entailing responsibility for the effective and

economical planning and regulation of the operations of an
enterprise, in fulfilment of a given purpose or task.”
 Management vs Administration

Administration
 “That part of the management process concerned with the
institution and carrying out of procedures by which the
programme is laid down and communicated, and the
progress of activities is regulated and checked against
targets and plans.”
 The activities of the higher level of the management group
 The process of organizing people and processes efficiently
 Controlling day to day running activities of the enterprise
 An administrator can also be a manager
 The Board of Directors
Chairman
• head of the organization
• Need knowledgeable about the company activities and objectives
Managing Director
• a full-time executive running the day-to-day affairs of the
company
Executive Directors
• members of the board who are also full-time executives and
usually heads of departments like marketing, production,
personnel and so on
Part-time (non-executive) Directors
• have expert knowledge and experience in particular field
Company Secretary
• a legal background
• organizes, records and attends board meetings
• Main function: transfer of shares and debentures and other legal
aspects of the activities of the company
 Functions of the Board of Directors

 Everything that happens in the company takes place through the

authority of the board of directors
 Minutes of the board meeting embody resolutions passed by the
directors
 Key functions
1) the determination of policy, the clarification of the company’s
objectives and the formulation of plans to achieve them
2) the establishment of a proper organization with a suitable
executive structure including the appointment of appropriately
qualified executives to fill the posts created
3) the board must ensure compliance with legal requirement
 Functions of the Board of Directors
4) Compliance with Acts (the factory acts, the health and safety acts,
the finance acts)
5) Ensures adequate financial arrangements:
o provides or obtains capital at the start of the business
o pays attention to cash flow and profitability
o sets the dividends policy which decides how much of the profit is
paid to shareholders

6) Leadership

o Most important function is to maintain the morale of the

organization by effective leadership at all the times.

 Board of directors must display a manifest harmony, enthusiasm for

the firm’s products, projects and programmes and a quiet
confidence in the firm’s future prospects
 Managing Director

 Representatives of the board to the workforce and ordinary

workforce to the board
 Must communicate the objectives to the staff
 Arranges to break them into a sequence of activities which
can be achieved
 Comparison between the results achieved and the plans
made will be possible
 This may call for reporting back to board level to various
aspects: the difficulties encountered, the unrealistic nature of
the original plans or possibly their inadequacy
 Managing Director

 Would present such a report or arrange to have it presented by

a suitable executive
 Cannot do all the work of administration personally
 Will be assisted by a team of senior executives, several of
whom may be boardroom status (executive directors )
 Executives and Non-Executives
Part-time (non-executive)directors

 have an advisory capacity, bringing certain types of expertise to

the boardroom

 Not having any part to play in putting the plans into execution

Executive directors

 Are a lower status than managing director

 Present day to day situation report to him/her.

 Referred as managers (marketing manager, or sales manager,

the personnel manager, the factory manager)
 What is Organization?

An organization is a group of individuals who work together

toward common goals.

14
 Organization

 Its purpose is to create an arrangement of positions and

responsibilities through and by means of which an enterprise
can carry out it work.
 The framework of the management process as formed by the
definition of:
 “The responsibilities by means of which the activities of the
enterprise are dispersed among the personnel employed in
its service”
 “The formal interrelations established among the personnel
by virtue of such responsibilities”
Types of Organization

• Profit-seeking organizations
• Non-profit seeking organizations
• Government
• Ministry of Education
• Ministry of Health and Sports
• Religious
• Social

16
 Science or Art?

 The development of any science needs a conceptual framework of theory and

principle
 Management principles are not fundamental truths, they are conditional statements
 Never become wholly an exact science
 Personal judgement will always be needed to supplement available knowledge,
therefore, management will always be an art.
 Management – A Profession?

 Mary Parker Follett: Regrarded as a profession in a

motive of service
 P.F. Drucker: A practice
 The growing professionalism of managers there is a need for
such a code of conduct.
 To act loyally and honestly in carrying out the policy of the
organization and not undermine its image or reputation
 To accept responsibility for their own work and that of their
subordinates
 Not to abuse their authority for personal gain
 Not to injure or attempt to injure the professional
reputation, prospects or business of others
 Management – A Universal Process?

 Universality: General management skill & knowledge can be

applied in a wide variety of industries
 P.F. Drucker: Skill & Experience, cannot be applied to running
of different institutions
 Ernest Dale: Difference in underlying philosophy
 Not universality, Any one could not be a good administrator, in
academic, business, military, or religious concern
 Environments differ, it has to considered transferable
management knowledge & skill in allocating resources to achieve
organizational goal
 Classical Theory

 Classical Theorists
 Focus on the job and management functions to
determine the best way to manage in all organizations.
 Scientific Management
 Best way to maximize job performance
 Fredrick Winslow Taylor
 Principles of Scientific Management
 HL Gantt
 To create a favorable work environment to obtain
worker cooperation

1–20
 Scientific Management
 F Gilbreth
 Best way of doing job, work efficiency, motion study
 H Emerson
 Importance of correct organization structure to achieve
productivity,
 Line & Staff organization, & principles of efficiency

1–21
 Administrative Management
 Henri Fayol

 Father of Modern Management

 Develop principles and functions of management
14 Principles of Management
1. Division of Labor: Specializing work encourages continuous improvement in skills
2. Authority : The right to give orders and the power to extract obedience
3. Discipline: Respect for the rules that govern the organization
4. Unity of Command: An employee should receive orders from one superior only
5. Unity of Direction: Grouping of similar activities that are directed to a single
goal under one manager

1–22
 Fayol’s 14 Principles of Management

6. Subordination of Individual Interests to the General Interest: Interests of

individuals and groups should not take precedence over the interests of the
organization as a whole.

7. Remuneration of Personnel: Payment should be fair & satisfactory for

employees and the organization
8. Centralization: Managers retain final responsibility – subordinates maintain
enough responsibility to accomplish their tasks
9. Scalar Chain (Line of Authority): The chain of command from the ultimate
authority to the lowest

1–23
 Fayol’s 14 Principles of Management
10. Order: People and supplies should be in the right place at the right time
11. Equity: Managers should treat employees fairly & equally
12. Stability of Tenure of Personnel: Managerial practices that encourage
long-term commitment from
employees
create a stable workforce and therefore a
successful organization
13. Initiative: Employees should be encouraged to develop and carry out
improvement plans
14. Esprit de Corps: Managers should foster and maintain teamwork, team spirit,
and a sense of unity among employees

1–24
 Administrative Management

Max Weber
 Bureaucracy concept: Characteristics of Ideal
formalized organization
 Characteristics of Ideal Formalized Organization
• A division of labor
• Hierarchy of authority
• Formal selection
• Career managers (Professionals)
• Formal rules

1–25
 Behavioral Theory
 Behavioral Theorists
 Focus on people to determine the best way to manage in all organizations.
 Human Relations Movement (later, the Behavioral Science Approach)
 Elton Mayo: Hawthorne studies
 The component of the job & work satisfaction (Test
room, interview & observation)
 Not just by money; role of superior, group spirit,
team work are vital to accomplish organizational
goals & worker satisfaction

1–26
 Behavioral Theory

 Abraham Maslow: Hierarchy of needs theory

1–27
 Behavioral Theory

 Douglas McGregor: Theory X and Theory Y

1–28
Behavioral Theory

1–29
 Management Science

 Management Science Theorists

 Focus on the use of mathematics to aid in problem solving and decision making.
 Mathematical models are used in the areas of finance, management information
systems (MIS), and operations management.

1–30
 Integrative Theories

Systems Theory
 Focuses on viewing the organization as a whole and as the interrelationship of its
parts (subsystems).
Sociotechnical Theory
 Focuses on integrating people and technology.
Contingency Theory
 Focuses on determining the best management approach for a given situation.

1–31
 Comparison of Theories
Attempts to develop the best way to manage in all organizations by focusing
Classical
on the jobs and structure of the firm.

Attempts to develop a single best way to manage in all organizations by

Behavioral
focusing on people and making them productive.

Recommends using math (computers) to aid in problem solving and decision

Management Science
making.

Manages by focusing on the organization as a whole and the interrelationship

Systems Theory
of its departments, rather than on individual parts.

Sociotechnical Theory Recommends focusing on the integration of people and technology.

Recommends using the theory or the combination of theories that

Contingency Theory
best meets the given situation.
 Elements of Management
Management Functions
 Henri Fayol
 Managers at all levels
in all organizations
perform each of the
functions of planning,
organizing, leading, &
controlling.
 Planning

 Identifying and selecting appropriate goals and courses of

action for an organization.
 The planning function determines how effective and
efficient the organization is and determines the strategy
of the organization.
 Three Steps in the Planning Process:
1. Deciding which goals to pursue.
2. Deciding what courses of action to adopt.
3. Deciding how to allocate resources.
 Organizing

 Structuring working relationships in a way that allows

organizational members to work together to achieve
organizational goals.
 Organizational Structure
 A formal system of task and reporting relationships that
coordinates and motivates organizational members.
 Creating organizational structure:
 Grouping employees into departments according to the
tasks performed.
 Laying out lines of authority and responsibility for
organizational members.
 Leading

 Articulating a clear vision to follow, and energizing and

enabling organizational members so they understand the
part they play in attaining organizational goals.
 Leadership involves using power, influence, vision,
persuasion, and communication skills.
 The outcome of leadership is highly motivated and
committed organizational members.
 Controlling

 Evaluating how well an organization is achieving its goals and

taking action to maintain or improve performance.
 Monitoring individuals, departments, and the organization
to determine if desired performance standards have been
reached.
 Taking action to increase performance as required.
 The outcome of control is the ability to measure
performance accurately and to regulate the organization
for efficiency and effectiveness.
 Types of Managers

 Levels of Management
 First-line managers
 Responsible for day-to-day operations. Supervise
people performing activities required to make the good
or service.
 Middle managers
 Supervise first-line managers. Are responsible to find
the best way to use departmental resources to achieve
goals.
 Top managers
 Responsible for the performance of all departments
and have cross-departmental responsibility.
 Establish organizational goals and monitor middle
managers.
 Form top management team along with the CEO and
COO.
Levels of Management
Relative Amount of Time That Managers
Spend on the Four Managerial Functions
 Managerial Skills

 Conceptual Skills
 The ability to analyze and diagnose a situation and distinguish between cause and
effect. What should be the right thing?
 Human Skills
 The ability to understand, alter, lead, and control the behavior of other individuals
and groups.
 Technical Skills
 The specific knowledge and techniques required to perform an organizational role.
Skill Types Needed by
Managerial Level
 Managerial Roles

 Managerial Role
 The set of specific tasks that a person is expected to
perform because of the position he or she holds in the
organization.

 Roles are defined into three role categories (as identified by

Mintzberg):
 Interpersonal Informational Decisional
1–44

Ten Roles of Managers

Managers play various roles as necessary while performing their

management functions so as to achieve organizational objectives.
 Interpersonal Roles

 Roles that managers assume to provide direction and

supervision to both employees and the organization as a
whole:
 Figurehead: Symbolizing the organization’s mission &
what it is seeking to achieve.
 Leader: Training, counseling, and mentoring high
employee performance.
 Liaison: linking and coordinating the activities of
people and groups both inside and outside the
organization/department.
 Informational Roles

 Roles associated with the tasks needed to obtain and transmit

information in the process of managing the organization:
 Monitor: Analyzing information from both the
internal and external environment.
 Disseminator: Transmitting information to
influence the attitudes and behavior of employees.
 Spokesperson: Using information to positively
influence the way people in and out of the organization
respond to it.
 Decisional Roles

 Roles associated with methods managers use in planning

strategy and utilizing resources:
 Entrepreneur: Deciding which new projects or
programs to initiate and to invest resources in.
 Disturbance handler: Managing an unexpected event or
crisis.
 Resource allocator: Assigning resources
between functions and divisions, setting the budgets of
lower managers.
 Negotiator: Reaching agreements
between other managers, unions, customers, or
shareholders.
End of Chapter 1

48