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Management

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Contents
Articles
Main article
Management 1 1 8 8 12 17 35 38 47 58 58 59 61 84 88 93 95 99 99 100 100 102

Theoretical scope
Planning Organizing Leadership Coordination Control Motivation

Branches of business management
Human resources Operations management Strategic management Marketing management Finance Information technology management Management information system

Managerial levels and hierarchy
Senior management Middle management Supervisor Team leader

References
Article Sources and Contributors Image Sources, Licenses and Contributors 103 107

Article Licenses
License 108

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Main article
Management
Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources and natural resources. Since organizations can be viewed as systems, management can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a pre-requisite to attempting to manage others.

History
The verb manage comes from the Italian maneggiare (to handle, train, control horses), which in turn derives from the Latin manus (hand). The French word mesnagement (later ménagement) influenced the development in meaning of the English word management in the 15th and 16th centuries.[1] Some definitions of management are: • Organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of clearly defined objectives. Management is often included as a factor of production along with machines, materials and money. According to the management guru Peter Drucker (1909–2005), the basic task of a management is twofold: marketing and innovation. • Directors and managers have the power and responsibility to make decisions to manage an enterprise when given the authority by the shareholders. As a discipline, management comprises the interlocking functions of formulating corporate policy and organizing, planning, controlling, and directing the firm's resources to achieve the policy's objectives. The size of management can range from one person in a small firm to hundreds or thousands of managers in multinational companies. In large firms the board of directors formulates the policy which is implemented by the chief executive officer.

Theoretical scope
At first, one views management functionally, such as measuring quantity, adjusting plans, meeting goals,foresighting/forecasting. This applies even in situations when planning does not take place. From this perspective, Henri Fayol (1841–1925)[2] considers management to consist of six functions: forecasting, planning, organizing, commanding, coordinating and controlling. He was one of the most influential contributors to modern concepts of management. Another way of thinking, Mary Parker Follett (1868–1933), defined management as "the art of getting things done through people". She described management as philosophy.[3] Some people, however, find this definition useful but far too narrow. The phrase "management is what managers do" occurs widely, suggesting the difficulty of defining management, the shifting nature of definitions and the connection of managerial practices with the existence of a managerial cadre or class. One habit of thought regards management as equivalent to "business administration" and thus excludes management in places outside commerce, as for example in charities and in the public sector. More realistically, however, every

Management organization must manage its work, people, processes, technology, etc. to maximize effectiveness. Nonetheless, many people refer to university departments which teach management as "business schools." Some institutions (such as the Harvard Business School) use that name while others (such as the Yale School of Management) employ the more inclusive term "management." English speakers may also use the term "management" or "the management" as a collective word describing the managers of an organization, for example of a corporation. Historically this use of the term was often contrasted with the term "Labor" referring to those being managed.

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Nature of managerial work
In for-profit work, management has as its primary function the satisfaction of a range of stakeholders. This typically involves making a profit (for the shareholders), creating valued products at a reasonable cost (for customers) and providing rewarding employment opportunities (for employees). In nonprofit management, add the importance of keeping the faith of donors. In most models of management/governance, shareholders vote for the board of directors, and the board then hires senior management. Some organizations have experimented with other methods (such as employee-voting models) of selecting or reviewing managers; but this occurs only very rarely. In the public sector of countries constituted as representative democracies, voters elect politicians to public office. Such politicians hire many managers and administrators, and in some countries like the United States political appointees lose their jobs on the election of a new president/governor/mayor.

Historical development
Difficulties arise in tracing the history of management. Some see it (by definition) as a late modern (in the sense of late modernity) conceptualization. On those terms it cannot have a pre-modern history, only harbingers (such as stewards). Others, however, detect management-like-thought back to Sumerian traders and to the builders of the pyramids of ancient Egypt. Slave-owners through the centuries faced the problems of exploiting/motivating a dependent but sometimes unenthusiastic or recalcitrant workforce, but many pre-industrial enterprises, given their small scale, did not feel compelled to face the issues of management systematically. However, innovations such as the spread of Arabic numerals (5th to 15th centuries) and the codification of double-entry book-keeping (1494) provided tools for management assessment, planning and control. Given the scale of most commercial operations and the lack of mechanized record-keeping and recording before the industrial revolution, it made sense for most owners of enterprises in those times to carry out management functions by and for themselves. But with growing size and complexity of organizations, the split between owners (individuals, industrial dynasties or groups of shareholders) and day-to-day managers (independent specialists in planning and control) gradually became more common.

Early writing
While management has been present for millennia, several writers have created a background of works that assisted in modern management theories.[4] Sun Tzu's The Art of War Written by Chinese general Sun Tzu in the 6th century BC, The Art of War is a military strategy book that, for managerial purposes, recommends being aware of and acting on strengths and weaknesses of both a manager's organization and a foe's.[4]

Management Chanakya's Arthashastra Chanakya wrote the Arthashastra around 300BC in which various strategies, techniques and management theories were written which gives an account on the management of empires, economy and family. The work is often compared to the later works of Machiavelli. Niccolò Machiavelli's The Prince Believing that people were motivated by self-interest, Niccolò Machiavelli wrote The Prince in 1513 as advice for the city of Florence, Italy.[5] Machiavelli recommended that leaders use fear—but not hatred—to maintain control. Adam Smith's The Wealth of Nations Written in 1776 by Adam Smith, a Scottish moral philosopher, The Wealth of Nations aims for efficient organization of work through Specialization of labor.[5] Smith described how changes in processes could boost productivity in the manufacture of pins. While individuals could produce 200 pins per day, Smith analyzed the steps involved in manufacture and, with 10 specialists, enabled production of 48,000 pins per day.[5]

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19th century
Classical economists such as Adam Smith (1723–1790) and John Stuart Mill (1806–1873) provided a theoretical background to resource-allocation, production, and pricing issues. About the same time, innovators like Eli Whitney (1765–1825), James Watt (1736–1819), and Matthew Boulton (1728–1809) developed elements of technical production such as standardization, quality-control procedures, cost-accounting, interchangeability of parts, and work-planning. Many of these aspects of management existed in the pre-1861 slave-based sector of the US economy. That environment saw 4 million people, as the contemporary usages had it, "managed" in profitable quasi-mass production.

20th century
By about 1900 one finds managers trying to place their theories on what they regarded as a thoroughly scientific basis (see scientism for perceived limitations of this belief). Examples include Henry R. Towne's Science of management in the 1890s, Frederick Winslow Taylor's The Principles of Scientific Management (1911), Frank and Lillian Gilbreth's Applied motion study (1917), and Henry L. Gantt's charts (1910s). J. Duncan wrote the first college management textbook in 1911. In 1912 Yoichi Ueno introduced Taylorism to Japan and became first management consultant of the "Japanese-management style". His son Ichiro Ueno pioneered Japanese quality assurance. The first comprehensive theories of management appeared around 1920. The Harvard Business School offered the first Master of Business Administration degree (MBA) in 1921. People like Henri Fayol (1841–1925) and Alexander Church described the various branches of management and their inter-relationships. In the early 20th century, people like Ordway Tead (1891–1973), Walter Scott and J. Mooney applied the principles of psychology to management, while other writers, such as Elton Mayo (1880–1949), Mary Parker Follett (1868–1933), Chester Barnard (1886–1961), Max Weber (1864–1920), Rensis Likert (1903–1981), and Chris Argyris (1923 - ) approached the phenomenon of management from a sociological perspective. Peter Drucker (1909–2005) wrote one of the earliest books on applied management: Concept of the Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors until 1956) commissioning a study of the organisation. Drucker went on to write 39 books, many in the same vein. H. Dodge, Ronald Fisher (1890–1962), and Thornton C. Fry introduced statistical techniques into management-studies. In the 1940s, Patrick Blackett combined these statistical theories with microeconomic theory and gave birth to the science of operations research. Operations research, sometimes known as "management science" (but distinct from Taylor's scientific management), attempts to take a scientific approach to solving management problems, particularly in the areas of logistics and operations.

Management Some of the more recent developments include the Theory of Constraints, management by objectives, reengineering, Six Sigma and various information-technology-driven theories such as agile software development, as well as group management theories such as Cog's Ladder. As the general recognition of managers as a class solidified during the 20th century and gave perceived practitioners of the art/science of management a certain amount of prestige, so the way opened for popularised systems of management ideas to peddle their wares. In this context many management fads may have had more to do with pop psychology than with scientific theories of management. Towards the end of the 20th century, business management came to consist of six separate branches, namely: • • • • • • Human resource management Operations management or production management Strategic management Marketing management Financial management Information technology management responsible for management information systems

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21st century
In the 21st century observers find it increasingly difficult to subdivide management into functional categories in this way. More and more processes simultaneously involve several categories. Instead, one tends to think in terms of the various processes, tasks, and objects subject to management. Branches of management theory also exist relating to nonprofits and to government: such as public administration, public management, and educational management. Further, management programs related to civil-society organizations have also spawned programs in nonprofit management and social entrepreneurship. Note that many of the assumptions made by management have come under attack from business ethics viewpoints, critical management studies, and anti-corporate activism. As one consequence, workplace democracy has become both more common, and more advocated, in some places distributing all management functions among the workers, each of whom takes on a portion of the work. However, these models predate any current political issue, and may occur more naturally than does a command hierarchy. All management to some degree embraces democratic principles in that in the long term workers must give majority support to management; otherwise they leave to find other work, or go on strike. Despite the move toward workplace democracy, command-and-control organization structures remain commonplace and the de facto organization structure. Indeed, the entrenched nature of command-and-control can be seen in the way that recent layoffs have been conducted with management ranks affected far less than employees at the lower levels. In some cases, management has even rewarded itself with bonuses after laying off level workers.[6] According to leading leadership academic Manfred F.R. Kets de Vries, it's almost inevitable these days that there will be some personality disorders in a senior management team.[7]

• A planning unit must be created to ensure that all plans are consistent and that policies and strategies are aimed at achieving the same mission and objectives. • Informational: roles that involve handling.[9] . stipulating how they ought to allocate and utilize the factors of production to the business's advantage. Managers must understand where and how they can implement their policies and strategies. create short-term wins. regulations and objectives. A plan of action must be devised for each department. • The forecasting method develops a reliable picture of the business's future environment. All policies must be discussed with all managerial personnel and staff that is required in the execution of any departmental policy. and analyzing information. Initially. • The vision of the business reflects its aspirations and specifies its intended direction or future destination. Management skills • • • • [8] Political: used to build a power base and establish connections. Diagnostic: the ability to visualize most appropriate response to a situation . • The business's strategy refers to the coordinated plan of action that it is going to take. communicate the buy-in. motivate. for example. sharing. strengths and weaknesses of each department must be analysed to determine their roles in achieving the business's mission. Policies and strategies must be reviewed regularly. The missions. and make change stick. it could help the managers decide on what type of business they want to form. and may be used in the managers' decision-making. don't let up. A good environment and team spirit is required within the business. to make soap. Formation of the business policy • The mission of the business is the most obvious purpose—which may be. empower action. Contingency plans must be devised in case the environment changes. Conceptual: used to analyze complex situations. form a coalition. as well as the resources that it will use. • Organizational change is strategically achieved through the implementation of the eight-step plan of action established by John P. It must be flexible and easily interpreted and understood by all employees. It is a guideline to managers.Management 5 Topics Basic roles • Interpersonal: roles that involve coordination and interaction with employees. to realize its vision and long-term objectives. objectives. • The objectives of the business refer to the ends or activity at which a certain task is aimed. • Decisional: roles that require decision-making. • The business's policy is a guide that stipulates rules. Assessments of progress ought to be carried out regularly by top-level managers. mentor and delegate. Kotter: Increase urgency. Interpersonal: used to communicate. get the vision right. Implementation of policies and strategies • • • • • • • • All policies and strategies must be discussed with all managerial personnel and staff.

and top-level managers. CEOs. Career planning. In many organizations. supervising the staffs. First-level managers are role models for employees that provide: • • • • • Basic supervision. Diagnosing and resolving problems within and among work groups. Defining and monitoring group-level performance indicators.[10] Top-level managers Consists of board of directors. section leads.and lower-level managers a good idea of the future plans for each department in an organization. the following skills are needed at the top managerial level. In addition. • Mid. and make decisions on the direction of the business. suggestions. guiding and supervising employees on day-to-day activities. 6 Levels of management Most organizations have three management levels: low-level. and perform different tasks. and social trends effect organizational effectiveness . company policies. Their roles can be emphasized as executing organizational plans in conformance with the company's policies and the objectives of the top management. etc. and upchanneling employee problems. Performance feedback. top-level managers play a significant role in the mobilization of outside resources and are accountable to the shareholders and general public. They devote more time to organizational and directional functions. foremen. ensuring quality and quantity production. world economies. Kleiman. branch managers and department managers. These managers are classified in a hierarchy of authority. vice-president. etc.Management Policies and strategies in the planning process • They give mid. [11] • Broadened understanding of how: competition. They develop goals. and most importantly they inspire and provide guidance to lower level managers towards better performance. Designing and implementing reward systems supporting cooperative behavior. They usually have the responsibility of assigning employees tasks. They focus on controlling and directing. Middle-level managers Consist of general managers. politics.and lower-level management may adapt their own plans to the business's strategic ones. low-level managers Consist of supervisors. they define and discuss information and policies from top management to lower management. middle-level. They are accountable to the top management for their department's function. Some of their functions are as follows: • • • • Designing and implementing effective group and intergroup work and information systems. the number of managers in every level resembles a pyramid. • A framework is created whereby plans and decisions are made. etc. According to Lawrence S. They are responsible for controlling and overseeing the entire organization. . president. making recommendations. Motivation. strategic plans. Each level is explained below in specifications of their different responsibilities and likely job titles.

3rd edition. January 29).2003. htm). 19." Management Study Guide. (http:/ / www. . com/ management/ Log-Mar/ Management-and-Executive-Development. Merrill Bonus Case Widens as Deal Struggles. ISBN 978-0-07-302743-2. Performance. and Prachi Juneja.. ISBN 978-0-07-302743-2. New York USA: McGraw-Hill. html?mod=googlenews_wsj) [7] Manfred F. (http:/ / www.Business & Economics . Paris : Dunod.prévoyance organization . Lawrence S. (2002). R. 20. Management: People. John P. David B. Gomez-Mejia. Boston: Harvard Business School Publishing. html).. wsj. Autumn Page 26 (2003).Business Strategy Review 14(3). Luis R. New York USA: McGraw-Hill.Page 51. "Management and Executive Development. [5] Gomez-Mejia. referenceforbusiness. coordination – contrôle. [8] Kleiman. David B. (http:/ / online. 25 Mar 2011. " MANAGEMENT AND EXECUTIVE DEVELOPMENT. FirstHimanshu. com/ management_levels. html). pag. pag. [11] Kleiman.Management 7 Management-focused journals • • • • • • Administrative Science Quarterly Academy of Management Journal Academy of Management Review Journal of Management Management Science: A Journal of the Institute for Operations Research and the Management Sciences Organization Science: A Journal of the Institute for Operations Research and the Management Sciences References [1] [2] [3] [4] Oxford English Dictionary Administration industrielle et générale . Management: People. 17 Mar 2011. [9] Kotter. Kets de Vries The Dark Side of Leadership . 2011. Performance. Web. com/ management/ Log-Mar/ Management-and-Executive-Development. (2009."Reference for Business:Encyclopedia of Business(2010): n. Cardy (2008). Web. Change. WebCraft Pvt Ltd. & Dan S. 1966 Vocational Business: Training.commandment. 25 Mar 2011. Balkin and Robert L. New York. [6] Craig. . Lawrence S. Cardy (2008). Luis R. Cohen. 3rd edition. Change. S. Web. com/ article/ SB123318892645426723. Balkin and Robert L. referenceforbusiness. [10] Juneja hu Juneja. The Heart of Change. (http:/ / www. "Management. Developing and Motivating People by Richard Barrett . New York. pp. pp. managementstudyguide. Wall Street Journal." Reference for Business: Encyclopedia of Business (2010): n.

This thought process is essential to the creation and refinement of a plan. diagrams. it is a fundamental property of intelligent behavior. choosing a destination. and the psychological process of thinking about the activities required to create a desired goal on some scale. and the strategy to be followed. Beyond this. our future is shaped by consequences of our own planning and actions. is the relationship it holds with forecasting. Such impromptu gatherings promote creativity and exchange of information. evaluating alternative routes. the objectives to be met. a plan can be long range. computer consultants give up on automated scheduling and resort to an old-fashioned plan-board to agree on who does what when. but lack of a sound plan will almost certainly ensure failure. planning has a different meaning depending on the political or economic context in which it is used.a result-oriented process . It is setting of goals on the basis of objectives and keeping in the resources. For management seeking external support.[1] The term is also used for describing the formal procedures used in such an endeavor. It is a blue print of business growth and a road map of development. albeit often ignored aspect of planning. that works positively towards an on-time result. and 3. or integration of it with other plans. 2. Two attitudes to planning need to be held in tension: on the one hand we need to be prepared for what may lie ahead. It helps in deciding objectives both in quantitative and qualitative terms. deciding the specific course of your plan. What should a plan be? A plan should be a realistic view of the expectations. Forecasting can be described as predicting what the future will look like. It is the framework within which it must operate.can be summarized in 3 easy steps: 1. that is.[2] . or meetings to discuss the important issues to be addressed. it combines forecasting of developments with the preparation of scenarios of how to react to them. but often the detailed tasks must be discussed live with the whole team. the plan is the most important document and key to growth. In the weeks prior to an important milestone. Depending upon the activities. Preparation of a comprehensive plan will not guarantee success. such as the creation of documents. intermediate range or short range.8 Theoretical scope Planning Planning in organizations and public policy is both the organizational process of creating and maintaining a plan. The counterpart to planning is spontaneous order. Overview Planning is a process for accomplishing purposes. An important. whereas planning predicts what the future should look like. Automated scheduling works well for the bigger picture. Planning . On the other hand. which may mean contingencies and flexible processes. As such.

Planning 9 Purpose of a plan Just as no two organizations are alike. Planning is looking ahead. It is therefore important to prepare a plan keeping in view the necessities of the enterprise. and most importantly. Planning helps in forecasting the future. Preparing a satisfactory plan of the organization is essential. finances. Importance of the planning process A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities. A plan is an important aspect of business. makes the future visible to some extent. and research their business's or project's development and prospects. neither are their plans. focus. • Provides a considered and logical framework within which a business can develop and pursue business strategies over the next three to five years. markets and competition. It bridges between where we are and where we want to go. management. The planning know the business and that they have thought through its development in terms of products. It serves the following three critical functions: • Helps management to clarify. • Offers a benchmark against which actual performance can be measured and reviewed. Types of plans or planning • • • • • • • • • • • • • • • • • • Architectural planning Business plan Comprehensive planning Contingency planning Economic planning Enterprise architecture planning Environmental planning Event planning and production Family planning Financial planning Land use planning Life planning Marketing plan Network resource planning Operational planning Strategic planning Succession planning Urban planning .

The goal should be realistic. Strategies for implementation. Identify all the main issues which need to be addressed. Objective covers firm's long-range plans specific departmental goals and short-term individual assignment also". They are the basic guides to be consistent in decision-making. The planning helps to achieve these goals or target by using the available time and resources.Planning 10 Objectives and policies The objectives The objectives are general parts of the planning process. it is useful to think of objectives as the results we want to achieve. Planning basics Essentials of planning Planning is not done off hand. Define strategies and activities. the objective of the firm justifies its existence.. Planning always has a purpose. management has to: Clearly define the target/goal in writing. specific. It should be set by a person having authority. The concept of planning is to identify what the organization wants to do by using the four questions which are "where are we today in terms of our business or strategy planning? Where are we going? Where do we want to go? How are we going to get there?. They are needed in every aspect where performance and result directly and vitally affect the survival and success of the firm.. For a comprehensive business plan. Decide budgetary requirement. managers may develop plans such as a business plan or a marketing plan. What are requirements and how will they be met? What will be the likely length of the plan and its structure? Identify shortcomings in the concept and gaps. Policies provide the framework within which decision-makers are expected to operate while making organizational decisions. To meet the goals. concerned with defining goals for future organizational performance and deciding on the tasks and resources to be used in order to attain those goals."[3] . Focus on matters of strategic importance. Newman and Summer stated that "For managerial purposes. In other words. Applications In organizations Planning is also a management process. acceptable to the organization. The purpose may be achievement of certain goals or targets. Review periodically. To minimize the timing and resources also require proper planning. It is prepared after careful and extensive research. Review past performance. and easily measurable. They are the end-results towards which all business activities are directed. The policies Policies are specific guidelines and constraints for managerial thinking on decision-making and action.

Flyvbjerg (1996) argues that distinguishing between rationality and real rationality is as important for the understanding of planning as distinguishing between politics and Realpolitik is for the understanding of politics. vols. and independently of each other. Yiftachel (1995) similarly talked about a "dark side of modernism" in his studies of how planning is used for control and oppression of minorities. Yiftachel 1998. The term was coined by Oxford professor Bent Flyvbjerg (1996: 383) based on research of how political power influences rationality in planning (Flyvbjerg 1991.pdf) in Seymour Mandelbaum." A planned performance brings better results compared to an unplanned one. • Flyvbjerg. objectives and "translation of knowledge into action. 383-394. A manager's job is planning. php?option=com_content& task=view& id=3& Itemid=3#field_2) ForecastingPrinciples.Planning gives more power over the future. References [1] How does forecasting relate to planning? (http:/ / www.. i. actual planning practice often violates generally accepted norms of democracy. Schoonover. the operation of a town and country planning system is often referred to as "planning" and the professionals which operate the system are known as "planners". NJ: Center for Urban Policy Research Press) pp. 2005. how to do it. Montana and Bruce H. "Changing Ways: A Practical Tool for Implementing Change Within Organizations. Explorations in Planning Theory (New Brunswick. “The Dark Side of Planning: Rationality and Realrationalität.” (http://flyvbjerg. urban planning or spatial planning). 1988. com/ index. Flyvbjerg defined the dark side of planning as the real rationalities that planners employ in planning practice. Authors: Patrick J. It is deciding future course of action from amongst alternatives. Roy 2008. Print. Phil and Michael Gunder. The real rationalities of planners are called "dark" because it turns out that what planners do in actual practice often does not stand the light of day. 1998). and equity and thus of planning ethics. practical politics). efficiency. "Applying Lacanian Insight and a Dash of Derridean Deconstruction to Planning's 'Dark Side'. Charnov [3] Dalziel. It is done at all levels of the organization.. Gunder 2003." New York: Amacom/American Management Association. as opposed to the ideal rationalities of the benevolent planners that often inhabit planning textbooks. In many countries. Murray." Planning Theory.Planning 11 In public policy Planning refers to the practice and the profession associated with the idea of planning an idea yourself (land use planning. Tang 2000. eds. 1-2 (Copenhagen: Akademisk Forlag). these works introduced the "dark side" as a concept and an empirical phenomenon in planning theory and planning research. Bent. 2006). It is selection of missions. • Flyvbjerg. 1991.e. It is a conscious as well as sub-conscious activity. Luigi Mazza. It is a process that involves making and evaluating each set of interrelated decisions. 1996. . when to do it. This bridges the gap from where the organization is to where it wants to be. The dark side of planning The "dark side of planning" is a term used by planning scholars to distinguish actual planning from ideal planning. monitoring and controlling. vol. Flyvbjerg's definition of the dark side of planning draws and expands upon Ludwig von Rochau's distinction between politics and Realpolitik (real. and Robert Burchell. and Stephen C. Pløger 2001.aau. and implementation.com [2] Barron's Management book fourth edition. and who should do it. Planning includes the plan. made famous by Otto von Bismarck and signaling the advent of modern political science. Rationalitet og magt (Rationality and Power). dk/DarksideofplanningPUBL. Taken together. Planning is deciding in advance what to do. Flyvbjerg and Richardson 2002. Bent. 87-112. It is "an anticipatory decision making process" that helps in coping with complexities. pp. the thought process. action. Planning and goal setting are important traits of an organization.plan. • Allmendinger. Later works have further developed the concept in efforts to better understand what actual planners do when they plan (Allmendinger and Gunder 2005. 4. forecastingprinciples. The planning function involves establishing goals and arranging them in logical order.

2001.pdf) in Philip Allmendinger and Mark Tewdwr-Jones. • Yiftachel. 3. MA: Blackwell). Ananya. 235-319. pp. "Planning and Foucault: In Search of the Dark Side of Planning Theory. 2003. But it's only ultimately organized if any element has no difference on time taken to find it.aau. 5. vol. "Planning and Social Control: Exploring the Dark Side. no. 216-240. "Public Participation and the Art of Governance. Bent and Tim Richardson. 3. no. pp. Rationality and Power: Democracy in Practice (http://books. vol. organizing can also be defined as to place different objects in logical arrangement for better searching. 12 Organizing Organizing (also spelled organising) is the act of rearranging elements following one or more rules. pp. 44-62. 347-366..plan." Planning Theory." Environment and Planning B: Planning and Design. 28. eds. May. Planning Futures: New Directions for Planning Theory (London and New York: Routledge). "The Dark Side of Modernism: Planning as Control of an Ethnic Minority. 2002. 1. no. 395-406. Organizing metal movable type History Historically. pp. 211–222. such as business or political activities. eds. pp. 12. Anything is commonly considered organized when it looks like everything has a correct order or placement. 219-241." Journal of Planning Literature. • Tang. The organizing of information can be seen since the time . 1998." Progress in Planning. • Yiftachel.com/ books?id=aetrlrhK37sC&printsec=frontcover&dq=bent+flyvbjerg&ei=IR4cTr73JsHqUP7L5YcI& cd=3#v=onepage&q&f=false) (Chicago: University of Chicago Press). "Post-Liberalism: On the Ethico-Politics of Planning. "Re-engaging Planning Theory? Towards South-Eastern Perspectives. Michael. 2000. Bent. Postmodern Cities and Spaces (Oxford and Cambridge.Planning • Flyvbjerg. • Yiftachel. John. 60.google. Organizations are groups of people organized for some purpose. pp. Vol. 92-102. 2. pp. • Gunder. 2006." in Sophie Watson and Katherine Gibson." (http://flyvbjerg.. Wing-Shing. • Pløger. Oren. • Flyvbjerg. Oren.dk/DarkSide2. 7. "Chinese Urban Planning at Fifty: An Assessment of the Planning Theory Literature. 2008. 3. 14. • Roy. 4. vol." Journal of Planning Literature. pp. In that sense. October." Planning Theory. Oren. 1998. no. 1995. "Passionate Planning for the Others' Desire: An Agonistic Response to the Dark Side of Planning. no. vol. humanity has always tried to organize itself. no. vol.

Orientation towards goals Every organization has its own purposes and objectives. Organization harmonizes the individual goals of the employees with overall objectives of the firm. and more specifically cataloging ideas and thoughts. books and spoken word. for faster indexing and seeking of meanings. usually try to organize any subject into one place. Certain operatives occupy positions of management at various points in the process to ensure coordination. Science books are notable by their organization of a specific subject. instead. Composition of individuals and groups Individuals form a group and the groups form an organization. but also helps communicate history. The efforts of the operatives are coordinated to allow the process at hand to function correctly. Be it with religion. Writing ideas in a book. through journals and studies. . Individuals are grouped into departments and their work is coordinated and directed towards organizational goals. Organizing is the function employed to achieve the overall goals of the organization. The division of work is assigning responsibility for each organizational component to a specific individual or group thereof. Thus. It becomes specialization when the responsibility for a specific task lies with a designated expert in that field.Organizing 13 humans began to write. Organized livestock pens and walkways at Chicago's stockyards. 1941.organization is the composition of individual and groups. Prior to that. Nature of organization The following are the important characteristics of organization. Encyclopedias. ca. as opposed to verbally communicating with someone. is also an attempt to organize information. science. organizing not only is history. Specialization and division of work The entire philosophy of organization is centered on the concepts of specialization and division of work. history was passed down through song and word. or in many other ways.

and departments are coordinated. Staffing. it is necessary to design an organization properly. A set of formal tasks assigned to individuals and departments. 1. Work should be divided and right people should be given right jobs to reduce the wastage of resources in an organization. Optimum use of resources To make optimum use of resources such as men. Collecting these tasks at the final stage is called integration. resources are deployed. in companies point of view. organization has adapted the modern concept of systems approach based on human relations and it discards the traditional productivity and specialization approach. Purpose of organization Helps to achieve organizational goal Organization is employed to achieve the overall objectives of business firms. material. Continuity An organization is a group of people with a defined relationship in which they work together to achieve the goals of that organization. Applications Organizing. machine and method. Structure The framework in which the organization defines how tasks are divided.Organizing 14 Differentiated functions The organization divides the entire work and assigns the tasks to individuals in order to achieve the organizational objectives. is the management function that usually follows after planning. Directing and Controlling cannot be implemented without proper organization. Organization focuses attention of individuals objectives towards overall objectives. the grouping of tasks into departments and the assignment of authority and allocation of resources across the organization. Organization structure determines the input resources needed for expansion of a business activity similarly organization is essential for product diversification such as establishing a new product line. And it involves the assignment of tasks. Facilitates growth and diversification A good organization structure is essential for expanding business activity. This relationship does not come to end after completing each task. . Organization is a never ending process. Now. To perform managerial function Planning. each one has to perform a different task and tasks of one individual must be coordinated with the tasks of others. Human treatment of employees Organization has to operate for the betterment of employees and must not encourage monotony of work due to higher degree of specialization. money. Organizing.

The design of systems to ensure effective coordination of employees across departments. Functional authority is where managers have formal power over a specific subset of activities. number of hierarchical levels and span of managers control. issue orders. and counsels in the staff specialists' area of expertise and is responsible only for the quality of the advice (to be in line with the respective professional standards etc.) It is a communication relationship with management. boring job. and accountability • Authority is a manager's formal and legitimate right to make decisions. Delegation can improve flexibility to meet customers’ needs and adaptation to competitive environments. Delegation Delegation is the process managers use to transfer authority and responsibility to positions below them. It has an influence that derives indirectly from line authority at a higher level. • Accountability means that those with authority and responsibility must report and justify task outcomes to those above them in the chain of command. Organizations today tend to encourage delegation from highest to lowest possible levels. a legal department may have functional authority to interfere in any activity that could have legal consequences. • Responsibility means an employee's duty to perform assigned task or activities.Organizing 2. Formal reporting relationships. and allocate resources to achieve organizationally desired outcomes. Many organizations enlarge jobs or rotate assigned tasks to provide greater challenges. showing that the investment will have a yield of at least x%. . Authority. This authority would not be functional but it would rather be staff authority if such interference is "advice" rather than "order". decision responsibility. The superior issues orders and is responsible for the result—the subordinate obeys and is responsible only for executing the order according to instructions. tiny. It is not a real authority in the sense that a staff manager does not order or instruct but simply advises. including lines of authority. the Production Manager may have the line authority to decide whether and when a new machine is needed but the Controller demands that a Capital Expenditure Proposal is submitted first. Staff authority is granted to staff specialists in their areas of expertise. 3. With too much specialization. Managers often find delegation difficult Types of authority (and responsibility) Line authority managers have the formal power to direct and control immediate subordinates. or. recommends. employees are isolated and do only a single. responsibility. 15 Work specialization Work specialization (also called division of labour) is the degree to which organizational tasks are sub-divided into individual jobs. For instance.

The written documentation used to direct and control employees. • Flat . Work performed by subordinates is stable and routine. Subordinates are highly trained and need little direction in performing tasks. 3. Departmentalization Departmentalization is the basis on which individuals are grouped into departments and departments into total organizations.to accomplish specific tasks Network . • Decentralization . 8.common product. program or geographical location Matrix .The location of decision making authority near lower organizational levels. particularly when a new strategy is developed • Changing market conditions or new technology requires change • Organizations seek efficiencies through improvements in organizing . Reduced communication overhead. and formalization • Centralization . Little time is required in non-supervisory activities such as coordination with other departments or planning. 5. Subordinates are concentrated in a single location. Tight control. 7. Tall versus flat structure • Tall . 4. Loose control. 2.A management structure characterized by a wide span of control and relatively few hierarchical levels.The location of decision making authority near top organizational levels. Approach options include: 1.by common skills and work tasks Divisional .A management structure characterized by an overall narrow span of management and a relatively large number of hierarchical levels. 2. Functional . 1. Rules and procedures defining task activities are available. 5. Support systems and personnel are available for the managers. 3. 4.departments are independent providing functions for a central core breaker Importance of organizing • Organizations are often troubled by how to organize. Centralization.combination of Functional and Divisional Team . Facilitates delegation. decentralization. 6. • Formalization .Organizing 16 Span of management Factors influencing larger span of management. Managers' personal preferences and styles favour a large span. Subordinates perform similar work tasks.

1959[9]) prompted researchers to take a drastically different view of the driving forces behind leadership. This idea that leadership is based on individual attributes is known as the "trait theory of leadership". leadership was no longer characterized as an enduring individual trait. Bird. Early history The search for the characteristics or traits of leaders has been ongoing for centuries. For example.[2] situational interaction.[10] Additionally.Leadership 17 Leadership Leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task". as situational approaches (see alternative leadership theories below) posited that individuals can be effective in certain situations. This approach dominated much of the leadership theory and research for the next few decades.. this trait-based perspective dominated empirical and theoretical work in leadership.[8] Mann. however.[6] Rise of alternative theories In the late 1940s and early 1950s. In other words. Galton concluded that leadership was inherited. History's greatest philosophical writings from Plato's Republic to Plutarch's Lives have explored the question "What qualities distinguish an individual as a leader?" Underlying this search was the early recognition of the importance of leadership and the assumption that leadership is rooted in the characteristics that certain individuals possess.g. In Galton's Hereditary Genius (1869). integrity. The leader may or may not have any formal authority. adaptability. socioeconomic status. Carlyle identified the talents. and physical characteristics of men who rose to power. Subsequently. vision and values. persistence.[7] Stogdill. 1948. among others. Both of these notable works lent great initial support for the notion that leadership is rooted in characteristics of the leader. power. In reviewing the extant literature. behavior. not developed. a series of qualitative reviews of these studies (e. Students of leadership have produced theories involving traits. In Heroes and Hero Worship (1841). skills. function. and self-confidence. Most notable are the writings of Thomas Carlyle and Francis Galton. leaders were born. the overall evidence suggested that persons who are leaders in one situation may not necessarily be leaders in other situations. Reemergence of trait theory New methods and measurements were developed after these influential reviews that would ultimately reestablish the trait theory as a viable approach to the study of leadership. whose works have prompted decades of research[4]. Theories Leadership is "organizing a group of people to achieve a common goal". dominance. researchers conducted over a hundred studies proposing a number of characteristics that distinguished leaders from nonleaders: intelligence.[1] Other in-depth definitions of leadership have also emerged. he examined leadership qualities in the families of powerful men. This advent allowed trait theorists to create a comprehensive picture of previous leadership research rather . 1940. Stogdill and Mann found that while some traits were common across a number of studies.[3] charisma. in which they could quantitatively analyze and summarize the findings from a wide array of studies. For decades. but not others. After showing that the numbers of eminent relatives dropped off when moving from first degree to second degree relatives. during the 1980s statistical advances allowed researchers to conduct meta-analyses. for example.[5] Using early research techniques. The trait theory was explored at length in a number of works in the 19th century. and intelligence. improvements in researchers' use of the round robin research design methodology allowed researchers to see that individuals can and do emerge as leaders across a variety of situations and tasks.

social skills. do not consider how stable leader attributes account for the behavioral diversity necessary for effective leadership.[20][22] In other words. the leader attribute pattern approach argues that integrated constellations or combinations of individual differences may explain substantial variance in both leader emergence and leader effectiveness beyond that explained by single attributes. 3.[5] Specifically. the leader attribute pattern approach is based on theorists' arguments that the influence of individual characteristics on outcomes is best understood by considering the person as an integrated totality rather than a summation of individual variables. focus on a small set of individual attributes such as Big Five personality traits. and bound to. several researchers have begun to adopt a different perspective of leader individual differences—the leader attribute pattern approach. values. motives. . and problem-solving skills. 2.[10] • Significant relationships exist between leadership and such individual traits as: • • • • • • intelligence[11] adjustment[11] extraversion[11] conscientiousness[12][13][14] openness to experience[13][15] general self-efficacy[16][17] 18 While the trait theory of leadership has certainly regained popularity. 4. to the neglect of cognitive abilities. leadership researchers revealed the following: • Individuals can and do emerge as leaders across a variety of situations and tasks.[17][18][19][20][21] In contrast to the traditional approach. fail to consider patterns or integrations of multiple attributes. its reemergence has not been accompanied by a corresponding increase in sophisticated conceptual frameworks.Leadership than rely on the qualitative reviews of the past. expertise. Attribute pattern approach Considering the criticisms of the trait theory outlined above. Zaccaro (2007)[5] noted that trait theories still: 1. or by additive combinations of multiple attributes. situational influences. Equipped with new methods. do not distinguish between those leader attributes that are generally not malleable over time and those that are shaped by.

defining three leadership styles and . the employee comes to work on time more often because the employee likes to be praised..[29] This theory assumes that different situations call for different characteristics. evaluating the behavior of successful leaders. Goodrich."[30] Some theorists started to synthesize the trait and situational approaches.[28] Empirical research covering the last 20 years suggests that reinforcement theory has a 17 percent increase in performance. Michigan Bell. In this example. theorists began to research leadership as a set of behaviors. self-confidence and high self-esteem are useful.Leadership 19 Behavioral and style theories In response to the early criticisms of the trait approach. and Ralph White developed in 1939 the seminal work on the influence of leadership styles and performance. Herbert Spencer (1884) said that the times produce the person and not the other way around. The use of positive reinforcement is a successful and growing technique used by leaders to motivate and attain desired behaviors from subordinates. based on the leaders' concern for people and their concern for goal achievement. and the management of the group tasks (project management) according to [25] three styles: authoritarian. Additionally. many reinforcement techniques such as the use of praise are inexpensive. Organizations such as Frito-Lay.[23] David McClelland. no single optimal psychographic profile of a leader exists. Positive reinforcement occurs when a positive stimulus is presented in response to a behavior. Ronald Lipitt.F. and Emery Air Freight have all used reinforcement to increase productivity. Skinner is the father of behavior modification and developed the concept of positive reinforcement. In each. increasing the likelihood of that behavior in the future. praise and criticism (feedback). and laissez-faire.[26] A graphical representation of the managerial grid model Positive reinforcement B. Situational and contingency theories Situational theory also appeared as a reaction to the trait theory of leadership. The model was developed by Robert Blake and Jane Mouton in 1964 and suggests five different leadership styles. 3M. To lead. "what an individual actually does when acting as a leader is in large part dependent upon characteristics of the situation in which he [sic] functions. The manager of this employee decides to praise the employee for showing up on time every day the employee actually shows up to work on time. providing higher performance for lower costs. As a result.[27] The following is an example of how positive reinforcement can be used in a business setting. Social scientists argued that history was more than the result of intervention of great men as Carlyle suggested. praise (the stimulus) is a positive reinforcer for this employee because the employee arrives at work on time (the behavior) more frequently after being praised for showing up to work on time. academics began to normalize the descriptive models of leadership climates. The managerial grid model is also based on a behavioral theory. determining a behavior taxonomy. perhaps even essential. and identifying broad leadership styles.[24] Kurt Lewin. The researchers evaluated the performance of groups of eleven-year-old boys under different types of work climate. This employee does not show up to work on time every day. the leader exercised his influence regarding the type of group decision making. Building upon the research of Lewin et al. posited that leadership takes a strong personality with a well-developed positive ego. Assume praise is a positive reinforcer for a particular employee. for example. according to this group of theories. According to the theory. democratic.

and that leaders can adopt any of the four depending on what the situation demands. for example.[34] developed a taxonomy for describing leadership situations. The authoritarian leadership style. 2001). In summarizing literature on functional leadership (see Kozlowski . 2005. as it depends on the circumstances. The path-goal model can be classified both as a contingency theory. achievement-oriented. & Marks. 1986). For effectiveness. Rittman. The Fiedler contingency model bases the leader's effectiveness on what Fred Fiedler called situational contingency. defining which approach was more suitable to which situation. the laissez-faire leadership style is appreciated for the degree of freedom it provides. but as the leaders do not "take charge". a leader can be said to have done their job well when they have contributed to group effectiveness and cohesion (Fleishman et al. Hackman & Walton. a highly structured task. 1991. and those who have as their prime concern carrying out the task itself (task-oriented). it has also been effectively applied to broader organizational leadership as well (Zaccaro.[39] 20 Functional theory Functional leadership theory (Hackman & Walton. engage in behaviors that complement subordinates' environments and abilities in a manner that compensates for deficiencies and is instrumental to subordinate satisfaction and individual and work unit performance". The situational leadership model proposed by Hersey and Blanchard suggests four leadership-styles and four levels of follower-development. and high leader position power. as the theory emphasizes the reciprocity behavior between the leader and the followers. While functional leadership theory has most often been applied to team leadership (Zaccaro. The theory defined two types of leader: those who tend to accomplish the task by developing good relationships with the group (relationship-oriented). participative. When there is a good leader-member relation. leadership behavior becomes a function not only of the characteristics of the leader. In contrast to the Fiedler contingency model. 1962) is a particularly useful theory for addressing specific leader behaviors expected to contribute to organizational or unit effectiveness. the path-goal model states that the four leadership behaviors are fluid. This model was later referred to as situational contingency theory. Four contingency leadership theories appear more prominently in recent years: Fiedler contingency model. 1986.[32] According to Fiedler. the path-goal theory. to be effective. which is sometimes classified as contingency theory.. and supportive. In this model. Victor Vroom. in collaboration with Phillip Yetton (1973)[33] and later with Arthur Jago (1988). finally.[36] The path-goal theory of leadership was developed by Robert House (1971) and was based on the expectancy theory of Victor Vroom. whereas relationship-oriented leaders perform best in situations with intermediate favorability.Leadership identifying which situations each style works better in. the model posits that the leadership-style must match the appropriate level of follower-development. but of the characteristics of followers as well.[31] Thus. McGrath. Fiedler found that task-oriented leaders are more effective in extremely favorable or unfavorable situations. there is no ideal leader. and as a transactional leadership theory. the democratic leadership style is more adequate in situations that require consensus building.[35] This approach was novel because it supported the idea that the same manager could rely on different group decision making approaches depending on the attributes of each situation. thus. Hackman & Wageman. directive. is approved in periods of crisis but fails to win the "hearts and minds" of followers in day-to-day management. that are contingent to the environment factors and follower characteristics. and the Hersey-Blanchard situational theory.[37] According to House. they can be perceived as a failure in protracted or thorny organizational problems.[38] The theory identifies four leader behaviors. 2001). the situation is considered a "favorable situation". the essence of the theory is "the meta proposition that leaders. Vroom-Yetton decision model. theorists defined the style of leadership as contingent to the situation. This theory argues that the leader's main job is to see that whatever is necessary to group needs is taken care of. which was used in a normative decision model where leadership styles were connected to situational variables. Both task-oriented and relationship-oriented leaders can be effective if their leadership orientation fits the situation. This results from the interaction of leadership style and situational favorability (later called situational control).

The transactional leader (Burns. These functions include environmental monitoring. 21 Transactional and transformational theories Eric Berne[40] first analyzed the relations between a group and its leadership in terms of transactional analysis. The transformational leader (Burns. Hackman & Wageman (2005). Examples of such behavior would include showing concern for a subordinate or acting in a supportive manner towards others. The group members respond to those signals cognitively and behaviorally in ways that are reflected in the group processes. Klein. motivating others. These effects can be described in three levels:[43] 1. Power is given to the leader to evaluate.[43] 3. organizing subordinate activities. correct. Group affective tone is an aggregate of the moods of the individual members of the group and refers to mood at the group level of analysis. (1996). Communication is the base for goal achievement focusing the group on the final desired outcome or goal attainment. 1978)[41] is given power to perform certain tasks and reward or punish for the team's performance. A variety of leadership behaviors are expected to facilitate these functions. Groups with leaders in a positive mood have a more positive affective tone than do groups with leaders in a negative mood. Idiosyncrasy Credits. and train subordinates when productivity is not up to the desired level. and Xiao (2006) observed five broad functions a leader performs when promoting organization's effectiveness. and attitudes through their expressions of moods. and intervening actively in the group's work. Fleishman (1953) observed that subordinates perceived their supervisors' behavior in terms of two broad categories referred to as consideration and initiating structure. Group processes like coordination. first posited by Edward Hollander (1971) is one example of a concept closely related to transactional leadership. For example. This could include role clarification. Morgeson (2005)). teaching and coaching subordinates.Leadership et al. Group affective tone represents the consistent or homogeneous affective reactions within a group. expressions of positive moods by leaders signal that leaders deem progress toward goals to be good. Zeigert. with emotions entwined with the social influence process.[45] . Knight. the leader's mood has some effects on his/her group. Leaders signal their goals. In initial work identifying leader behavior. Consideration includes behavior involved in fostering effective relationships. needing to be surrounded by people who take care of the details.[43] Mood contagion may be one of the psychological mechanisms by which charismatic leaders influence followers. The affective tone of the group. Group members with leaders in a positive mood experience more positive mood than do group members with leaders in a negative mood. they send signals to others. Transformational leaders focus on the big picture. Emotions Leadership can be perceived as a particularly emotion-laden process. setting performance standards. It gives the opportunity to the manager to lead the group and the group agrees to follow his lead to accomplish a predetermined goal in exchange for something else. and task strategy. Public expressions of mood impact how group members think and act. When people experience and express mood. The mood of individual group members. and reward effectiveness when expected outcome is reached. effort expenditure. This leader is highly visible and uses chain of command to get the job done. The leader is always looking for ideas that move the organization to reach the company's vision. it was found that expressions of positive mood by the leader improve the performance of the group. 1978)[41] motivates its team to be effective and efficient.[44] 2. intentions. and holding subordinates accountable to those standards. Initiating structure involves the actions of the leader focused specifically on task accomplishment. Hackman and Walton (1986). The leaders transmit their moods to other group members through the mechanism of emotional contagion. (2001). Zaccaro et al. although in other sectors there were other findings.[43] In research about client service.[42] In an organization.

an autocratic leadership style may be most effective. but may also be based on a political command. in a highly motivated and aligned team with a homogeneous level of expertise. The autocratic management has been successful as it provides strong motivation to the manager. media. not through the true actions of the leader himself. Therefore. In an emergency when there is little time to converge on an agreement and where a designated authority has significantly more experience or expertise than the rest of the team. the press. In other words. a payment. Since employee behavior and productivity are directly affected by their emotional states. it is imperative to consider employee emotional responses to organizational leaders. which may be based on reality. L'Hyperpolitique. allocating tasks. however. so that when he arrived home in England he would receive a true hero's welcome.[49] Participative or democratic style The democratic leadership style favors decision-making by the group. Styles Leadership style refers to a leader's behavior. the reproduction of information or stories form the basis of the perception of leadership by the majority. Certain leader behaviors displayed during interactions with their employees are the sources of these affective events. it can be contended that the perception of all leaders is created and in fact does not reflect their true leadership qualities at all.Leadership Beyond the leader's mood. resource distribution.[46] Emotional intelligence.[45] 22 Neo-emergent theory The Neo-emergent leadership theory (from the Oxford school of leadership) espouses that leadership is created through the emergence of information by the leader or other stakeholders. In modern society. as with dictators. and experience of the leader. contributes to effective leadership within organizations. Political Style. The decisions of the democratic leader are not unilateral as with the autocrat because they arise from consultation with the group members and participation by them. Different situations call for different leadership styles. personality. Examples – feedback giving. They can win the cooperation of their group and can motivate them effectively and positively. her/his behavior is a source for employee positive and negative emotions at work. Leaders do not entertain any suggestions or initiatives from subordinates. or an inherent interest of the author. the ability to understand and manage moods and emotions in the self and others. Rhetoric specialists have also developed models for understanding leadership (Robert Hariman. all decision-making powers are centralized in the leader. It is well known that the great naval hero Lord Nelson often wrote his own versions of battles he was involved in. It is the result of the philosophy. Such a leader gives instructions after consulting the group.[49] Autocratic or authoritarian style Under the autocratic leadership style.[47] Philippe-Joseph Salazar. or leader. The style adopted should be the one that most effectively achieves the objectives of the group while balancing the interests of its individual members. a more democratic or laissez-faire style may be more effective. Leaders shape workplace affective events. Technologies politiques De La Domination[48]). It permits quick decision-making. as only one person decides for the whole group and keeps each decision to him/herself until he/she feels it needs to be shared with the rest of the group. blogs and other sources report their own views of a leader. The leader creates situations and events that lead to emotional response.[49] .

leader advancement. Performance In the past. For instance. Steve Zaffron. leadership was one of the dimensions that he identified. Maccoby. 1990). and Thomas have identified narcissistic leadership as an important and common leadership style. performance of the group or organization. This differs from relating to the relevant parties as “followers” and calling up an image of a single leader with others following. and Kari Granger who describe leadership as “an exercise in language that results in the realization of a future that wasn’t going to happen anyway. Kaiser. including outcomes such as leader effectiveness.Leadership 23 Laissez-faire or free rein style A free-rein leader does not lead. or even leader emergence. Jensen. however. 1988. Many distinct conceptualizations are often lumped together under the umbrella of leadership performance. Narcissistic leadership Various academics such as Kets de Vries. Rather. Despite these assertions.. Job performance generally refers to behavior that is expected to contribute to organizational success (Campbell. they are different outcomes and their inclusion should depend on the applied or research focus. 2008). [50] . Each of these measures can be considered conceptually distinct. To facilitate successful performance it is important to understand and accurately measure leadership performance. This definition ensures that leadership is talking about the future and includes the fundamental concerns of the relevant parties. & Craig. 2008). a future that fulfills on the fundamental concerns of the relevant parties indicates the future that wasn’t going to happen is not the “idea of the leader”. 2006). which future fulfills (or contributes to fulfilling) the concerns of the relevant parties…”. Michael C. and who abuses the leader-follower relationship by leaving the group or organization in a worse-off condition than when he/she first found them. Campbell identified a number of specific types of performance dimensions. but rather is what emerges from digging deep to find the underlying concerns of those who are impacted by the leadership. they are given a free hand in deciding their own policies and methods. some researchers have argued that the actual influence of leaders on organizational outcomes is overrated and romanticized as a result of biased attributions about leaders (Meindl & Ehrlich. While these aspects may be related. Such a leader allows maximum freedom to subordinates. it is largely recognized and accepted by practitioners and researchers that leadership is important. The Ontological/Phenomenological Model for Leadership One of the more recent definitions of leadership comes from Werner Erhard. and leader emergence (Kaiser et al. leadership performance may be used to refer to the career success of the individual leader. and research supports the notion that leaders do contribute to key organizational outcomes (Day & Lord. overall definition of leadership performance (Yukl. There is no consistent. 1987). Hogan. Toxic leadership A toxic leader is someone who has responsibility over a group of people or an organization. but leaves the group entirely to itself.

entry and subsequent advancement is by merit or seniority. Bennis. the demands of the situation. The need to identify with a community that provides security. However. The informal organization represents an extension of the social structures that generally characterize human life — the spontaneous emergence of groups and organizations as ends in themselves. paraphrased from Leaders. protection. the greater one's presumed expertise in adjudicating problems that may arise in the course of the work carried out at lower levels of the organization. the formal organization is expected to behave impersonally in regard to relationships with clients or with its members. Every organization needs leaders at every level. According to Weber's definition. The informal organization expresses the personal objectives and goals of the individual membership. Power is a stronger form of influence because it reflects a person's ability to enforce action through the control of a means of punishment." Leaders are recognized by their capacity for caring for others. sections. departments. In prehistoric times. It follows that whoever wields personal influence and power can legitimize this only by gaining a formal position in the hierarchy. Influence is the ability of a person to gain co-operation from others by means of persuasion or control over rewards. Its design specifies how goals are subdivided and reflected in subdivisions of the organization. It is not dependent on title or formal authority.[55] . only authority of position has the backing of formal sanctions. protection. and Leadership Presence. and tasks make up this work structure. positions. Employees receive a salary and enjoy a degree of tenure that safeguards them from the arbitrary influence of superiors or of powerful clients.[52] Leadership can be defined as one's ability to get others to willingly follow. the emergent leader wields influence or power. Halpern & Lubar. a manager may be confronted by an emergent leader who can challenge her/his role in the organization and reduce it to that of a figurehead.[54] An individual who is appointed to a managerial position has the right to command and enforce obedience by virtue of the authority of his position. However. with commensurate authority. Divisions. Their objectives and goals may or may not coincide with those of the formal organization. The higher one's position in the hierarchy. because authority is only potentially available to him/her.[52] A leader is a person who influences a group of people towards a specific result. jobs. maintenance. clear communication. humanity was preoccupied with personal security.[52][53] Leaders emerge from within the structure of the informal organization.[51] In contrast to the appointed head or chief of an administrative unit. It is this bureaucratic structure that forms the basis for the appointment of heads or chiefs of administrative subdivisions in the organization and endows them with the authority attached to their position.Leadership 24 Contexts Organizations An organization that is established as an instrument or means for achieving defined objectives has been referred to as a formal organization. Their personal qualities. or a combination of these and other factors attract followers who accept their leadership within one or several overlay structures. (Elevos. Thus. maintenance. Instead of the authority of position held by an appointed head or chief. and a commitment to persist. Now humanity spends a major portion of waking hours working for organizations. and survival. In the absence of sufficient personal competence. and a feeling of belonging has continued unchanged from prehistoric times.) Ogbonnia (2007) defines an effective leader "as an individual with the capacity to consistently succeed in a given condition and be viewed as meeting the expectations of an organization or society. a leader emerges within the context of the informal organization that underlies the formal structure. This need is met by the informal organization and its emergent. leaders. or unofficial. she or he must possess adequate personal attributes to match this authority.

share a similar . management by exception) and "transformational" leadership (characterized by e. • There must be interpersonal relationship.g. and generally reflects an awareness of the distinction made by Burns (1978) between "transactional" leadership (characterized by e. creativity). more than one person provides direction to the group as a whole.[56] Leaders who demonstrate persistence. some organizations have adopted group leadership. Others may see the traditional leadership of a boss as costing too much in team performance. • Training: Opportunities for feedback and updating skills are provided and taken advantage of by team members. contingent reward. Additionally. in the organizational context. • Roles: Members know their roles in getting tasks done and when to allow a more skillful member to do a certain task. • Priorities: Members know what needs to be done next. the team members best able to handle any given phase of the project become the temporary leaders. as each team member has the opportunity to experience the elevated level of empowerment. too. tenacity.[59] Richard Wrangham and Dale Peterson. personal relationships.Leadership 25 Management Over the years the philosophical terminology of "management" and "leadership" have. or downsizing. Good leaders use their own inner mentors to energize their team and organizations and lead a team to achieve success. Some organizations have taken this approach in hopes of increasing creativity. reducing costs. In this situation. in Demonic Males: Apes and the Origins of Human Violence. present evidence that only humans and chimpanzees. it energizes staff and feeds the cycle of success. • Decisions: Authority and decision-making lines are clearly understood. among all the animals living on Earth.[57] According to the National School Boards Association (USA):[58] These Group Leaderships or Leadership Teams have specific characteristics: Characteristics of a Team • There must be an awareness of unity on the part of all its members. They suggest that leadership has a long evolutionary history and that the same mechanisms underpinning leadership in humans can be found in other social species. • Personal traits: members feel their unique personalities are appreciated and well utilized. Ten characteristics of well-functioning teams: • Purpose: Members proudly share a sense of why the team exists and are invested in accomplishing its mission and goals.g. by whom. • Norms: Group norms for working together are set and seen as standards for every one in the groups. • The members must have the ability to act together toward a common goal. Members must have a chance to contribute. • Conflict: Conflict is dealt with openly and is considered important to decision-making and personal growth. emphasis on procedures. In some situations. • Success: Members know clearly when the team has met with success and share in this equally and proudly. Debate is fairly common about whether the use of these terms should be restricted.[41] Group leadership In contrast to individual leadership. and by when to achieve team goals. and learn from and work with others. determination. and synergistic communication skills will bring out the same qualities in their groups. been used both as synonyms and with clearly differentiated meanings. Primates Mark van Vugt and Anjana Ahuja in Naturally Selected: The Evolutionary Science of Leadership present evidence of leadership in nonhuman animals. charisma. • Effectiveness: Members find team meetings efficient and productive and look forward to this time together. from ants and bees to baboons and chimpanzees.

not all scientists agree on the allegedly peaceful nature of the bonobo or its reputation as a "hippie chimp".Leadership tendency for a cluster of behaviors: violence. and competition for uniting behind the one chief male of the land. exhibit violence. Dependence on the strength of courage results in violence. It is important also to note that the peculiarities of one tribe cannot necessarily be ascribed to another. in varying degrees. trustworthiness. on the other hand. Christian thinking on . (Note that the Oxford English Dictionary traces the word "leadership" in English only as far back as the 19th century. If one looks before these times. The fundamental assumption that has been built into most of the world's countries is that patriarchy is the natural biological predisposition of homo sapiens. suggesting Wrangham and Peterson's evidence is not empirical.[62] Aristocratic thinkers have postulated that leadership depends on one's "blue blood" or genes. founded on Christian literature. Reliance on intelligence alone results in rebelliousness. It would be beneficial to examine that most accounts of leadership over the past few millennia (since the creation of Christian religions) are through the perspective of a patriarchal society. Fixation on trust results in folly. humaneness. Many animals beyond apes are territorial. then among the bonobos. then one can be a leader. responsive. a female almost always exerts the strongest and most effective leadership. each appropriate to its function.) One response to this denial of élitism came with Leninism. and may prop up its assertions against the claims of mere aristocrats by invoking divine sanction (see the divine right of kings). the views of Confucianism on "right living" relate very much to the ideal of the (male) scholar-leader and his benevolent rule. buttressed by a tradition of filial piety. Excessive discipline and sternness in command result in cruelty. Feminist thinking. Thus. as even our modern-day customs differ. . The Iroquoian First Nations tribes are an example of a matrilineal tribe. — Sun Tzu[63] In the 19th century. such as the Napoleonic marshals profiting from careers open to talent. When one has all five virtues together. and have a social structure controlled by a dominant male (lions. bonobos. along with Mayan tribes. can prove as strong as the strongest male. and many others. Contrariwise. if leadership amounts to getting the greatest number of followers. more democratically-inclined theorists have pointed to examples of meritocratic leaders. However.[61] 26 Historical views Sanskrit literature identifies ten types of leaders. do not unite behind the chief male of the land. Unfortunately. Monarchy takes an extreme view of the same idea.). However. meerkats (who are likewise matriarchal). the elaboration of anarchist thought called the whole concept of leadership into question. The bonobos show deference to an alpha or top-ranking female that. with the support of her coalition of other females. this belief has led to the widespread oppression of women in all of those countries. the second-closest species-relatives of humans. traditionalists recall the role of leadership of the Roman pater familias. courage. India. Comparable to the Roman tradition. we must examine other species as well.[60] This position is contentious. bringing into existence the dictatorship of the proletariat. and discipline . including elephants (which are matriarchal and follow an alpha female). Other historical views of leadership have addressed the seeming contrasts between secular and religious leadership. The current day patrilineal custom is only a recent invention in human history and our original method of familial practices were matrilineal. and also the society of Meghalaya. Leadership is a matter of intelligence. compete. wolves. Exercise of humaneness alone results in weakness. By comparison. etc. may object to such models as patriarchal and posit against them emotionally-attuned. . territoriality. which is sometimes associated with matriarchies. The doctrines of Caesaro-papism have recurred and had their detractors over several centuries. In the autocratic/paternalistic strain of thought. and consensual empathetic guidance. it is noticed that Pagan and Earth-based tribes in fact had female leaders. which demanded an élite group of disciplined cadres to act as the vanguard of a socialist revolution. Defining characteristics of the ten types of leaders are explained with examples from history and mythology.

g.[69] and efficiency [70] all tend to climb in businesses with designated managers or CEOs. [66] Despite popular belief. many researchers have stressed the prevalence of this misunderstanding. (1988). 1975). coercion. compare the concept of the statesperson. 1965. Leadership is possessing power over others Although leadership is certainly a form of power. effective leadership can result from nature (i. court judge). Over the years. it is a power with people that exists as a reciprocal relationship between a leader and his/her followers (Forsyth. concerning leadership often interferes with individuals’ conception of what leadership is all about (Gardner.. However.e. However.. but usually do so through negative means. this romanticized view of leadership (i.e. although largely talked about. Pol Pot.g. ingenuity).[64] [65] Leadership is innate According to some. 2009). Leaders are positively influential The validity of the assertion that groups flourish when guided by effective leaders can be illustrated using several examples. or myths...g. it is unwarranted to assume that all leaders are in complete control of their groups' achievements. class president. Compare servant leadership. including his/her own followers (e. . the tendency to overestimate the degree of control leaders have over their groups and their groups’ outcomes) ignores the existence of many other factors that influence group dynamics. and domination to influence others is not a requirement for leadership.. Leaders sometimes focus on fulfilling their own agendas at the expense of others. it is important to note that leadership also develops through hard work and careful observation. 27 Leadership Myths Leadership. the difference leaders make is not always positive in nature. innate talents) as well as nurture (i. Leaders who focus on personal gain by employing stringent and manipulative leadership styles often make a difference.[71] Leaders entirely control group outcomes In Western cultures it is generally assumed that group leaders make all the difference when it comes to group influence and overall goal-attainment. the bystander effect (failure to respond or offer assistance) that tends to develop within groups faced with an emergency is significantly reduced in groups guided by a leader. leadership is determined by distinctive dispositional characteristics present at birth (e. For this reason. individual personality traits.e. For instance. it has been documented that group performance. [67] Moreover. it is not demarcated by power over people – rather. group cohesion. as well as behavioral norms and established standards influence group functionality in varying capacities. the use of manipulation. Although common. extraversion. Josef Stalin). has been described as one of the least understood concepts across all cultures and civilizations.Leadership leadership has often emphasized stewardship of divinely-provided resources—human and material—and their deployment in accordance with a Divine plan. group context. [72] For example. Bennis. individuals who seek group consent and strive to act in the best interests of others can also become effective leaders (e. acquired skills). For a more general take on leadership in politics.. intelligence. In actuality.[68] creativity. [66] Thus. communication patterns among members. according to Baumeister et al. the nature or orientation of the work. stating that the existence of several flawed assumptions.

Some examples of demonstrations of action oriented leadership include extinguishing a rural fire. 1953). are free from stressful decision-making. "President".[75] or only exist for a short period of time (e. Guastello. leading a team on an outdoor expedition. In the course of the 18th to 20th centuries. See peerage for a systematization of this hierarchy. a baronet might in theory control less land than an earl. not all groups need have a designated leader.g. Group members tend to be more contented and productive when they have a leader to guide them. 2007. and task within a changeable environment. and so on) often seemed inappropriate. Titles emphasizing authority At certain stages in their development. Group members resist leaders Although research has indicated that group members’ dependence on group leaders can lead to reduced self-reliance and overall group strength. Leadership of people in these environments requires a different set of skills to that of front line management. Thus a knight led fewer men in general than did a duke. where effective functional leadership is required to achieve critical or reactive tasks by small teams deployed into the field. [66] most people actually prefer to be led than to be without a leader (Berkowitz. or rescuing a person from a potentially hazardous environment. While the conventional view of leadership is rather satisfying to people who "want to be told what to do". In most cases these teams are tasked to operate in remote and changeable environments with limited support or backup (action environments).Leadership 28 All groups have a designated leader Despite preconceived notions.[76] This "need for a leader" becomes especially strong in troubled groups that are experiencing some sort of conflict. and order of precedence for links to various systems. They or their systems often expressed a belief in strong individual leadership. These leaders must effectively operate remotely and negotiate the needs of the individual. these critics say that one should question why they are being subjected to a will or intellect other than their own if the leader is not a Subject Matter Expert (SME). 2007). Groups that are primarily composed of women. but existing titles and labels ("King".. 2002. team. The formal or informal titles or descriptions they or their subordinates employ express and foster a general veneration for leadership of the inspired and autocratic variety. student work groups. most people appreciate the contributions that leaders make to their groups and consequently welcome the guidance of a leader (Stewart & Manz. Although individuals filling leadership roles can be a direct source of resentment for followers. The definite article when used as part of the title (in languages that use definite articles) emphasizes the existence of a sole "true" leader.[73][74] are limited in size. there is leadership of small groups often created to respond to a situation or critical incident. In other words. This has been termed action oriented leadership. where leadership tasks and roles are shared amongst members (Schmid Mast. insufficient. 1995). . or downright inaccurate in some circumstances. Critical thought Noam Chomsky[78] and others[79] have brought critical thinking to the very concept of leadership and have provided an analysis that asserts that people abrogate their responsibility to think and will actions for themselves. pub quiz/trivia teams) often undergo a diffusion of responsibility. the hierarchies of social ranks implied different degrees or ranks of leadership in society. "Emperor". Berdahl & Anderson. [77] Action-oriented environments One approach to team leadership examines action-oriented environments. locating a missing person. several political operators took non-traditional paths to become dominant in their societies.

various historical calamities are attributed to a misplaced reliance on the principle of leadership. Punishment can be mild. [7] Bird.g. Psychological Bulletin. The Bass handbook of leadership: Theory. and managerial applications (4th ed. Journal of Psychology. research. [8] Stogdill. Director. (1959). 68. (1986). De Vader. The successful leader effectively uses these powers to influence employees. or previous experience. abilities. [9] Mann. 25. The authors distinguish the following types of organizational power: • Legitimate Power refers to the different types of professional positions within an organization structure that inherit such power (e. Journal of Applied Psychology. common civic virtue. 29 Varieties of individual power According to Patrick J.[80] References Notes [1] [2] [3] [4] [5] [6] Chemers M. .Leadership The fundamentally anti-democratic nature of the leadership principle is challenged by the introduction of concepts such as autogestion. R. ISBN 9780805826791 Locke et al. which stress individual responsibility and/or group authority in the work place and elsewhere by focusing on the skills and attitudes that a person needs in general rather than separating out leadership as the basis of a special class of individuals.). R. 402-410. 56. etc. • Referent Power is a power that is gained by association. Bass. A manager who has this power within the organization may be a very valuable and important manager in the company.. Supervisor. Montana and Bruce H. New York: Appleton-Century.A. have higher power than the rest of the professional positions in the hierarchical executive levels. [10] Kenny. A person who has power by association is often referred to as an assistant or deputy. • Reward Power is the power given to managers that attain administrative power over a range of rewards (such as raises and promotions). or serious. Journal of Applied Psychology. Vice President.206) http:/ / qualities-of-a-leader. Charnov. • Coercive Power is the manager's ability to punish an employee. G. S. New York: Free Press. An estimate of variance due to traits in leadership. S. (2007). Publishers. & Alliger. C. 6-16. Social Psychology. (2008). (1997) An integrative theory of leadership. such as termination. Employees who work for managers desire the reward from the manager and will be influenced by receiving it as a result of work performance. 241-270. com/ trait-approach/ Zaccaro. B. R.. [11] Lord.. • Information Power is gained by a person who has possession of important information at an important time when such information is needed to organizational functioning. 678-685. and create the opportunity for interpersonal influence.M. such as president of the company. (1940).G. p. and it is important for leaders to understand the uses of power to strengthen their leadership. Lawrence Erlbaum Associates. A review of the relationship between personality and performance in small groups. 62. • Expert Power is attained by the manager due to his or her own talents such as skills. 71. the ability to attain these unique powers is what enables leadership to influence subordinates and peers by controlling organizational resources.M. These levels of power correspond to the hierarchical executive levels within the organization itself.M. A meta-analysis of the relation between personality traits and leader perceptions: An application of validity generalization procedures. etc. (1983). Trait-based perspectives of leadership. Similarly. knowledge. 1991 (Richards & Engle. Manager. 35-71. & Zaccaro. D. Personal factors associated with leadership: A survey of the literature. & Bass.J. J.D. (1948).L.). R. employeeship. The higher positions. 1986. such as a suspension. C. • Charisma Power: a manager who has charisma will have a positive influence on workers. American Psychologist.

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a social standard which can save lives if it is widely adhered to. d > b. Home} and {Home. The {Party. as the pure coordination game in Fig. d Fig. Down} are pure Nash equilibria. This is not true for all coordination games. 3 shows. consider the 2-player. For a classic example of a coordination game. {Party. then the following inequalities in payoffs hold for player 1 (rows): A > B. assume that two drivers meet on a narrow dirt road. marked in gray. 1). Up} and {Right. Home} outcome. Examples A typical case for a coordination game is choosing the side of the road upon which to drive. here both players prefer partying over both staying at home to watch TV. Pure (or common interest) coordination is the game where the players both prefer the same Nash equilibrium outcome. but only by making mutually consistent decisions. it doesn't matter which side both players pick. including economics. or both swerve to the right. 2. 2-strategy game. Party}. 1: 2-player coordination game If this game is a coordination game. as well as for a game with more than two players. and for player 2 (columns): a > c. Both have to swerve in order to avoid a head-on collision. Party} outcome Pareto dominates the {Home. just as both Pareto dominate the other two outcomes. In this game the strategy profiles {Left.dmoz. coordination games are a class of games with multiple pure strategy Nash equilibria in which players choose the same or corresponding strategies. A common application is the choice of technological standards. Coordination games are a formalization of the idea of a coordination problem. In this example. meaning situations in which all parties can realize mutual gains.org/Business/Management/Leadership//) at the Open Directory Project Coordination In game theory. In the payoff matrix in Fig. successful passing is represented by a payoff of 10. and a collision by a payoff of 0. as long as they both pick the same. If both execute the same swerving maneuver they will manage to pass each other.Leadership 35 External links • Leadership (http://www. Both solutions are Pareto efficient. . a B. with the payoff matrix shown on the right (Fig. In a simplified example. which is widespread in the social sciences. D > C. b C. This setup can be extended for more than two strategies (strategies are usually sorted so that the Nash equilibria are in the diagonal from top left to bottom right). Left Up Down Right A. In this case there are two pure Nash equilibria: either both swerve to the left. but if they choose differing maneuvers they will collide. c D.

7 Home Hare Fig. Unlike the pure Nash equilibria. 10 0. 10 10. a quandary that led Robert Aumann to propose the refinement of a correlated equilibrium. Finally. so existence is assured (similarly for q). In this game both players prefer engaging in the same activity over going alone. 0 0. The mixed Nash equilibrium is also Pareto dominated by the two pure Nash equilibria (since the players will fail to coordinate with non-zero probability). p is always between zero and one. and q = (D-C)/(A+D-B-C) to play Left and 1-q to play Right for player 2.Coordination 36 Left Left Right Party Home Party Home Right 10. while the mixed Nash equilibrium lies in the middle. 2: Choosing sides Party Party Home Stag Stag Hare 10. Since d > b and d-b < a+d-b-c. 0 10 0. 3: Pure coordination game Fig. 0. This example of the potential conflict between safety and social cooperation is originally due to Jean-Jacques Rousseau. 0 10. at the intersection of the dashed lines. 0 7. 5: Stag hunt This is different in another type of coordination game commonly called battle of the sexes (or conflicting interest coordination). because each hunter has an alternative which is safer because it does not require cooperation to succeed (hunting a hare). 4: Battle of the sexes Fig. . 10 7 7. but their preferences differ over which activity they should engage in. cooperation might fail. 5 shows a situation in which both players (hunters) can benefit if they cooperate (hunting a stag). 0. 0 0. The pure Nash equilibria are the points in the bottom left and top right corners of the strategy space. the mixed equilibrium is not an evolutionarily stable strategy (ESS). 4. The reaction correspondences for 2×2 coordination games are shown in Fig. as seen in Fig. the stag hunt game in Fig. 6. Mixed Nash equilibrium Coordination games also have mixed strategy Nash equilibria. In the generic coordination game above. Player 1 prefers that they both party while player 2 prefers that they both stay at home. 0 5. 0 5. 5 0. 10 10. a mixed Nash equilibrium is given by probabilities p = (d-b)/(a+d-b-c) to play Up and 1-p to play Down for player 1. 5 Fig. However.

280 is considered more scenic. where one player's incentive is to coordinate while the other player tries to avoid this. A hybrid form of coordination and anti-coordination is the discoordination game. Sometimes these refinements conflict. Many authors have suggested that particular equilibria are focal for one reason or another. Using the payoff matrix in Figure 1. but {Hare. game theorists have modeled behavior under negative externalities where choosing the same action creates a cost rather than a benefit. D < C. where the two player's correspondences agree. some equilibria may give higher payoffs.Reaction correspondence for 2x2 coordination games. For instance. Nash equilibria shown with points.S. be naturally more salient. choosing payoffs so that A > B. cross Coordination games are closely linked to the economic concept of externalities. Right} improves player 2's payoff but reduces player 1's payoff. Discoordination games have no pure Nash equilibria.6 . Conversely. Other games with externalities Fig. which makes certain coordination games especially complicated and interesting (e. so a change from {Up. the benefit reaped from being in the same network as other agents. This counters the standard coordination game setup. Left} to {Up. creates a discoordination game.Stag} has higher payoffs.g.Coordination 37 Coordination and equilibrium selection Games like the driving example above have illustrated the need for solution to coordination problems. c > d. A well-known example of the minority game is the El Farol Bar problem proposed by W. introducing conflict.Hare} is safer). For instance. In each of the four possible states either player 1 or player 2 are better off by switching their strategy. The best-known example of a 2-player anti-coordination game is the game of Chicken (also known as Hawk-Dove game). Chicken also requires that A > C.e. The minority game is a game where the only objective for all players is to be part of smaller of two groups. A crowding game is defined as a game where each player's payoff is non-increasing over the number of other players choosing the same strategy (i. may be more fair. Left} and {Up. Brian Arthur. a game with negative network externalities). so the only Nash equilirium is mixed. But each additional car on either route will slightly increase the drive time on that route. The canonical example of a discoordination game is the matching pennies game. a driver could take U. or may be safer. A congestion game is a crowding game in networks. Route 101 or Interstate 280 from San Francisco to San Jose. Right} are the two pure Nash equilibria. in which {Stag. The concept of anti-coordination games has been extended to multi-player situation. The generic term for this class of game is anti-coordination game. so additional traffic creates negative network externalities. and even scenery-minded drivers might opt to take 101 if 280 becomes too crowded. In Figure 1. Often we are confronted with circumstances where we must solve coordination problems without the ability to communicate with our partner.. {Down.e. i. where all unilateral changes in a strategy lead to either mutual gain or mutual loss. a game is an anti-coordination game if B > A and C > D for row-player 1 (with lowercase analogues for column-player 2). and in particular positive network externalities. so drivers might have different preferences between the two independent of the traffic flow. While 101 is shorter. while a < b. . the Stag hunt.

CO%3B2-0 Control Controlling is one of the managerial functions like planning. 1969 (ISBN 0-631-23257-5). 1991 (ISBN 0-393-32946-1). According to EFL Breach. 1992 (ISBN 0-691-00395-5). According to Stafford Beer. 1998 (ISBN 0-521-57896-5). Oxford Un. • Robert Gibbons: Game Theory for Applied Economists. New York: Norton. New York: Norton. and the principles which have been laid down. Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted. Control in management means setting standards. Thus. Oxford: Blackwell. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to Harold Koontz. control comprises these three main activities. the orders which have been given. • Thomas Schelling: Micromotives and Macrobehavior. control is a foreseeing action whereas earlier concept of control was used only when errors were detected. measuring actual performance and taking corrective action. 1978 (ISBN 0-393-32946-1). • Thomas Schelling: The Strategy of Conflict. • Edna Ullmann-Margalit: The Emergence of Norms. Princeton. Henri Fayol formulated one of the first definitions of control as it pertains to management: Control consists of verifying whether everything occurs in conformity with the plan adopted. Cambridge: Cambridge University Press. Massachusetts: MIT Press. Cambridge. Definitions According to Henri Fayol. Cambridge. vol. 1994 (ISBN 0-262-65040-1). 1960 (ISBN 0-674-84031-3). organizing. Management is the profession of control. and principles established. 1988. Its object is to point out mistakes in order that they may be rectified and prevented from recurring. References [1] http:/ / links. (or Clarendon Press 1978). It ['s] object [is] to point out weaknesses and errors in order to rectify [them] and . 99-107. Control is checking current performance against pre-determined standards contained in the plans. Press. • Adrian Piper: review of 'The Emergence of Norms' [1] in The Philosophical Review. New Jersey: Princeton University Press. • Avinash Dixit & Barry Nalebuff: Thinking Strategically. 1977. 0. 97. • David Kellogg Lewis: Convention: A Philosophical Study. • Martin J. with a view to ensure adequate progress and satisfactory performance. staffing and directing. the instructions issued. jstor. Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.Coordination 38 References • Russell Cooper: Coordination Games. Massachusetts: Harvard University Press. In 1916. org/ sici?sici=0031-8108(198801)97%3A1%3C99%3ATEON%3E2. According to modern concepts. Osborne & Ariel Rubinstein: A Course in Game Theory. pp.

Rapidity of response pertains to the speed with which a system can correct variations and return to expected output. goals and objectives are often referred to as siamese twins of management. or to maintain variations from system objectives within allowable limits". and controlling is a process which measures and directs the actual performance against the planned goals of the organisation. The control subsystem functions in close harmony with the operating system. the managerial function of management and correction of performance in order to make sure that enterpriseobjectives and the goals devised to attain them being accomplished.[3] The first element is the characteristic or condition of the operating system which is to be measured. Thus. certain adjustments in strategy and/or tactics can be made in an attempt to achieve the desired result. Stability concerns a system's ability to maintain a pattern of output without wide fluctuations. and (4) the activator — occur in the same sequence and maintain a consistent relationship to each other in every system. (3) the comparator . Each party organizes a campaign to get its candidate selected and outlines a plan to inform the public about both the candidate's credentials and the party's platform.[1] Robert J. or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives. The control subsystem must be designed to include a sensory .[3] A political election can illustrate the concept of control and the importance of feedback. or control. Mockler presented a more comprehensive definition of managerial control: Management control can be defined as a systematic effort by business management to compare performance to predetermined standards.Control prevent recurrence. The second element of control. it may be the heat energy produced by the furnace or the temperature in the room which has changed because of the heat generated by the furnace. Planning is a process by which an organisation's objectives and the methods to achieve the objectives are established.[2] Also control can be defined as "that function of the system that adjusts operations as needed to achieve the plan. is a means for measuring the characteristic or condition. the sensor. For example. the hours a teacher works or the gain in knowledge demonstrated by the students on a national examination are examples of characteristics that may be selected for measurement. 39 Characteristics of Control • • • • • • • Control is a continuous process Control is a management process Control is embedded in each level of organizational hierarchy Control is forward looking Control is closely linked with planning Control is a tool for achieving organizational activities control is an end process The elements of control The four basic elements in a control system — (1) the characteristic or condition to be controlled. opinion polls furnish feedback about the effectiveness of the campaign and about each candidate's chances to win. (2) the sensor. As the election nears. plans. From these definitions it can be stated that there is close link between planning and controlling. The characteristic may be the output of the system during any stage of processing or it may be a condition that has resulted from the output of the system. Depending on the nature of this feedback. The degree to which they interact depends on the nature of the operating system and its objectives. In an elementary school system. We select a specific characteristic because a correlation exists between it and how the system is performing.

As long as a plan is performed within allowable limits. an employee directed to rework the parts that failed to pass quality inspection. There should be a direct correlation between the controlled item and the system's operation. let us review the elements of control in the context of information. It is often possible to identify trends in performance and to take action before an unacceptable variation from the norm occurs. however. . or plan. Social norms change.[2] Comparison with Standard In a social system. To illustrate how information flow facilitates control. the norms of acceptable behavior become the standard against which so-called deviant behavior may be judged. corrective action is not necessary. should be expressed in the same terms or language as in the original plan to facilitate decision making. the standards outlined by a formal law can be changed from one day to the next through revision. or a school principal who decides to buy additional books to provide for an increased number of students. information pertinent to control is fed back. and in a quality-control system this measurement might be performed by a visual inspection of the product. frequency distribution (a tabulation of the number of times a given characteristic occurs within the sample of products being checked) may be used to show the average quality. The third element of control. because the flow of sensory data and later the flow of corrective information allow a characteristic or condition of the system to be controlled.Control device or method of measurement. In many instances. Sensor After the characteristic is sensed. the comparator. A sampling procedure suggests measuring some segment or portion of the operation that will represent the total. Information is the medium of control. the relative ease of translation may be a significant factor in selecting the units of measurement or the language unit in the sensing element. determines the need for correction by comparing what is occurring with what has been planned. Using machine methods (computers) may require extensive translation of the information. This sort of preventative action indicates that good control is being achieved. Information that is to be compared with the standard. Exactly what information needs to be transmitted and also the language that will best facilitate the communication process and reduce the possibility of distortion in transmission must be carefully considered. Some deviation from plan is usual and expected. In a home heating system this device would be the thermostat.[4] 40 Relationship between the elements of control and information Controlled Characteristic or. Output information is compared with the standard or norm and significant deviations are noted.[5] It is usually impractical to control every feature and condition associated with the system's output. device. or replacement by another. corrective action is required. or method used to direct corrective inputs into the operating system may take a variety of forms. In contrast. The fourth element of control. Regulations and laws provide a more formal collection of information for society. control of the selected characteristic should have a direct relationship to the goal or objective of the system. Information about deviant behavior becomes the basis for controlling social activity. the measurement may be sampled rather than providing a complete and continuous feedback of information about the operation. and the comparison of output with a standard. Condition The primary requirement of a control system is that it maintain the level and kind of output necessary to achieve the system's objectives. but when variations are beyond those considered acceptable. or measured. It may be a hydraulic controller positioned by a solenoid or electric motor in response to an electronic error signal. the choice of the controlled item (and appropriate information about it) is extremely important. Therefore. this seldom occurs in practice. Since optimal languages for computation and for human review are not always the same. discontinuation. In other words. The actual person. In an industrial example. but very slowly. the spread. is the corrective action taken to return the system to expected output. the activator.

[4] The comparator may be located far from the operating system. comparison. the sensing. that the timing mechanism is an independent unit and is not measuring the objective function of the lighting system. For example. If the system is a machine-to-machine system. Comparing actual performance with standards. to modify the time the lights are turned on as the days grow shorter or longer). and a ribbon of white-hot steel races through the plant. A small amount of energy can change the operation of jet airplanes. or adjustment may be made through action taken by an individual . If the lights should be needed on a dark. the measurement (the sensory element) is usually at the point of operations. automatic steel mills. and (3) the relationship of control to the decision process (that is. or whether to modify the law to reflect a different norm of acceptable behavior. This ability to control from afar means that aircraft can be flown by remote control. The measurement information can be transmitted to a distant point for comparison with the standard (comparator). For example. It takes but a small amount of control energy to release or stop large quantities of input. stormy day the timing device would not recognize this need and therefore would not activate energy inputs. the traffic in drugs has been increasing in some cities at an alarming rate.or closed-loop control)." This means that the objectives of the system are not feasible in relation to the capabilities of the present design. (2) the kind of components included in the design (that is man or machine control systems). the system is "out of control.Control If there is a significant and uncorrectable difference between output and plan. Either the objectives must be reevaluated or the system redesigned to add new capacity or capability. a mechanical device closes the circuit and energy flows through the electric lines to light the lamps. however. When the control relates to a man-to-machine or man-to-man system. Kinds of control Control may be grouped according to three general classifications: (1) the nature of the information flow designed into the system (that is. Correcting deviations. dangerous manufacturing processes can be operated from a safe distance. Once the decision has been made to direct new inputs into the system. Implimentor The activator unit responds to the information received from the comparator and initiates corrective action. However. and (3) what corrective inputs will restore the system to a reasonable degree of stability. a worker at a control board directs the flow of electrical energy throughout a regional network of stations and substations. the individual(s) in charge must evaluate (1) the accuracy of the feedback information. (2) the significance of the variation. and the landing gear of the airplane goes up or down. Corrective properties may sometimes be built into the controller (for example. the correcting input can be released from the distant point. The citizens must decide whether to revise the police system so as to regain control. In another instance. the input (activator) will be located at the operating system. Measurement of actual performance. but this would not close the loop. At a certain time each evening. although at least some of the elements must be in close proximity to operations. The pilot presses a button.and Closed-Loop Control A street-lighting system controlled by a timing device is an example of an open-loop system. 41 Process of Controlling • • • • • Setting performance standards. the actual process may be relatively easy. however. Analysing deviations. Note. and when deviations occur. and hydroelectric power plants. the corrective inputs (decision rules) are designed into the network. organizational or operational control).[3] Open. the operator of a steel mill pushes a lever. open. and national organizations can be directed from centralized headquarters.

The automatic system is highly structured. the relationship between objectives and associated characteristics is often vague. . For example. The complexity of our society is reflected in many of our laws and regulations. let us refer once more to a formalized social system in which deviant behavior is controlled through a process of observed violation of the existing law (sensing). In automatic machine systems. the expected standard is difficult to define. it is a closed-loop system. but even in this instance. This new input returns the engine to the desired number of revolutions per minute. The home thermostat is the classic example of a control device in a closed-loop system. The significant difference between this type of system and an open-loop system is that the control device is an element of the system it serves and measures the performance of the system. the degree of permissible variation and the amount of the actual variation are often a subject of disagreement between the patrolman and the suspected violator.[3]'' == 42 Man and Machine Control The elements of control are easy to identify in machine systems. For example. the correction process begins. and programmed to regulate the transformation of inputs within a narrow range of variation. the regulator reacts by opening a valve that releases additional inputs of steam energy. the output of the system is measured continually through the item controlled. If control is exercised as a result of the operation rather than because of outside or predetermined arrangements. The furnace-activating circuit is turned off as the temperature reaches the preselected level. An expectation of precision exists because the characteristic is quantifiable and the standard and the normal variation to be expected can be described in exact terms. The reason for such a condition is apparent when one recognizes that any system.[6] The speed limit established for freeway driving is one standard of performance that is quantifiable. and the sensing device could be a speedometer or a thermometer. In other words. the control mechanism closes the circuit to start the furnace and the temperature rises. Consider the complex missile-guidance systems that measure the actual course according to predetermined mathematical calculations and make almost instantaneous corrections to direct the missile to its target. that is. all four control elements are integral to the specific system.Control who is not part of the system. every goal-seeking system employs feedback. must have available to it at all times an indication of its degree of attainment. the lights may be turned on by someone who happens to pass by and recognizes the need for additional light. and the amount of new inputs required is impossible to quantify. Many of the patterns of information flow in organizations are found to have the nature of closed loops. the measurement of the characteristic may be extremely subjective. and social operations. and the input is modified to reduce any difference or error toward zero. whereas control of people is complex because the elements of control are difficult to determine. This type of mechanical control is crude in comparison to the more sophisticated electronic control systems in everyday use. When even a small variation from the standard occurs. court hearings and trials (comparison with standard). the characteristic to be controlled might be some variable like speed or temperature. which establish the general standards for economic. if it is to achieve a predetermined goal. which use feedback. designed to accept certain kinds of input and produce specific output. as the load on a steam engine increases and the engine starts to slow down. Machine systems can be complex because of the sophisticated technology. inputs of information are used in a process of continual adjustment to achieve output specifications. In general. political.[6] For an illustration of mechanical control. In human control systems. incarceration when the accused is found guilty (correction). An essential part of a closed-loop system is feedback. A citizen may not know or understand the law and consequently would not know whether or not he was guilty of a violation. and release from custody after rehabilitation of the prisoner has occurred. When the room temperature drops below the desired point. To illustrate.

and "hierarchical authority". and budgets. but organizational control tends to review and evaluate the nature and arrangement of components in the system. A pilot acts in conjunction with computers and automatic pilots to fly large jets. some elements of control may be performed by machine whereas others are accomplished by man. When a more detailed analysis is necessary. "closeness of supervision". special diagnostic techniques may be required to isolate the trouble areas and to identify the causes of the difficulty. we operate and "control" the system with respect to the daily inputs of material. To illustrate the difference. we "evaluate" the performance of a system to see how effective and efficient the design proved to be or to discover why it failed. and costs. writers have tended to differentiate the control process between that which emphasizes the nature of the organizational or systems design and that which deals with daily operations. he must intercede and assume direct control. a failure to meet expectations may signal the need to reorganize or redesign.[7] In organizational control. a manager might not be concerned with the behavior of a salesman as long as sales were as high as expected. goods-in-process. or possible collision with another plane. is it because the system is not effective (accomplishing its objectives)? Is the system failing to achieve an expected standard of efficiency? Is the evaluation being conducted because of a breakdown or failure in operations? Is it merely a periodic audit-and-review process? When a system has failed or is in great difficulty. Is the output of product or service the proper quality and is it available as scheduled? Are inventories of raw materials. The process of organizational control is to review and evaluate the performance of the system against these established norms. In contrast. More recently. In both instances. specifications. Rewards for meeting or exceeding standards may range from special recognition to salary increases or promotions. the elements of feedback are present. and energy. if an organization's output backlog builds rapidly. it is logical to check first to see if the problem is due to such readily obtainable measures as increased demand or to a drop in available man hours. the approach used in the program of review and evaluation depends on the reason for the evaluation — that is. General plans are translated into specific performance measures such as share of the market. some standards may be precisely structured whereas others may be little more than general guidelines with wide variations expected in output.Control Most organized systems are some combination of man and machine. In the event of unexpected weather changes. On the other hand. It is appropriate to investigate areas that have been troublesome before or areas where some measure of performance can be quickly identified. Associated with this theory are such concepts as "span of control". whereas operational control tends to adjust the daily inputs.[4] 43 Organizational and Operational Control The concept of organizational control is implicit in the bureaucratic theory of Max Weber. Machines such as computers are incapable of making exceptions from the specified control criteria regardless of how much a particular case might warrant special consideration. return on investment. information. and finished products being purchased and produced in the desired quantities? Are the costs associated with the transformation process in line with cost estimates? Is the information needed in the transformation process available in the right form and at the right time? Is the energy resource being utilized efficiently? The most difficult task of management concerns monitoring the behavior of individuals. In other instances.[7] In contrast to organizational control. In addition. earnings. comparing performance to some standard. Man must act as the controller when measurement is subjective and judgment is required. close supervision of the salesman might be appropriate if achieving customer satisfaction were one of the sales organization's main objectives. Sometimes this control over people relates entirely to their output. Weber's view tends to include all levels or types of organizational control as being the same. For example. and providing rewards or punishment as indicated. The direction for organizational control comes from the goals and strategic plans of the organization. a systematic procedure should be followed. . For example. operational control serves to regulate the day-to-day output relative to schedules.

the average ranking would indicate a particular executive's score in his decision-making role. and yet the two managers may have made decisions under different circumstances and conditions. is mental fatigue a function of the lack of a challenging assignment or the fear of a potential injury? Subjective inputs may be transferred into numerical data. If it were feasible. . This is true particularly when inputs of human energy cannot be related directly to output. In evaluating man-machine or human-oriented systems. the problem of timing information flow. how does mental fatigue affect the quality or quantity of output? And. energy. Still. Let us suppose. It also follows that if it is difficult or impossible to identify the actual output of individuals. adding these. we design control into systems.[7] 44 Problems of control The perfect plan could be outlined if every possible variation of input could be anticipated and if the system would operate as predicted. Many of the characteristics pertaining to output do not lend themselves to quantitative measurement. the more likely that the control characteristic will be related to some output goal. the measurement of system effectiveness is difficult to make and subsequently perplexing to evaluate. Some of the more typical problems relating to control include the difficulty of measurement. External factors over which neither executive had any control may have influenced the difference in "effectiveness".[7] When objectives are not limited to quantitative output. This means that individuals' levels of motivation and the measurement of their performance become subjective judgments made by the supervisor. the system may not be designed to operate efficiently. After determining the ranking for each decision. and quite another to make it operate true to the best objectives of design.75 might be considered more effective than another who had a ranking of 6. 10 being the perfect decision. judgments — which could be quite erroneous — might be made about his decision-making effectiveness. The objective of the system is to perform some specified function. planning requirements would be so complex that the system would be out of date before it could be operated. The purpose of organizational control is to see that the specified function is achieved. Operating "in control" or "with plan" does not guarantee optimum performance. for example. and the danger that the analyst may assume undue confidence in such data after they have been quantified. or information — in other words. One executive with a ranking of 6. economical. For example.25. it is better to measure the performance of the entire group. The same situation applies to machines and other equipment associated with human involvement.[7] Quantifying human behavior. This kind of planning is neither realistic. that the decisions made by an executive are rated from 1 to 10. the objective of operational control is to ensure that variations in daily output are maintained within prescribed limits. It is one thing to design a system that contains all of the elements of control. subjectivity. and the setting of proper standards. psychological and sociological factors obviously do not easily translate into quantifiable terms. the design and effective operation of control are not without problems. On the basis of this score. if it does. and dividing by the total number of decisions made. The behavior of individuals ultimately dictates the success or failure of every man-made system. nor feasible for most business systems.Control The larger the unit. but there is always the danger of an incorrect appraisal and transfer. For example. Therefore. despite its extreme difficulty. the plan may not make the best use of the inputs of materials. when output is not in specific units. and imprecision in relation to measuring physical characteristics is the most prevalent and important measurement made in large systems. Controlling output also suggests the difficulty of controlling individuals' performance and relating this to the total system's objectives. This requires more thought in the systems design but allows more flexibility of operations and makes it possible to operate a system using unpredictable components and undetermined input.

to correct too much in the other direction. Again.Control 45 Information Flow Another problem of control relates to the improper timing of information introduced into the feedback channel. The more rapid the system's response to an error signal.[3] One solution to this problem rests in anticipation. and so on until the system fluctuates ("oscillates") out of control. It is usually more effective for an organization to maintain continuous measurement of its performance and to make small adjustments in operations constantly (this assumes a highly sensitive control system). a time lead can be introduced to compensate for the time lag. for then the corrective action is superimposed on a variation from norm which. either by mistakes in measurement or in judgment. but not until Point B. The difficulty also might be overcome by reducing the time lag between the measurement of the output and the adjustment to input. “Oscillation and Feedback”. The correction is outlined as a factor of the type and rate of the error.[3] . yet the need for prompt action is important because any delay in providing corrective input could also be crucial. If a trend can be indicated. This phenomenon is illustrated in Figure 1. A system generating feedback inconsistent with current need will tend to fluctuate and will not adjust in the desired manner. if this is recognized at Point C. This Oscillation and Feedback causes the system to overcorrect. the trend below standard is recognized and new inputs are added. the more likely it is that the system could overadjust. That is. If. should be timely and correct to be effective. which involves measuring not only the change but also the rate of change. but inputs are not withdrawn until Point D. Information feedback. is in the same direction as that of the correction. The most serious problem in information flow arises when the delay in feedback is exactly one-half cycle. bringing about consistency between the need for correction and the type and magnitude of the indicated action. it will cause the system to drop below the lower limit of allowable variation. consequently. the system will overreact and go beyond the allowable limits. Improper timing can occur in both computerized and human control systems. the information should provide an accurate indication of the status of the system. at Point A. and then if the reverse adjustment is made out of cycle. at that moment.

Co. Automatic control systems. that we may measure characteristics that do not represent effective performance (as in the case of the speaker who requested that all of the people who could not hear what he was saying should raise their hands). ISBN 0876205406 9780876205402. [2] Robert J. systems. Standards should be as precise as possible and communicated to all persons concerned. or it may be related to the lack of defined responsibility or authority to take action. OCLC 2299496. provided that human intervention is possible to handle exceptions. OCLC 825227. Mass.: Goodyear Pub. In human systems. Management. however. Calif. [5] James G March. Mockler (1970). communication alone is not sufficient. ISBN 0080224822 : 9780080224824 0080224814 9780080224817. what kind of behavior should be expected by students in the classroom? Discretion and personal judgment play a large part in such systems. OCLC 4193519. ISBN 0390644390 9780390644398. and society : an introduction. Pacific Palisades. Leadership and positive motivation then become vital ingredients in achieving the proper response to input requirements.. The management control function. OCLC 2299496. standards tend to be poorly defined and the allowable range of deviation from standard also indefinite. pp.. pp. offer the greatest promise. pp. or that improper information may be communicated. For example.: Harvard Business School Press. [4] Samuel Eilon (1979). OCLC 115076. pp.: Goodyear Pub.[3] References [1] Henri Fayol (1949). . on the assumption that when people establish their own goals. [3] Richard Arvid Johnson (1976). Boston. Boston. to determine whether corrective action should be taken. New York: Appleton-Century-Crofts. ISBN 0471567930 9780471567936. 148–142. New York: Pitman Publishing.: Harvard Business School Press. pp. understanding is necessary. 14–17. 241–244. Management. thus the solution to these problems must start at that point. Readings in Management Control. and business managers face the same issue in establishing standards that will be acceptable to employees.Control 46 Setting Standards Setting the proper standards or control limits is a problem in many systems. OCLC 18052725. Herbert A Simon (1958). how many hours each day should a professor be expected to be available for student consultation? Or. Parents are confronted with this dilemma in expressing what they expect of their children. Mass. This may take the form of opposition and subversion to control. Management control. Organizations. General and Industrial Management. Calif. Most control problems relate to design. systems. ISBN 0875841848 9780875841847. OCLC 1329335. 9–11. and society : an introduction. pp. There is a danger. they are more apt to accept and achieve them. 14–17. Perhaps the most difficult problem in human systems is the unresponsiveness of individuals to indicated correction. 107–109. ISBN 0876205406 9780876205402. Some theorists have proposed that workers be allowed to set their own standards. [7] Richard Arvid Johnson (1976). Co. [6] Robert N Anthony (1970). New York: Wiley. Moreover. Pacific Palisades.

controls. and sustains certain behaviors. Motivation concepts Intrinsic and extrinsic motivation Intrinsic motivation refers to motivation that is driven by an interest or enjoyment in the task itself. goal. Conceptually. For instance: An individual has not eaten. which will increase their capabilities. also known as autonomy. • believe they have the skill that will allow them to be effective agents in reaching desired goals (i. Timeline of theorists about student motivation Brief history At one time. Initially they noticed that employees were working harder but it was not because of the lighting.[6] Intrinsic motivation has been studied by social and educational psychologists since the early 1970s. employees were considered just another input into the production of goods and services. Intrinsic Motivation is based on taking pleasure in an activity rather working towards an external reward. motivation should not be confused with either volition or optimism. They concluded that productivity increased due to attention that the workers got from the research team and not because of changes to the experimental variable. Students who are intrinsically motivated are more likely to engage in the task willingly as well as work to improve their skills. as a response he or she eats and diminishes feelings of hunger.[1] Motivation is related to. so the needs and motivation of employees became the primary focus of managers. selfishness. emotion. the results are not determined by luck). or a desired object. or it may include specific needs such as eating and resting. The researches were studying the effect of different working environments on productivity.Motivation 47 Motivation Motivation is a term that refers to a process that elicits. . he or she feels hungry.e. motivation may be rooted in a basic need to minimize physical pain and maximize pleasure. morality.[3] The Hawthorne studies were conducted by Elton Mayo [4] at Hawthorne Plant in the 1920s. but distinct from. Hawthorne studies found that employees are not motivated solely by money but motivation is linked to employee behaviour and their attitudes. ideal. or avoiding mortality. state of being.[7] Students are likely to be intrinsically motivated if they: • attribute their educational results to factors under their Motivational poster own control. According to various theories. or it may be attributed to less-apparent reasons such as altruism. and exists within the individual rather than relying on any external pressure. They used lighting as an experimental variable (the effect of bright lighting and dull lighting).[2] But this changed after the Hawthorne Studies.[5] The Hawthorne Studies began the human relations approach to management.

Social psychological research has indicated that extrinsic rewards can lead to over justification and a subsequent reduction in intrinsic motivation. the effect is greater. Extrinsic motivation refers to the performance of an activity in order to attain an outcome. Drives and desires can be described as a deficiency or need that activates behavior that is aimed at a goal or an incentive. even later when the treat is removed from the process. Self-determination theory proposes that extrinsic motivation can be internalised by the individual if the task fits with their values and beliefs and therefore helps to fulfill their basic psychological needs. Negative reinforcement involves stimulus change consisting of the removal of an aversive stimulus following a response. A reinforcer is any stimulus change following a response that increases the future frequency or magnitude of that response.[8] Extrinsic motivation comes from outside of the individual. These are thought to originate within the individual and may not require external stimuli to encourage the behavior. children who expected to be (and were) rewarded with a ribbon and a gold star for drawing pictures spent less time playing with the drawing materials in subsequent observations than children who were assigned to an unexpected reward condition. and other people. a person may be highly intelligent according to a more conservative definition (as measured by many intelligence tests). which motivates a person to seek food. coercion and threat of punishment. Reinforcers and reinforcement principles of behavior differ from the hypothetical construct of reward. Competition is in general extrinsic because it encourages the performer to win and beat others. A crowd cheering on the individual and trophies are also extrinsic incentives. respectively. which motivates a person to behave in a manner pleasing to others. therefore the cognitive approach is certainly the way forward as in 1973 Maslow described it as being the golden pineapple. and decreases as duration lengthens. Common extrinsic motivations are rewards like money and grades. is presented after the occurrence of an action (i. The treat motivates the animals to perform the trick consistently. motivation is mediated by environmental events. not to enjoy the intrinsic rewards of the activity. Yale School of Management professor Victor Vroom's "expectancy theory" provides an account of when people will decide whether to exert self control to pursue a particular goal. Positive reinforcement is demonstrated by an increase in the future frequency or magnitude of a response due to in the past being followed contingently by a reinforcing stimulus. tangible or intangible.[9] For those children who received no extrinsic reward. Motivational theories Incentive theory A reward. 48 Self-control The self-control of motivation is increasingly understood as a subset of emotional intelligence. These two sources are called intrinsic motivation and extrinsic motivation. yet unmotivated to dedicate this intelligence to certain tasks.e. and the concept of distinguishing between intrinsic and extrinsic forces is irrelevant.Motivation • are interested in mastering a topic. behavior) with the intent to cause the behavior to occur again. By contrast. Motivation comes from two sources: oneself. . In one study demonstrating this effect. This is done by associating positive meaning to the behavior. Studies show that if the person receives the reward immediately. whereas more subtle drives might be the desire for praise and approval. Basic drives could be sparked by deficiencies such as hunger. From this perspective. Repetitive action-reward combination can cause the action to become habit. Positive reinforcement involves a stimulus change consisting of the presentation or magnification of an appetitive stimulus following a response. rather than just rote-learning to achieve good grades. the role of extrinsic rewards and stimuli can be seen in the example of training animals by giving them treats when they perform a trick correctly. which then contradicts intrinsic motivation.

The Drive Reduction Theory grows out of the concept that we have certain biological drives. and. such as a thermostat. it will eliminate that negative feeling of thirst. The theory is based on diverse ideas from the theories of Freud to the ideas of feedback control systems. The ability of drive theory to cope with all kinds of behavior. or if they drink when thirsty. or gaining social capital will make them happier.Motivation Applying proper motivational techniques can be much harder than it seems. It is one of the most influential and extensively studied theories in social psychology. a person has come to know that if they eat when hungry. or a hungry human could not prepare a meal without eating the food before he finished cooking it. blaming. In incentive theory. The first problem is that it does not explain how secondary reinforcers reduce drive. In terms of behaviorism. in the direction of the motivation. Incentive theory distinguishes itself from other motivation theories. As time passes the strength of the drive increases if it is not satisfied (in this case by eating). which combine with drives for "food" in order to explain cooking render it hard to test. a consumer may seek to reassure himself regarding a purchase. In addition.the lack of homeostasis in the body. or actions. making the drive a homuncular being—a feature criticized as simply moving the fundamental problem behind this "small man" and his desires. but a pay check appears to reduce drive through second-order conditioning. For example. cognitive dissonance occurs when an individual experiences some degree of discomfort resulting from an incompatibility between two cognitions. the drive model appears to be compatible with sensations of rising hunger as the food is prepared. it will eliminate that negative feeling of hunger. which involves negative reinforcement: a stimulus has been associated with the removal of the punishment-. to mean that a person's actions always have social ramifications: and if actions are positively received people are more likely to act in this manner.F. Incentive theory in psychology treats motivation and behavior of the individual as they are influenced by beliefs. incentive theory involves positive reinforcement: the stimulus has been conditioned to make the person happier. such as hunger. such as engaging in activities that are expected to be profitable. such as hunger. to use the term above. it can be easy to reward A. it is clear that drive reduction theory cannot be a complete theory of behavior. . beliefs. As opposed to the body seeking to reestablish homeostasis pushing it towards the stimulus. in retrospect. the theory of cognitive dissonance proposes that people have a motivational drive to reduce dissonance. Upon satisfying a drive the drive's strength is reduced. and denying. from not satisfying a drive (by adding on other traits such as restraint). For instance when preparing food. For example. Skinner and literalized by behaviorists. is viewed as having a "desire" to eat. reap harmful effects that can jeopardize your goals. a person towards them. per se. especially by Skinner in his philosophy of Radical behaviorism. that another decision may have been preferable. or if negatively received people are less likely to act in this manner. stimuli "attract". or adding additional drives for "tasty" food. a drive. Steven Kerr notes that when creating a reward system. While not a theory of motivation. Incentive theory is promoted by behavioral psychologists. such as B. that leave the validity of drive reduction open for debate. a person knows that eating food. however. after the food has been consumed. 49 Drive-reduction theory There are a number of drive theories. Drive theory has some intuitive or folk validity. and in the process. There are several problems. Secondly. such as drive theory. Cognitive dissonance theory Suggested by Leon Festinger. a decrease in subjective hunger. For example. They do this by changing their attitudes. feeling. drinking water. money satisfies no biological or psychological needs. As opposed to in drive theory. while hoping for B. Dissonance is also reduced by justifying. For instance.

but absence can cause health deterioration. Basically it is oriented on a future need for security. challenging work. from the basic to the complex. people are motivated by unsatisfied needs. • The person advances to the next level of needs only after the lower level need is at least minimally satisfied." Herzberg's theory has found application in such occupational fields as information systems and in studies of user satisfaction (see Computer user satisfaction). if a manager is trying to motivate his employees by satisfying their needs. they don't lead to dissatisfaction but no satisfaction. After securing those two levels. but if absent. etc. If there is any deficit on this level.k. which awake a need for security. According to him. job security. Only unsatisfied needs influence behavior. and • Hygiene factors. salary and fringe benefits) that do not motivate if present. (e. The American motivation psychologist Abraham H.g. (e.) Safety/Security/Shelter/Health Belongingness/Love/Friendship Self-esteem/Recognition/Achievement Self actualization Herzberg's two-factor theory Frederick Herzberg's two-factor theory. We can relate Maslow's Hierarchy of Needs theory with employee motivation. satisfied needs do not. the motives shift in the social sphere. It shows the complexity of human requirements. Also he has to remember that not everyone will be satisfied by the same needs. according to Maslow. a.Motivation 50 Need theories Need hierarchy theory The content theory includes the hierarchy of needs from Abraham Maslow and the two. • Since needs are many. responsibility) which give positive satisfaction. intrinsic/extrinsic motivation. humanness and psychological health a person will show. while the top of the hierarchy comprise the self. Maslow developed the Hierarchy of needs consistent of five hierarchic classes. .factor theory from Herzberg. status. thirst. Maslow's theory is one of the most widely discussed theories of motivation. but "respect for me as a person" is one of the top motivating factors at any stage of life. he should try to satisfy the lower level needs before he tries to satisfy the upper level needs or the employees will not be motivated. listed from basic (lowest-earliest) to most complex (highest-latest) are as follows: • • • • • Physiology (hunger. The name Hygiene factors is used because. Psychological requirements consist in the fourth level. like hygiene. recognition. The theory is sometimes called the "Motivator-Hygiene Theory" and/or "The Dual Structure Theory. but.The factors that motivate people can change over their lifetime.realization So theory can be summarized as follows: • Human beings have wants and desires which influence their behavior. which form the third stage. the more individuality. He distinguished between: • Motivators. the whole behavior of a human will be oriented to satisfy this deficit. result in demotivation. if absent. Subsequently we do have the second level. the presence will not make you healthier. • The further the progress up the hierarchy. For example.a. The needs. concludes that certain factors in the workplace result in job satisfaction. they are arranged in order of importance. The basic requirements build the first step in his pyramid. The lower level needs such as Physiological and Safety needs will have to be satisfied before higher level needs are to be addressed.g. sleep. A good manager will try to figure out which levels of needs are active for a certain individual or employee.

As a result.Motivation Alderfer's ERG theory Alderfer. The goal should be objectively defined and intelligible for the individual. it includes a range of dimensions that are relevant to success at work but which are not conventionally regarded as being part of performance motivation. The second group of needs are those of relatedness. SDT does not include any sort of "autopilot" for achievement. difficulty and specificity. social motives like dominance. At the same time people want to feel that there is a substantial probability that they will succeed. Most children have no idea how much effort they need to reach that goal. integrative theory of motivation is Temporal Motivation Theory(TMT)[10]. Self-Efficacy and Goal Setting. most people are not optimally motivated. but instead requires active encouragement from the environment. not too hard or too easy to complete. SDT posits a natural tendency toward growth and development. Unlike these other theories. existing theories to integrate were selected based on their shared attributes. The existence group is concerned with providing our basic material existence requirements. They include the items that Maslow considered to be physiological and safety needs. These social and status desires require interaction with others if they are to be satisfied. including Incentive Theory. An ideal goal should present a situation where the time between the initiation of behavior and the end state is close. focuses on the importance of intrinsic motivation in driving human behavior. 51 Broad theories The latest approach in developing a broad. Self-determination theory Self-determination theory. Need Theory. In both cases. Especially it integrates formerly separated approaches as Need for Achievement with e. in an effort to keep the theory simple. However. The original researchers note that. Introduced in a 2007 Academy of Management Review article. A classic example of a poorly specified goal is to get the highest possible grade. Alderfer isolates growth needs' an intrinsic desire for personal development. this end state is a reward in itself. . These include the intrinsic component from Maslow's esteem category and the characteristics included under self-actualization. expanding on Maslow's hierarchy of needs. it still simplifies the field of motivation and allows findings from one theory to be translated into terms of another. it synthesizes into a single formulation the primary aspects of several other major motivational theories. Like Maslow's hierarchical theory and others that built on it. created the ERG theory. This explains why some children are more motivated to learn how to ride a bike than to master algebra.the desire we have for maintaining important interpersonal relationships. as many want a challenge (which assumes some kind of insecurity of success). developed by Edward Deci and Richard Ryan.g. Specificity concerns the description of the goal in their class. A goal's efficiency is affected by three features: proximity. competence feedback. and growth. and relatedness. hence the label: ERG theory. relatedness. This theory posits that there are three groups of core needs — existence. The primary factors that encourage motivation and development are autonomy. Integrating theories of motivation. Finally. however. as TMT does not contain the same depth of detail as each individual theory. Cognitive theories Goal-setting theory Goal-setting theory is based on the notion that individuals sometimes have a drive to reach a clearly defined end state. Drive Theory. and that these theories are still of value. Achievement Motivation is an integrative perspective based on the premise that performance motivation results from the way broad components of personality are directed towards performance. A goal should be moderate. Also. The Achievement Motivation Inventory is based on this theory and assesses three factors (17 separated scales) relevant to vocational and professional success. Often. and they align with Maslow's social need and the external component of Maslow's esteem classification.

the need to learn Eating. the need to strike back/to win In this model. An example of such a motivational and volitional construct is perceived self-efficacy. and the initiation of action. the need for individuality Order.000 people.Motivation 52 Models of behavior change Social-cognitive models of behavior change include the constructs of motivation and volition. people differ in these basic desires. These basic desires represent intrinsic desires that directly motivate a person's behavior. the need to be safe Vengeance. the need to be loyal to the traditional values of one's clan/ethnic group Idealism. the need for organized. the need for social standing/importance Tranquility. the need to raise children Honor. respectively. or only as a means to achieve other basic desires. predictable environments Physical activity. motivation and volition refer to goal setting and goal pursuit. "Psychoanalysis has often demonstrated that the relationship between a conscious desire and the ultimate unconscious aim that underlies it need not be at all direct. the need to collect Social contact. the need for approval Curiosity. Self-efficacy is supposed to facilitate the forming of behavioral intentions. Volition is seen as a process that leads from intention to actual behavior. . the need for food Family. Both processes require self-regulatory efforts. but in this case this does not relate to deep motivation. The 16 basic desires that motivate our actions and define our personalities as: • • • • • • • • • • • • • • • • Acceptance. Professor Steven Reiss has proposed a theory that found 16 basic desires that guide nearly all human behavior. In other words. stable. Intrinsic motivation and the 16 basic desires theory Starting from studies involving more than 6. Several self-regulatory constructs are needed to operate in orchestration to attain goals. It can support the translation of intentions into action. and not aimed at indirectly satisfying other desires. People may also be motivated by non-basic desires. the development of action plans. the need for friends (peer relationships) Social status. the need for sex Saving. the need for social justice Independence. the need for exercise Power. the need for influence of will Romance. Unconscious motivation Some psychologists believe that a significant portion of human behavior is energized and directed by unconscious motives. Motivation is seen as a process that leads to the forming of behavioral intentions. According to Maslow.

4. you can use general motivational strategies or specific motivational appeals. audience rewards and audience threats. then that employee’s quality of work or all work in general will deteriorate. Soft sell strategies have logical appeals. Direct behavior toward particular goals Lead to increased effort and energy Increase initiation of. When motivating an audience. they sometimes need situated motivation. These drugs work in various ways to affect neurotransmitters in the brain. but not without potential side effects. Motivation in education can have several effects on how students learn and how they behave towards subject matter. Most of the time. which is found in environmental conditions that the teacher creates. It is generally widely accepted that these drugs enhance cognitive functions. An employee must be motivated to work for a company or organization. also known as nootropics. especially in the transhumanist movement. 5.[12] The effects of many of these drugs on the brain are emphatically not well understood. right and wrong. advice and praise.[14] The majority of new student orientation leaders at colleges and universities recognize that distinctive needs of students should be considered in regard to orientation information provided at the beginning of the higher education experience. and their legal status often makes open experimentation difficult. feelings. 2. they may find it difficult to extricate themselves from that path.Motivation 53 Controlling motivation The control of motivation is only understood to a limited extent. Research done by Whyte in 1986 raised the awareness of counselors and educators in this regard. and persistence in. In . emotional appeals. General motivational strategies include soft sell versus hard sell and personality type. 6. you can consider basing your strategy on your audience personality.[11] Drugs Some authors. There are many different approaches of motivation training. have suggested the use of "smart drugs". Hard sell strategies have barter. Specific motivational appeals focus on provable facts. the specific kind of motivation that is studied in the specialized setting of education differs qualitatively from the more general forms of motivation studied by psychologists in other fields. the salary of the employee is enough to keep him or her working for an organization. To understand how to control motivation it is first necessary to understand why many people lack motivation. as "motivation-enhancers". pressure and rank. activities Enhance cognitive processing Determine what consequences are reinforcing Lead to improved performance. but many of these are considered pseudoscientific by critics. However. If teachers decided to extrinsically reward productive student behaviors. outnumbering.[13] It can: 1. Applications Education Motivation is of particular interest to educational psychologists because of the crucial role it plays in student learning. Because students are not always internally motivated. Also. Consequently student dependency on extrinsic rewards represents one of the greatest detractors from their use in the classroom. 3. If no motivation is present in an employee. Employee motivation Workers in any organization need something to keep them working.

asserting that they do not rate people. or they feel that what they are learning is significant. they adduce. or recommendations. Doyle and Moeyn have noted that traditional methods tended to use anxiety as negative motivation (e.[25] 54 .[18] Also. motivation is conceptualized as either intrinsic or extrinsic. Students tending toward a more internal locus of control are more academically successful.[24] According to Sudbury Model schools. Classically. as in Pivotal Response Therapy. that the more requirements we pile onto children at school.[16] Today. They contend that human nature in a free society recoils from every attempt to force it into a mold. The no-grading and no-rating policy helps to create an atmosphere free of competition among students or battles for adult approval. Whyte's research report allowing readers to ascertain improvements made in addressing specific needs of students over a quarter of a century later to help with academic success. they admit it makes the process more difficult. However. in younger students it has been shown that contextualizing material that would otherwise be presented in an abstract manner increases the intrinsic motivation of these students. but instead as two ideal types that define a continuum:[17] • Intrinsic motivation occurs when people are internally motivated to do something because it either brings them pleasure. They assert that schools must keep that drive alive by doing what some of them do: nurturing it on the freedom it needs to thrive.[22] Sudbury Model schools' approach Sudbury Model schools adduce that the cure to the problem of procrastination. and in treating Autism Spectrum Disorders. they think it is important.[19] • Extrinsic motivation comes into play when a student is compelled to do something or act a certain way because of factors external to him or her (like money or good grades). transcripts. these concepts are less likely to be used as distinct categories. this policy does not cause harm to their students as they move on to life outside the school. However. and that school is not a judge. Whyte researched and reported about the importance of locus of control and academic achievement. and particularly of scientific illiteracy is to remove once and for all what they call the underlying disease: compulsion in schools.[23] Sudbury Model schools do not perform and do not offer evaluations. thus encouraging curriculum and activity development with consideration of motivation theories.[20][21] Motivation has been found to be an important element in the concept of Andragogy (what motivates the adult learner). but that such hardship is part of the students learning to make their own way. that after all the drive and motivation of infants to master the world around them is legendary. Cassandra B.g. assessments. the surer we are to drive them away from the material we are trying to force down their throats. Students decide for themselves how to measure their progress as self-starting learners as a process of self-evaluation: real life-long learning and the proper educational evaluation for the 21st century. of learning in general. set their own standards and meet their own goals. It has been shown that intrinsic motivation for education drops from grades 3-9 though the exact cause cannot be ascertained. the National Orientation Directors Association reprinted Cassandra B. or to some standard that has been set is for them a violation of the student's right to privacy and to self-determination. comparing students to each other. they have found that progressive approaches with focus on positive motivation over punishment has produced greater effectiveness with learning. since anxiety interferes with performance of complex tasks. use of bad grades by teachers) as a method of getting students to work. these categories are regarded as distinct.[15] Generally.Motivation 2007. and encourages a positive cooperative environment amongst the student body.

and find answers independently. Motivation is a powerful tool in the work environment that can lead to employees working at their most efficient levels of production. In keeping with this view. security and immediate reward) and solidaristic (which prioritises group loyalty). recognition. • Motivated employees always look for better ways to do a job. Also he has to remember that not everyone will be satisfied by the same needs. The average workplace is about midway between the extremes of high threat and high opportunity.. had as its first motto "To make everyone productive. Other theories which expanded and extended those of Maslow and Herzberg included Kurt Lewin's Force Field Theory.. McBer & Company. bureaucratic (where work is a source of status." For McClelland. such as physiological needs. McGregor places money in his Theory X category and feels it is a poor motivator. extrinsic motivation (e. An effective leader must understand how to manage all characters. a worker's motivation is solely determined by pay. Elton Mayo found that the social contacts a worker has at the workplace are very important and that boredom and repetitiveness of tasks lead to reduced motivation. though money could be used as an indicator of success for various motives. if a manager is trying to motivate his employees by satisfying their needs.[26] The lower level needs such as Physiological and Safety needs will have to be satisfied before higher level needs are to be addressed. indifferent.[30] According to the system of scientific management developed by Frederick Winslow Taylor.[28] The assumptions of Maslow and Herzberg were challenged by a classic study[29] at Vauxhall Motors' UK manufacturing plant. In essence. This introduced the concept of orientation to work and distinguished three main orientations: instrumental (where work is a means to an end). • Motivated workers are more productive.[27] Nonetheless. Edwin Locke's Goal Theory and Victor Vroom's Expectancy theory. and therefore management need not consider psychological or social aspects of work. money) could extinguish intrinsic motivation such as achievement motivation. These tend to stress cultural differences and the fact that individuals tend to be motivated by different factors at different times. At higher levels of the hierarchy. and ambivalent who all react and interact uniquely. however it tends to have a motivating effect on staff that lasts only for a short period (in accordance with Herzberg's two-factor model of motivation). praise. Mayo believed that workers could be motivated by . We can relate Maslow's Hierarchy of Needs theory with employee motivation. his consulting firm. Praise and recognition are placed in the Theory Y category and are considered stronger motivators than money. respect. According to Maslow. people are motivated by unsatisfied needs. and naturally staff are more attracted to the opportunity side of the motivation curve than the threat side. scientific management bases human motivation wholly on extrinsic rewards and discards the idea of intrinsic rewards. In contrast.g. and must be treated. A good manager will try to figure out which levels of needs are active for a certain individual or employee. Steinmetz also discusses three common character types of subordinates: ascendant.Motivation 55 Business At lower levels of Maslow's hierarchy of needs. and free. For example. David McClelland believed that workers could not be motivated by the mere need for money—in fact. grow. • Motivated employees are more quality oriented. as both Abraham Maslow's theory of motivation and Douglas McGregor's theory X and theory Y (pertaining to the theory of leadership) demonstrate. he should try to satisfy the lower level needs before he tries to satisfy the upper level needs or the employees will not be motivated. empowerment and a sense of belonging are far more powerful motivators than money. and motivated accordingly. money is a motivator. keeping score. managed. Maslow has money at the lowest level of the hierarchy and shows other needs are better motivators to staff.g. and more importantly the manager must utilize avenues that allow room for employees to work. according to Maslow. e. satisfaction lay in aligning a person's life with their fundamental motivations. happy. Motivation by threat is a dead-end strategy.

[13] Ormrod. New York: Van Nostrand Reinhold [6] N/A. P. Cognitive Enhancement: A Boost in the Right Direction?. http:/ / www. com/ doc/ 1P3-649207301. (pp. Learned Optimism. Heyel (ed. 25. Knopf. Understanding Employee Motivation. and Well-Being. 36 The Hawthorne Studies. ISBN 0-394-57915-1 James L (1998). J. Martin E. a hybrid management approach consisting of both Japanese and American philosophies and cultures.[31] William Ouchi introduced Theory Z. A Test of ‘Overjustification’ Hypothesis. html). In C. [16] Alexander. pdf [11] Thomas.. [12] Stevens.[35] The motivational structure of games is central to the gamification trend. ucalgary. L.. Cassandra B.. com. Its American segment retains formality and authority amongst members and the organization. The encyclopedia of management. (2007). p. including Richard Bartle's. 129‐37. 2nd ed. 2011. Self-Determination Theory and the Facilation of Intrinsic Motivation. W. org/ wiki/ Elton_Mayo Dickson. R. Guide to Managerial Persuasion and Influence. wikipedia. American Psychologist. employees were given freedom to make decisions on the job and greater attention was paid to informal work groups. as well as constant improvement of work efficacy. An Additional Look at Orientation Programs Nationally. htm [7] Wigfield. 2004.. http:/ / en.[32] Its Japanese segment is much like the clan culture where organizations focus on a standardized structure with heavy emphasis on socialization of its members. ca/ ~steel/ images/ Integrating... Contemporary Educational Psychology. Hawthorne experiments. because without motivation a player will not be interested in progressing further within a game. Tonks. 2000). L. “Undermining Children’s Intrinsic Interest with Extrinsic Reward. highbeam. 299-309 [8] Ryan. 71-77. David Greene and Richard Nisbet. Jon Radoff has proposed a four-quadrant model of gameplay motivation that includes cooperation. [9] Mark R. [10] http:/ / webapps2. T.Motivation acknowledging their social needs and making them feel important. N/A June 1998. E.. S. Ultimately. L. R. Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions. (1990). 2003 [14] Williams. and identify five principles that contribute to the success of an employee incentive program:[33] • Recognition of employees' individual differences. (2004). & Stockdale. & Perencevich. Robbins and Judge examine recognition programs as motivators. In Essentials of Organizational Behavior. His model has been judged as placing undue reliance on social contacts at work situations for motivating employees.(reprint of 1986 article in same journal). (January 01. M. 2000. The Triple Helix. org/ wiki/ Hawthorne_effect Elton Mayo Retrieved from http:/ / en. Sharni. & Deci. Guthrie. A. Vol. "The Teacher Educator". (1973). Print. As a result. C.P. S. immersion and achievement. competition. Social Development. & Deci. 2004 [15] Whyte. N.[34] Several models for gameplay motivations have been proposed. Psychology Dictionary. which seeks to apply game-based motivation to business applications.. 298-302).: Pearson Prentice Hall. R. wikipedia. K. Inc. Children's motivation for reading: Domain specificity and instructional influences. Mayo named the model the Hawthorne effect. hk/ psychology/ i. Ryan. 97. tuition.[36] References [1] [2] [3] [4] [5] Seligman. 15 (1).). J.. 1973. New York: Alfred A. Upper Saddle River. Theory Z promotes common structure and commitment to the organization. The Journal of Educational Research. ” Journal of Personality and Social Psychology 28. All underlying goals are consistent across the organization. and clear identification of behavior deemed worthy of recognition • Allowing employees to participate • Linking rewards to performance • Rewarding of nominators • Visibility of the recognition process 56 Games Motivational models are central to game design. 101. E. . Jane. "Classroom Motivation Strategies for Prospective Teachers" (http:/ / www. Lepper. 1. National Orientation Directiors Association Journal.J.

J.D. New York: Guilford Press. html) (9 ed. Extrinsic. Jossey-Bass. Appley.F. Timothy A. Shadel. [33] Robbins. Charles N. msn. com/ bp_robbins_eob_9/ 64/ 16396/ 4197506. W. cw/ index. 1-23. P.M. New York: Cambridge University Press. Droege. (1978). google. K. (1999).). The Academic Motivation Scale: A Measure of Intrinsic. "Theory Z. and behavior: An introduction to theory and research. Inner Excellence. Jim (2009). (2008) The Employee Motivation Audit: Cambridge Strategy Publications [31] Human Resources Management.wiley. Vohs. Helen (June 1. Boulder. F. 1993). Sydney: John Wiley & Sons • Fishbein. html [27] Steinmetz. shtml) edited transcript of a talk delivered at the April 2000 International Conference on Learning in the 21st Century. and Choice [20] Whyte..ub. com/ books?id=es2nOuZE0rAC& pg=PA95& dq=Evaluation.L. Measurement and Evaluation in Counseling. (2004). Upper Saddle River. Bechhofer. doi:10. (2007). org/ stable/ 40195071 [23] Greenberg D. K. webpronews. J. R. [18] Susan Harter (1981). "Self-Regulation: Reminders and Suggestions from Personality Science" (http://www3. [28] Steinmetz. Scheier. (1992) Freedom Nurtures Culture and Learning (http:/ / books. R. L. Mark Lepper (1995) Intrinsic Motivation and the Process of Learning:Beneficial Effects of Contextualization. Gale Virtual Reference Library. Marina (2006). radoff. p. 8. (March 08. Essentials of Organizational Behavior (http:/ / wps. & Doyle. April 2011. google. intention. [26] Tom P (2004).B. ISBN 1572309911 • Carver. [22] Moen.. (http:/ / sudburyvalleyschool. Fiori. R. On the self-regulation of behavior (http://books.G. C. com/ id/ 37451547/ ns/ technology_and_science-tech_and_gadgets/ ). and Scott B. 5th ed. K. http:/ / archive. Cassandra B. (1983) Nice Guys Finish Last: Management Myths and Reality. A New Self-Report Scale of Intrinsic versus Extrinsic Orientation in the Classroom: Motivational and Informational Components [19] Diana Cordova. 57 Further reading • Baumeister. The Human Factor: Inside the CIA's Dysfunctional Intelligence Culture (New York: Encounter Books).2006. doi:10. [34] Radoff. (2001).S. MA: Addison-Wesley • Gollwitzer. (2000). O. Ajzen. (1980).F. D. Web. (1987). Tim. Measures of Academic Motivation: A Conceptual Review. J. M. 2012.Motivation [17] Vallerand. prenhall. [30] Weightman. Judge. jstor.. 574. M. D. com/ books?id=YQn_BA76TF4C& pg=PA14& dq=Freedom+ Nurtures+ Culture+ and+ Learning). London. (editor) and Whyte. [25] Greenberg. (pp. Belief.x • Cofer.1464-0597. Mortimer H (1967). com/ it/ itmanagement/ wpn-18-20040302ManagingITAccordingtoaHierarchyofNeeds. "Implementation intentions: Strong effects of simple plans" (http://kops. [21] Lauridsen. Chapter 20. Applied Psychology: an International Review 55 (3): 333–385. Ed. Colorado: Horizon Publications Inc. D. Game On: Energize Your Business with Social Games.com/?id=7CeE67IrVDUC&dq).+ Free+ at+ Last+ —+ The+ Sudbury+ Valley+ School& cd=1#v=onepage& q=& f=false) Free at Last — The Sudbury Valley School. Reading. MSNBC.. 43–44) [29] Goldthorpe. ISBN 0521000998 • Cervone. [24] Greenberg.54. Boulder. and Platt. org/ essays/ 102008. theory. McGraw-Hill.google..7. uni-konstanz. (1979) Effective Counseling Methods for High-Risk College Freshmen. Lockwood. Detroit: Gale.493 • Jones. Handbook of self-regulation: Research.pdf). 198-200. I. NJ: Prentice Hall.1037/0003-066X. and Amotivation in Education. American Psychologist 54 (7): 493–503." May 2011. ISBN 978-1594033827 • Murphy. Jon. Evaluation. "FarmVille invades the real world" (http:/ / www. Marilyn M. J.H.. p. Smith. Stephen P. 5 Feb. Colorado: Horizon Publications Inc. and applications (http:// books. Ishmael (2008)." Encyclopedia of Management..google.com/ ?id=U9xi8wlfWccC&printsec). .. Education in America: A View From Sudbury Valley.interscience. Personalization. N/A. 2010). L. ISBN 978-0470936269 [35] Radoff. Research in Higher Education.com (http:/ / radoff. ISBN 978-0-07-163504-2 . Retrieved from http:/ / www. New York. (1983) Nice Guys Finish Last: Management Myths and Reality.Managing IT According To A Hierarchy Of Needs.00261. 2006. 914-916. An Integrated counseling and Learning Assistance Center. msnbc.com/journal/118628287/abstract). HT Graham and R Bennett M+E Handbooks(1993) ISBN 0-7121-0844-0 [32] Barnett. C. (1975). 6 (4). Educational and Psychological Measurement. Jon. attitude. "Game Player Motivations. 52.1111/j. 1003-17.de/volltexte/2008/5559/pdf/99Goll_ImpInt. 21st Century Schools. Motivation: Theory and Research. Inc. 4. Helms. 460. (1968) The Affluent Worker: Attitudes and Behaviour Cambridge: Cambridge University Press.. (http:/ / books. com/ blog/ 2011/ 05/ 19/ game-player-motivations/ ) [36] Popkin. D..New Directions Sourcebook. Ronald E.

sexual orientation etc. their sequence and interaction. business sector or an economy. gender. In governing human resources. Demographics: the characteristics of a population/workforce.. "labor". etc. Also. organization career (promotion through the firm) and unstructured (lower/unskilled workers who work when needed). Modern analysis emphasizes that human beings are not "commodities" or "resources". and the transportation and infrastructure of the area also influence who applies for a post. Skills and qualifications: as industries move from manual to more managerial professions so does the need for more highly skilled graduates. companies will engage in a barrage of human resource management practices to capitalize on those assets. Overview The term in practice In the corporate vision. 2. Advocates of "workplace diversity" advocate an employee base that is a mirror reflection of the make-up of society insofar as race. Changes in society now mean that a larger proportion of organizations are made up of "baby-boomers" or older employees in comparison to thirty years ago.e. The professional discipline and business function that oversees an organization's human resources is called human resource management (HRM. other terms sometimes used include "manpower". the International Labour Organization decided to revisit and revise its 1975 Recommendation 150 on Human Resources . gender or social class. employers must compete for employees by offering financial rewards. and to define and communicate responsibilities and authorities. age. employees are viewed as assets to the enterprise. and simply "people". not enough staff for the jobs). Mahoney 1989 developed 3 different types of occupational structure. 3. heavily unionised nations such as France and Germany have adopted and encouraged such approaches. for example. • Occupational structure: the norms and values of the different careers within an organization. In general. If the market is "tight" (i. insurance packages etc. in 2001. Concerns about the terminology One major concern about considering people as assets or resources is that they will be commoditized and abused. or simply HR). the following must be understood: • Geographical spread: how far is the job from the individual? The distance to travel to work should be in line with the pay offered. namely. three major trends are typically considered: 1. community investment. Likewise.[1] Hence. craft (loyalty to the profession). for example. This type of trend may have an effect in relation to pension offerings. in contrast. although human capital typically refers to a more narrow view. but are creative and social beings in a productive enterprise. "talent". their behavior and their expectations of the organization. "Human capital" is sometimes used synonymously with human resources. The 2000 revision of ISO 9001. whose value is enhanced by development. • Generational difference: different age categories of employees have certain characteristics. the knowledge the individuals embody and can contribute to an organization.e. requires identifying the processes. In regard to how individuals respond to the changes in a labor market.58 Branches of business management Human resources Human resources is the set of individuals who make up the workforce of an organization. Diversity: the variation within the population/workplace. i.

The relationship of operations management to senior management in commercial contexts can be compared to the relationship of line officers the highest-level senior officers in military science. the boundaries between levels are not always distinct. creativity. and individual people often move between roles over time. systems analysis. Department of Education. needs repair [3] [a broad inter-sectoral approach to developing human resourcefulness see United Nations Expert Meeting on Human Resources Development.[1][2] Management. plant management. and the arts. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed. and knowledge of technology are all required for success. It is concerned with managing the process that converts inputs (in the forms of materials. Operations management programs typically include instruction in principles of general management. com/ cgi/ content/ abstract/ 520/ 1/ 42] Operations management Operations management is an area of management concerned with overseeing. Jr. production. the United Nations have come to more generally support the developing nations' point of view. Trott. Trends Toward a Closer Integration of Vocational Education and Human Resources Development. In business as in military affairs. designing.E/25. htm Broken link. Over time. People skills. Governments of developing nations often regard developed nations that encourage immigration or "guest workers" as appropriating human capital that is more rightfully part of the developing nation and required to further its economic growth. 12. and move from one enterprise to another with little controversy or difficulty in adapting. and have requested significant offsetting "foreign aid" contributions so that a developing nation losing human capital does not lose the capacity to continue to train new people in trades.. productivity analysis and cost control. and materials planning. ST/TCD/SER. p7 [2] http:/ / www-ilo-mirror. and redesigning business operations in the production of goods and/or services. professions. is like engineering in that it blends art with applied science. sagepub. `Changing Perspectives on Human Resources Development. According to the U. . June 1994 http:/ / ann. No. including operations management. Journal of Vocational and Technical Education. equipment maintenance management. tactical information dynamically informs strategy.[2] One view of these trends is that a strong social consensus on political economy and a good social welfare system facilitates labor mobility and tends to make the entire economy more productive. manufacturing and production systems. Holton II. industrial labor relations and skilled trades supervision. and effective in terms of meeting customer requirements. The highest-level officers shape the strategy and revise it over time. production control. labor. strategic manufacturing policy. edu/ public/ english/ employment/ skills/ recomm/ quest/ qr_1b. rational analysis. as labor can develop skills and experience in various ways. Vol. operations management is the field concerned with managing and directing the physical and/or technical functions of a firm or organization. and energy) into outputs (in the form of goods and/or services).Human resources Development. while the line officers make tactical decisions in support of carrying out the strategy. Another important controversy regards labor mobility and the broader philosophical issue with usage of the phrase "human resources".S.[3] 59 References [1] Elwood F. 2. particularly those relating to development. cornell. James W. and manufacturing. 1996.

org/2011/09/19/ operations-management-journal-ranking/) . ed. gov/ pubs2002/ cip2000/ occupationallookup6d.CIP Lookup to Occupational Crosswalks (http:/ / nces.Operations management 60 Organizations The following organizations support and promote operations management: • Association for Operations Management (APICS) which supports the Production and Inventory Management Journal • European Operations Management Association (EurOMA) which supports the International Journal of Operations & Production Management • Production and Operations Management Society (POMS) which supports the journal: Production and Operations Management • Institute for Operations Research and the Management Sciences (INFORMS) • The Manufacturing and Service Operations Management Society (MSOM) which supports the journal: Manufacturing & Service Operations Management • Institute of Operations Management (UK) • Association of Technology. 0205) [2] ATMAE Membership Venn Diagram (http:/ / atmae. Retrieved on October 26. ASP?CIP=52. and Applied Engineering (ATMAE) Publications The following academic journals are concerned with Operations Management issues: • • • • • • • • Management Science Manufacturing & Service Operations Management Operations Research Journal of Operations Management International Journal of Operations & Production Management Production and Operations Management Production and Inventory Management Journal Journal of Modelling in Operations Management References [1] U.S. php?option=com_content& view=article& id=227& Itemid=48) External links • Operations management journal ranking (http://scmresearch. Management. org/ index. 2009 from CIP 2000 . Department of Education Institute of Education Sciences: Classification of Instructional Programs (CIP).

and that a number of differing variables must be taken into account. vision and objectives. due to its size. Evolutionary and Systemic approaches. and the descriptive schools merely describe how corporate strategy is devised in given contexts. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives.Strategic management 61 Strategic management Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners. developing policies and plans. or a new social. a new economic environment. of which global firms have faced over the past 4/5 decades. An SME's CEO (or general top management) may simply outline a mission. Strategic management is a level of managerial activity under setting goals and over Tactics. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders. Processual. and the proclivity to change of its business environment. . These points are highlighted below: • A global/transnational organization may employ a more structured strategic management model. financial. 1984:ix)[2] Concepts/approaches of strategic management Strategic management can depend upon the size of an organization. to enhance the performance of firms in their external environments." According to Arieu (2007). scope of operations. in the sense that the prescriptive schools are "one size fits all" approaches designed to work as best practice methods. It depends on the organizational structure." Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. involving utilization of resources. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. and need to encompass stakeholder views and requirements.. Each paradigm is suited to specific environmental factors. and these in turn are with the market and the context. or political environment. This is due to its comparatively smaller size and scope of operations. relative to how a corporate strategic plan is outlined. and then allocating resources to implement the policies and plans. which are designed to achieve these objectives. • Mintzberg has stated there are prescriptive (what should be) and descriptive (what is) schools. assesses its competitors and sets goals and strategies to meet all existing and potential competitors. • Whittington (2001) higlighted four approaches to strategic management. new competitors. new technology.” (Lamb. often in terms of projects and programs. projects and programs. • An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. "there is strategic consistency when the actions of an organization are consistent with the expectations of management. and then reassesses each strategy annually or quarterly [i. as well as possessing fewer resources.e. It can also be said to be a subjective and highly contextual process. and pursue all activities under that mission. It can said that there is no overriding strategic managerial method. utilising different factors that organisations may face.[1] It entails specifying the organization's mission. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency. “Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved. These are the Classical. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances.

it specifies the scope of activities an organization wishes to undertake. It thus comprises an environmental analysis. • Cost-based. In addition to ascertaining the suitability. overall corporate objectives (both financial and strategic). These options. mission statements (the role that the organization gives itself in society). self-evaluation and competitor analysis: both internal and external. a firm would then undertake an environmental scanning within the purview of the statement. This involves crafting vision statements (long term view of a possible future). in addition to areas in which expansion may be unwise. The initial task in strategic management is typically the compilation and dissemination of a mission statement. This advantage may derive from how an organization produces its products. An example would be dollar stores in the United States. The essential points of the approach are "where are we now?". both micro-environmental and macro-environmental. Additionally. . feasibility and acceptability of an option. some are in the short-term and others on the long-term. and tactical objectives. in which a multitude of market segments are served on a mass scale. An example will include the array of products produced by Unilever. This document outlines. These objectives should be parallel to a time-line. "where do we want to be?" and "how do we get there?". and determining a path for action and implementation. or other aspects of the business. Following the devising of a mission statement. Strategic formation is a combination of three main processes which are as follows: • Performing a situation analysis. Specific approaches may include: • Differentiation. Strategy evaluation and choice An environmental scan will highlight all pertinent aspects that affect an organization. have to be vetted and screened by an organization. in which products are tailored for the unique needs of a niche market. as opposed to a mass market. • Market segmentation (or niche). once identified. the actual modes of progress have to be determined. of which most textbooks on the subject convey. the raison d'etre of an organization.Strategic management 62 Strategy formation (Classical school) The Classical School of strategic management is the most taught and deployed approach. objectives are set. • Concurrent with this assessment. These pertain to: The basis of competition The basis of competition is the competitive advantage used or established by the strategy. strategic business unit objectives (both financial and strategic). Such an occurrence will also uncover areas to capitalise on. a choice of available options. whether external or sector/industry-based. how it acts within a market relative to its competitors. as both forge many of the world's noted consumer brands serving a variety of market segments. coupled with the markets a firm wishes to serve. in essence. An example is Aston Martin cars. or Procter and Gamble. which often concerns economy pricing.

employees would expect improvement in their careers and customers would expect better value for money. employees and unions could oppose outsourcing for fear of losing their jobs. • Risk deals with the probability and consequences of failure of a strategy (financial and non-financial). • Does it make economic sense? • Would the organization obtain economies of scale or economies of scope? • Would it be suitable in terms of environment and capabilities? Tools that can be used to evaluate suitability include: • Ranking strategic options • Decision trees Feasibility Feasibility is concerned with whether the resources required to implement the strategy are available. can it be made to work? • Acceptability. it's extremely important to conduct a SWOT analysis to figure out the internal strengths and weaknesses. risk and stakeholder/stakeholders reactions. Johnson. will they work it? Suitability Suitability deals with the overall rationale of the strategy. This may require taking certain precautionary measures or even changing the entire strategy. people. Tools that can be used to evaluate acceptability include: • what-if analysis • stakeholder mapping . can be developed or obtained. Resources include funding. and external opportunities and threats of the entity in business. In corporate strategy. shareholders would expect the increase of their wealth. and information. Shareholders could oppose the issuing of new shares. • Stakeholder reactions deals with anticipating the likely reaction of stakeholders. For example. Scholes and Whittington present a model in which strategic options are evaluated against three key success criteria:[3] • Suitability. • Return deals with the benefits expected by the stakeholders (financial and non-financial). time. which can be return. or cash flow in the market Tools that can be used to evaluate feasibility include: • cash flow analysis and forecasting • break-even analysis • resource deployment analysis Acceptability Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders. employees and customers) with the expected performance outcomes. would it work? • Feasibility.Strategic management 63 Mode of action • Measuring the effectiveness of the organizational strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position. customers could have concerns over a merger with regards to quality and support.

product development. including: • Growth-based (inspired by Igor Ansoff's matrix – market development. Additionally. an SBU will be created (which often has some degree of autonomous decision-making) if it exists in a market with unique conditions. in addition to the nature of products' performance in given industries. such as India and China. market penetration. A company may opt for an acquisition (actually buying and absorbing a smaller firm). Conducting a corporate strategy is worthless as long as it is not implemented correctly by each department of the organization This may involve organising. . This concerns the nature of reporting relationships.Strategic management 64 The direction of action Strategic options may span a number of options. resourcing and utilising change management procedures: Organizing Organizing relates to how an organizational design of a company can fit or align with a chosen strategy. The implementation of strategy is of great importance.e. Some countries. consortium or joint venture) can leverage on mutual skills between companies. spans of control. diversification) • Consolidation • Divestment • Harvesting The exact option depends on the given resources of the firm. it must then be put into practice. let a product die a natural death in the market) a product. the exact means of implementing a strategy needs to be considered.i. specifically state that FDI in their countries should be executed via a strategic alliance arrangement. if via portfolio analysis it was performing poorly comparative to others in the market.e. if it meant speedy entry into a market or lack of time in internal development. A generally well-performing organisation may seek to harvest (. A strategic alliance (such as a network.i. Typically. utilising one's own strategic capability in a given course of action) M&A (Mergers and Acquisitions) The chosen option in this context is dependent on the strategic capabilities of a firm.i. or has/requires unique strategic capabilities (. the skills needed for the running and competition of the SBU are different). and any strategic business units (SBUs) that require to be formed.e. Strategic implementation and control Once a strategy has been identified. These points range from: • • • • Strategic alliances Capital Expenditures (CAPEX) Internal development (.

Cost underestimation and benefit overestimation are major sources of error. resource allocation. Managing strategically requires paying . or collaborative processes. The proposals that are approved form the substance of a new strategy. It is important then that effectual change management practices are instituted. and to ICT-based implements. employees submit proposals to their managers who.) • Via change agency. • Ascertaining the causes of the resistance to organizational change (whether from employees. which are opposite but complement each other in some ways. Time remaining. In it. possibly with the assistance of a strategic planning team. Testing the Strategic Alignment of the organization The optimal performance of organizations is highly dependent on the level of Strategic Alignment. Change management In the process of implementing strategic plans.Strategic management 65 Resourcing Resourcing is literally the resources required to put the strategy into practice. economies of scale • assumptions — rationality. solely focused on measuring strategic alignment of organizations. Until 2010 Change management was used to implement a strategy. ranging from human resources. decides on the overall direction the company should take. profit maximization • The Sociological Approach • deals primarily with human interactions • assumptions — bounded rationality. This is often accomplished by a capital budgeting process. Some organizations are starting to experiment with collaborative strategic planning techniques that recognize the emergent nature of strategic decisions. profit sub-optimality. as an individual who would champion the changes and seek to reassure and allay any fears arising. Proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. The stakeholder focused approach is an example of this modern approach to strategy. etc. self discipline behaviour. In the bottom-up approach. and current Value/priority. The S-ray Alignment Scan is a visual of the Corporate Strategy measured against the level of understanding and implementation of the organozational departments. an organization must be wary of forces that may legitimately seek to obstruct such changes. there are two main approaches. to strategic management: • The Industrial Organizational Approach • based on economic theory — deals with issues like competitive rivalry. This cooperation led to the introduction of the S-ray Alignment Scan. in turn. In 2010 the Rotterdam School of Management together with the Erasmus School of Economics conducted research on the measurement possibilities of Strategic Alignment. to capital equipment. perceived loss of job security. The outcome comprises both the desired ending goal and the plan designed to reach that goal. These encompass: • The appointment of a change agent. all of which is done without a grand strategic design or a strategic architect. Strategic decisions should focus on Outcome. top-down. Strategic management techniques can be viewed as bottom-up. An example of a company that currently operates this way is Google. General approaches In general terms. The top-down approach is the most common by far. satisficing behaviour. slowly limiting the negative effects that a change may uncover. which is a spinn-off of this cooperation. funnel the best ideas further up the organization. In 2011 Erasmus University of Rotterdam introduced S-ray Diagnostics. the CEO.

in turn. An SBU is treated as an internal profit centre by corporate headquarters. Since the turn of the millennium. Functional strategies include marketing strategies. engineering organization or IT department.Strategic management attention to the time remaining to reach a particular level or goal and adjusting the pace and options accordingly. A strategic business unit is a semi-autonomous unit that is usually responsible for its own budgeting. time and relative value. Many companies feel that a functional organizational structure is not an efficient way to organize activities so they have reengineered according to processes or SBUs. It must operate within a budget but is not at liberty to adjust or create that budget. for example. Under this broad corporate strategy there are typically business-level competitive strategies and functional unit strategies. It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria. Such a corporate strategy answers the questions of "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?" Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation. new product development strategies. and corporate missions. Alternatively. It gives direction to corporate values. Strategic management by definition. and information technology management strategies. An objective that begins with a high level of value-add may change due to influence of internal and external factors. Operational level strategies are informed by business level strategies which. supply-chain strategies. Strategic divisions are thought to hamper this process. a firm must formulate a business strategy that incorporates either cost leadership. On the other hand. Generalized games are those that are designed to provide participants with new forms of how to adapt to an unfamiliar environment and make business decisions when in doubt. An additional level of strategy called operational strategy was encouraged by Peter Drucker in his theory of management by objectives (MBO). or focus to achieve a sustainable competitive advantage and long-term success. may include dimensions that are beyond the scope of a single business unit. The purpose of simulation gaming is to prepare managers make well rounded decisions. This work builds on that of Brown and Eisenhart as well as Christensen and portrays firm strategy. According to Michael Porter. and actively making course corrections as needed.[4] 66 The strategy hierarchy In most (large) corporations there are several levels of management. . There are two main focuses of the different simulation games. popularized by Carpenter and Sanders's textbook [5]. It is felt that knowledge management systems should be used to share information and create common goals. and price setting. This notion of strategy has been captured under the rubric of dynamic strategy. Corporate strategy is the highest of these levels in the sense that it is the broadest – applying to all parts of the firm – while also incorporating the longest time horizon. and hence to some extent their strategies are derived from broader corporate strategies. an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost trade off by simultaneously pursuing both differentiation and low cost. Value/priority relates to the shifting. although it is focused on technology as a means of achieving an organization's overall objective(s). according to W. Strategic decisions should be based on the understanding that the value-add of whatever you are managing is a constantly changing reference point. relative concept of value-add. both business and corporate. are informed by corporate level strategies. new product decisions. financial strategies. human resource strategies. is managing with a heads-up approach to outcome. legal strategies. corporate goals. corporate culture. Simulation strategies are also used by managers in an industry. Chan Kim and Renée Mauborgne. functional games are designed to make participants more aware of being able to deal with situations that bring about one or more problems that are encountered in a corporate function within an industry. Corporate strategy refers to the overarching strategy of the diversified firm. The emphasis is on short and medium term plans and is limited to the domain of each department’s functional responsibility. Each functional department attempts to do its part in meeting overall corporate objectives. A technology strategy. generalized games and functional games. some firms have reverted to a simpler strategic structure driven by advances in information technology. differentiation. hiring decisions.

then develop what he called “gap reducing actions”. Ellen-Earle Chaffee summarized what she thought were the main elements of strategic management theory by the 1970s:[10] • Strategic management involves adapting the organization to its business environment. Change creates novel combinations of circumstances requiring unstructured non-repetitive responses. Philip Selznick. Alfred Chandler recognized the importance of coordinating the various aspects of management under one all-encompassing strategy. Work would be carried out in teams with the person most knowledgeable in the task at hand being the temporary leader.”[6] In 1957. Firstly.[9] This evolved into his theory of management by objectives (MBO). Strengths and weaknesses of the firm are assessed in light of the opportunities and threats from the business environment. Such change and implementation are usually built into the strategy through the staging and pacing facets. He felt that management could use these strategies to systematically prepare for future opportunities and challenges. Chandler also stressed the importance of taking a long term perspective when looking to the future. In 1985. He says it concisely. that is. Chandler. According to Drucker. His other seminal contribution was in predicting the importance of what today we would call intellectual capital. product development strategies. the procedure of setting objectives and monitoring your progress towards them should permeate the entire organization. with a career spanning five decades. His contributions to strategic management were many but two are most important. • Strategic management is partially planned and partially unplanned. author of dozens of management books. “structure follows strategy. direction. He said that knowledge work is non-hierarchical. Igor Ansoff. 67 Historical development of strategic management Birth of strategic management The Strategic management discipline is originated in the 1950s and 60s. Chandler showed that a long-term coordinated strategy was necessary to give a company structure. he stressed the importance of objectives. He developed a strategy grid that compared market penetration strategies. Andrews. An organization without clear objectives is like a ship without a rudder. Although there were numerous early contributors to the literature. • Strategic management affects the entire organization by providing direction. and the seamless integration of strategy formulation and implementation. • Strategic management is fluid and complex. In his 1965 classic Corporate Strategy. . and Peter Drucker. As early as 1954 he was developing a theory of management based on objectives. Philip Selznick introduced the idea of matching the organization's internal factors with external environmental circumstances. The discipline draws from earlier thinking and texts on 'strategy' dating back thousands of years. there were one or two managers that relayed information back and forth between two departments. Igor Ansoff built on Chandler's work by adding a range of strategic concepts and inventing a whole new vocabulary. the most influential pioneers were Alfred D. • Strategic management involves both strategy formation (she called it content) and also strategy implementation (she called it process).[7] This core idea was developed into what we now call SWOT analysis by Learned. Interactions between functions or between departments were typically handled by a boundary position. and others at the Harvard Business School General Management Group. he developed the gap analysis still used today in which we must understand the gap between where we are currently and where we would like to be. market development strategies and horizontal and vertical integration and diversification strategies. and focus.Strategic management as necessarily embracing ongoing strategic change. Prior to this time the various functions of management were separate with little overall coordination or strategy.[8] Peter Drucker was a prolific strategy theorist. He predicted the rise of what he called the “knowledge worker” and explained the consequences of this for management. In his 1962 ground breaking work Strategy and Structure. top to bottom.

" This was largely due to the growing numbers of affluent and middle class people that capitalism had created. The relative advantages of horizontal integration. One of the most valuable concepts in the strategic management of multi-divisional companies was portfolio theory.[14] and later Traverso (2002)[15] showed how smaller niche players obtained very high returns. and individual business strategies.G. The management of diversified organizations required new techniques and new ways of thinking. B. objectives. encapsulated in the saying "Build a better mousetrap and the world will beat a path to your door. In the previous decade Harry Markowitz and other financial theorists developed the theory of portfolio analysis. By the early 1980s the paradoxical conclusion was that high market share and low market share companies were often very profitable but most of the companies in between were not. The combined effect is increased profits. started in the 1960s and lasted for 19 years. and strategies. and then moved to the Strategic Planning Institute in the late 1970s. The PIMS study was a long term study. GM was decentralized into semi-autonomous “strategic business units” (SBU's). and organic growth were discussed. costs. Each of a company’s operating divisions were seen as an element in the corporate portfolio. Their initial conclusion was unambiguous: The greater a company's market share. Schumacher (1973).Strategic management • Strategic management is done at several levels: overall corporate strategy. it now contains decades of information on the relationship between profitability and strategy. but with centralized support functions. There was also research that indicated that a low market share strategy could also be very profitable. Analysis. 68 Growth and portfolio theory In the 1970s much of strategic management dealt with size. From the beginnings of capitalism it was assumed that the key requirement of business success was a product of high technical quality. Each operating division (also called strategic business units) was treated as a semi-independent profit center with its own revenues. But after the untapped demand . This was the theory that gave us the wonderful image of a CEO sitting on a stool milking a cash cow. The high market share provides volume and economies of scale. If you produced a product that worked well and was durable. for example. diversification. particularly the effect of market share. Started at General Electric. In the 1970s marketers extended the theory to product portfolio decisions and managerial strategists extended it to operating division portfolios. mergers and acquisitions.E. it was assumed you would have no difficulty selling them at a profit. was developed by the Boston Consulting Group in the early 1970s. Shortly after that the G. This was sometimes called the “hole in the middle” problem. Several techniques were developed to analyze the relationships between elements in a portfolio. This was called the production orientation and it was generally true that good products could be sold without effort. moved to Harvard in the early 1970s. • Strategic management involves both conceptual and analytical thought processes.[12] Woo and Cooper (1982). that attempted to understand the Profit Impact of Marketing Strategies (PIMS). and portfolio theory. Companies continued to diversify until the 1980s when it was realized that in many cases a portfolio of operating divisions was worth more as separate completely independent companies.[13] Levenson (1984). multi factoral model was developed by General Electric. the greater will be their rate of profit. The marketing revolution The 1970s also saw the rise of the marketing oriented firm. It also provides experience and learning curve advantages. The benefits of high market share naturally lead to an interest in growth strategies. The most appropriate market dominance strategies were assessed given the competitive and regulatory environment. This anomaly would be explained by Michael Porter in the 1980s.[11] The studies conclusions continue to be drawn on by academics and companies today: "PIMS provides compelling quantitative evidence as to which business strategies work and don't work" – Tom Peters. It was concluded that a broad portfolio of financial assets could reduce specific risk.C. franchises. growth. vertical integration. The first CEO to address the problem of a multi-divisional company was Alfred Sloan at General Motors. joint ventures.

They introduced terms like strategic intent and strategic architecture. The 1980s and early 1990s saw a plethora of theories explaining exactly how this could be done.S. customer driven. This marketing orientation. In the early 1970s Theodore Levitt and others at Harvard argued that the sales orientation had things backward. Senior HP managers were seldom at their desks. The customer became the driving force behind all strategic business decisions. Genbutsu. K. . DuPont. In 5 forces analysis he identifies the forces that shape a firm's strategic environment. manufacturing economy. companies. for free or low-cost licenses made possible by the FTC and DOJ. less “arm-chair planning” was needed. The 1950s and 1960s is known as the sales era and the guiding philosophy of business of the time is today called the sales orientation. It is like a SWOT analysis with structure and purpose. businesses should start with the customer. generic strategies. find out what they wanted. marketing philosophy. customer focus.[17][18] Their most well known advance was the idea of core competency. This direct contact with key people provided them with a solid grounding from which viable strategies could be crafted. Scherer). but detailed comparisons of the two management styles and examinations of successful businesses convinced westerners that they could overcome the challenge. In 1975 the FTC reached a settlement with Xerox Corporation in its anti-trust lawsuit. They claimed that instead of producing products then trying to sell them to the customer.000 foreign licensing agreements. AT&T.[19] Active strategic management required active information gathering and active problem solving. mostly with U.") This action marked the start of an activist approach to managing competition by the FTC and DOJ. Dave Packard and Bill Hewlett devised an active management style that they called management by walking around (MBWA). in the decades since its introduction. Bausch & Lomb. but some of the more important strategic advances of the decade are explained below. In the early days of Hewlett-Packard (HP). Xerox's share of the U.C. and suppliers. customers. The post-1975 era of anti-trust initiatives by Washington D.S. The answer was to concentrate on selling. and “actual situation”). 5 forces analysis. strategic groups. 69 The Japanese challenge In 2009.S. Between 1950 and 1980 Japanese companies consummated more than 35. unprecedented rise in Japanese competitiveness and a simultaneous stalling of the U. Within four years of the consent decree. the FTC was under the direction of Frederic M. which translate into “actual place”. He introduced many new concepts including. Gary Hamel and C. including IBM. and Eastman Kodak. (See "compulsory license. They spent most of their days visiting employees.Strategic management caused by the second world war was saturated in the 1950s it became obvious that products were not selling as easily as they had been. Probably the most influential strategist of the decade was Michael Porter. The MBWA concept was popularized in 1985 by a book by Tom Peters and Nancy Austin. which originated at Honda. They showed how important it was to know the one or two key things that your company does better than the competition.[20] Japanese managers employ a similar system. has been reformulated and repackaged under numerous names including customer orientation. industry consultants Mark Blaxill and Ralph Eckardt suggested that much of the Japanese business dominance that began in the mid 1970s was the direct result of competition enforcement efforts by the Federal Trade Commission (FTC) and U. mainly to Japanese competitors. and Genjitsu. The 1975 Xerox consent decree forced the licensing of the company’s entire patent portfolio. Prahalad declared that strategy needs to be more active and interactive. copier market dropped from nearly 100% to less than 14%. Department of Justice (DOJ). and is sometimes called the 3 G's (Genba.S. They cannot all be detailed here. customer intimacy. and clusters. economists at the FTC corresponded directly with the rapid. the value chain.[16] Competitive advantage The Japanese challenge shook the confidence of the western business elite. which resulted in the compulsory licensing of tens of thousands of patent from some of America's leading companies. and market focused. and then produce it for them. (At the time. “actual thing”.

factor analysis. creates visual displays of the relationships between positions. Others felt that internal company resources were the key. Although the theory originated with Jack Trout in 1969. Multidimensional scaling. that they labeled reengineering. John Kay took the idea of the value chain to a financial level claiming “ Adding value is the central purpose of business activity”. This avoided functional silos where isolated departments seldom talked to each other. innovation. product differentiation strategies. In 1993. it didn’t gain wide acceptance until Al Ries and Jack Trout wrote their classic book “Positioning: The Battle For Your Mind” (1979). Several techniques were applied to positioning theory.[24] This involves determining where you need to improve. Porter's generic strategies detail the interaction between cost minimization strategies. quality. including human. which in turn follows industry structure. involved organizing a firm's assets around whole processes rather than tasks. A firm will be successful only to the extent that it contributes to the industry's value chain. reputation. saw strategy as assembling the optimum mix of resources. Porter modifies Chandler's dictum about structure following strategy by introducing a second level of structure: Organizational structure follows strategy. In 1989 Richard Lester and the researchers at the MIT Industrial Performance Center identified seven best practices and concluded that firms must accelerate the shift away from the mass production of low cost standardized products. and conjoint analysis are mathematical techniques used to determine the most relevant characteristics (called dimensions or factors) upon which positions should be based. and organizational structure. Preference regression can be used to determine vectors of ideal positions and cluster analysis can identify clusters of positions. for example. It also eliminated waste due to functional overlap and interdepartmental communications. Perceptual mapping for example. This forced management to look at its operations from the customer's point of view. he showed the importance of choosing one of them rather than trying to position your company between them.[21] Michael Hammer and James Champy felt that these resources needed to be restructured. He claims that there are 3 types of capabilities that can do this.[22] This process. Kay claims that the role of strategic management is to identify your core competencies. and then configure them in unique and sustainable ways. discriminant analysis. Although he did not introduce these terms.Strategic management It shows how a firm can use these forces to obtain a sustainable competitive advantage. Every operation should be examined in terms of what value it adds in the eyes of the final customer. finding an organization that is exceptional in this area. The 1980s also saw the widespread acceptance of positioning theory. The basic premise is that a strategy should not be judged by internal company factors but by the way customers see it relative to the competition. then studying the company and applying its best practices in your firm. and market focus strategies. some newly invented but most borrowed from other disciplines. and product innovation Breaking down organizational barriers between departments Eliminating layers of management creating flatter organizational hierarchies. Closer relationships with customers and suppliers Intelligent use of new technology Global focus Improving human resource skills 70 The search for “best practices” is also called benchmarking. technology. and then assemble a collection of assets that will increase value added and provide a competitive advantage. In this way a team of people saw a project through. where adding value is defined as the difference between the market value of outputs and the cost of inputs including capital. He also challenged managers to see their industry in terms of a value chain. all divided by the firm's net output. Borrowing from Gary Hamel and Michael Porter. Crafting and implementing a strategy involves creating a position in the mind of the collective consumer. In 1992. . and suppliers. The seven areas of best practice were:[23] • • • • • • • Simultaneous continuous improvement in cost. Jay Barney. service. from inception to completion.

He identified four key traits of companies that had prospered for 50 years or more. Juran. Six years of research uncovered a key underlying principle behind the 19 successful companies that they studied: They all encourage and preserve a core ideology that nurtures the company. The objective is to find inefficiencies and make the process more effective. James Collins and Jerry Porras spent years conducting empirical research on what makes great companies. Total Customer Service (TCS). Process management uses some of the techniques from product quality management and some of the techniques from customer service management. Carl Sewell. Len Berry. Six Sigma. called customer lifetime value (CLV). service charting. Their underlying assumption was that there is no better source of competitive advantage than a continuous stream of delighted customers. Paraurgman (1988).[35] Frederick F. that service would be transformed into an “experience”.[34] Christopher Hart. nevertheless. This school of thought is sometimes referred to as customer experience management (CEM). vision. cost cutting. were able to maintain a core set of values. People like James Heskett (1988). service mapping. and customer relationship management). Customer relationship management (CRM) software (and its many variants) became an integral tool that sustained this trend. He also popularized the concept of the BHAG (Big Hairy Audacious Goal). The Experience Economy. leaving no aspect of the firm free from potential process improvements. and purpose • Tolerance and decentralization — the ability to build relationships 71 . and Christopher Lovelock (1994).[37] and Earl Sasser[38] showed us how a competitive advantage could be found in ensuring that customers returned again and again.[40] along with the work of Bernd Schmitt convinced many to see service provision as a form of theatre. the service encounter.[36] C. In Built To Last (1994) they claim that short term profit goals. continuous improvement (kaizen). Reichheld. Because of the broad applicability of process management techniques.Strategic management A large group of theorists felt the area where western business was most lacking was product quality. Arie de Geus (1997) undertook a similar study and obtained similar results. They also developed techniques for estimating the lifetime value of a loyal customer. service gaps analysis.[41] In 2000 Collins coined the term “built to flip” to describe the prevailing business attitudes in Silicon Valley. They also realized that if a service is mass customized by creating a “performance” for each individual client. Edwards Deming. An equally large group of theorists felt that poor customer service was the problem. Their book. William Davidow.[27] Philip Crosby. James Gilmore and Joseph Pine found competitive advantage in mass customization.[28] and Armand Feignbaum[29] suggested quality improvement techniques like total quality management (TQM). It looks at an activity as a sequential process. supplier loyalty. It describes a business culture where technological change inhibits a long term focus.[32] A. and restructuring will not stimulate dedicated employees to build a great company that will endure. Although the procedures have a long history. they can be used as a basis for competitive advantage. People like W.[31] Len Schlesinger. the scope of their applicability has been greatly widened.[25] Joseph M. They are: • Sensitivity to the business environment — the ability to learn and adjust • Cohesion and identity — the ability to build a community with personality. and shareholder loyalty. relationship marketing. gave us fishbone diagramming. dating back to Taylorism. distributor loyalty. the companies.[33] Jane Kingman-Brundage. A significant movement started that attempted to recast selling and marketing techniques into a long term endeavor that created a sustained relationship with customers (called relationship selling. Even though strategy and tactics change daily. Gronroos. Kearney.[30] Earl Sasser (1995). These core values encourage employees to build an organization that lasts. and service teams. lean manufacturing.[39] Flexible manufacturing techniques allowed businesses to individualize products for each customer without losing economies of scale. Like Peters and Waterman a decade earlier. the service profit chain.[26] A. and return on quality (ROQ). strategic service vision. This has come to be known as the loyalty effect after Reicheld's book of the same name in which he broadens the concept to include employee loyalty. This effectively turned the product into a service. Some realized that businesses were spending much more on acquiring new customers than on retaining current ones.

intelligence gathering. Military strategy books such as The Art of War by Sun Tzu. From Von Clausewitz. 72 The military theorists In the 1980s some business strategists realized that there was a vast knowledge base stretching back thousands of years that they had barely examined. it has the potential to become great and endure for decades. From Mao Zedong. Dudley Lynch and Paul L. A variety of aggressiveness strategies were developed. 1987 Philip Kotler was a well-known proponent of marketing warfare strategy. J. and persona. a sort of Darwinian management strategy in which market interactions mimic long term ecological stability. he created an ecological theory of predators and prey (see ecological model of competition). Such an organization is an organic entity capable of learning (he called it a “learning organization”) and capable of creating its own processes.[44] Instead of using military terms. including: • "Will the proposed competitive advantage create something that is different from the competition?" • "Will the difference add value in the eyes of potential customers?" – This question will entail a discussion of the combined effects of price. If a company emphasizes knowledge rather than finance. logistics. There were generally thought to be four types of business warfare theories. There were many situations in which non-confrontational approaches were more appropriate. 1984 • Marketing Warfare by Al Ries and Jack Trout. The main marketing warfare books were: • Business War Games by Barrie James. From Sun Tzu. types of marketing weapons. Kordis published Strategy of the Dolphin: Scoring a Win in a Chaotic World. On War by von Clausewitz. and The Red Book by Mao Zedong became instant business classics. and sees itself as an ongoing community of human beings. They are: • • • • Offensive marketing warfare strategies Defensive marketing warfare strategies Flanking marketing warfare strategies Guerrilla marketing warfare strategies The marketing warfare literature also examined leadership and motivation. and communications. Moore used a similar metaphor. product features and consumer perceptions. By the turn of the century marketing warfare strategies had gone out of favour. They turned to military strategy for guidance. Will Mulcaster[42] suggests that firms engage in a dialogue that centres around the question "Will the proposed competitive advantage create Perceived Differential Value?" The dialogue should raise a series of other pertinent questions. they learned the dynamic and unpredictable nature of military strategy. they learned the tactical side of military strategy and specific tactical prescriptions. • "Will the product add value for the firm?" – Answering this question will require an examination of cost effectiveness and the pricing strategy. they learned the principles of guerrilla warfare. In 1989.Strategic management • Conservative financing A company with these key characteristics he called a living company because it is able to perpetuate itself. . In 1993. "The Strategy of the Dolphin” was developed to give guidance as to when to use aggressive strategies and when to use passive strategies. It was felt that they were limiting. goals. To help firms avoid a hit and miss approach to the creation of competitive advantage. 1986 • Leadership Secrets of Attila the Hun [43] by Wess Roberts. There are numerous ways by which a firm can try to create a competitive advantage – some will work but many will not.

businesses must stimulate a spirit of inquiry and healthy debate. have attempted to explain what this means for business strategy. But according to Drucker. In 1980 in The Third Wave. But these periods of stability are getting shorter and by the late 20th century had all but disappeared. The point where a new trend is initiated is called a strategic inflection point by Andy Grove.[48] In 1978. particularly since the early 1990s. prevents us from exploring new ideas. Charles Handy identified two types of change. In “Profit Patterns” (1999) .[47] He claimed that the dawn of this new phase will cause great anxiety for those that grew up in the previous phases. Malcolm Gladwell discussed the importance of the tipping point. In 1990.[52] He wrote that this is a trap that constrains our creativity. Noel Tichy wrote that because we are all beings of habit we tend to repeat what we are comfortable with. In 1996. Prevailing strategies become self-confirming. and hampers our dealing with the full complexity of new issues.[51] In 1983. Richard Pascale (Pascale. so to overcome this. They said we have a tendency to dismiss new ideas. To avoid this trap. 1990) wrote that relentless change requires that businesses continuously reinvent themselves. and corporate culture.[54] He claimed that recognizing the patterns behind these value migrations is necessary if we wish to understand the world of chaotic change. We tend to depend on what worked yesterday and refuse to let go of what worked so well for us in the past. decays over time. We cannot assume that trends that exist today will continue into the future. Toffler characterized this shift to relentless change as the defining feature of the third phase of civilization (the first two phases being the agricultural and industrial waves). that point where a trend or fad acquires critical mass and takes off. He developed a systematic method of dealing with change that involved looking at any new issue from three angles: technical and production.[45] In an age of continuity attempts to predict the future by extrapolating from the past can be somewhat accurate. Gary Hamel discussed strategic decay. Hundreds of authors. globalization. R. He identifies four sources of discontinuity: new technologies.[50] Strategic drift is a gradual change that occurs so subtly that it is not noticed until it is too late. and within companies.[49] In 1989. cultural pluralism. In 1970. By contrast. no matter how brilliant. This allowed society to assimilate the change and deal with it before the next change arrived. In past generations periods of change were always punctuated with times of stability. They must encourage a creative process of self renewal based on constructive conflict. political and resource allocation. transformational change is sudden and radical. Alvin Toffler in Future Shock described a trend towards accelerating rates of change. and will cause much conflict and opportunity in the business world. and he questioned society's ability to cope with the resulting turmoil and anxiety.[53] His famous maxim is “Nothing fails like success” by which he means that what was a strength yesterday becomes the root of weakness today. This has led some strategic planners to build planned obsolescence into their strategies. between companies. D. Adrian Slywotzky showed how changes in the business environment are reflected in value migrations between industries. the notion that the value of all strategies. and knowledge capital.[46] He illustrated how social and technological norms had shorter lifespans with each generation. In 2000. Peters and Austin (1985) stressed the importance of nurturing champions and heroes. In 2000. we are now in an age of discontinuity and extrapolating from the past is hopelessly ineffective. Dereck Abell (Abell. we should support those few people in the organization that have the courage to put their career and reputation on the line for an unproven idea. It is typically caused by discontinuities (or exogenous shocks) in the business environment. 1978) described strategic windows and stressed the importance of the timing (both entrance and exit) of any given strategy. Peter Drucker (1969) coined the phrase Age of Discontinuity to describe the way change forces disruptions into the continuity of our lives.Strategic management 73 Strategic change In 1968. Inflection points can be subtle or radical.

adaptive. or companies within the conceptual framework of consumers or other stakeholders – strategy determined primarily by factors outside the firm • Strategy as perspective – strategy determined primarily by a master strategist In 1998. i. The first group is prescriptive or normative. Because of this. These 10 schools are grouped into three categories. J. course of action – intention rather than actual Strategy as ploy – a maneuver intended to outwit a competitor Strategy as pattern – a consistent pattern of past behaviour – realized rather than intended Strategy as position – locating of brands. The way Peter Schwartz put it in 1991 is that strategic outcomes cannot be known in advance so the sources of competitive advantage cannot be predetermined. consisting of six schools. Instead. not the customers – can know how or in what quantities a disruptive product can or will be used before they have experience using it. the formal planning school. marketing under the implicit assumption that no one – not the company. organizational life cycles. Moncrieff (1999) also stresses strategy dynamics. Some business planners are starting to use a complexity theory approach to strategy. not about formal analysis and numbers. Henry Mintzberg looked at the changing world around him and decided it was time to reexamine how strategic management was done. Strategic management is planned and emergent.[59][60] He examined the strategic process and concluded it was much more fluid and unpredictable than people had thought. scenario planning is about insight. the corporate culture or collective process school.e. Slywotsky and his team identified 30 patterns that have transformed industry after industry. he could not point to one process that could be called strategic planning. and subtlety.[63] He recognized that strategy is partially deliberate and partially unplanned.[57] The fast changing business environment is too uncertain for us to find sustainable value in formulas of excellence or competitive advantage. products. the power or negotiation school. dynamic. is more concerned with how strategic management is actually done. or great leader school.[58] In 1988. and the business environment or reactive school. The second group.[56] Christensen's thesis is that outstanding companies lose their market leadership when confronted with disruptive technology. Complexity can be thought of as chaos with a dash of order. integrated process requiring continuous reassessment and reformation. Clayton Christensen (1997) took the position that great companies can fail precisely because they do everything right since the capabilities of the organization also defines its disabilities. It consists of the informal design and conception school. Complexity is not quite so unpredictable. the cognitive or mental process school. guide. an hybrid of the other schools organized into stages. According to Pierre Wack. The six schools are the entrepreneurial. never-ending.. Chaos theory deals with turbulent systems that rapidly become disordered. rather than prescribing optimal plans or positions. and the analytical positioning school. visionary.Strategic management he described businesses as being in a state of strategic anticipation as they try to spot emerging patterns. and their likeliness of occurrence evaluated. their implications assessed. 74 . complexity. or emergent process school.[61] In 1999. The unplanned element comes from two sources: emergent strategies (result from the emergence of opportunities and threats in the environment) and Strategies in action (ad hoc actions by many people from all parts of the organization). Instead Mintzberg concludes that there are five types of strategies: • • • • Strategy as plan – a direction.[62] He describes strategy formation and implementation as an on-going. or “episodes”. Constantinos Markides also wanted to reexamine the nature of strategic planning itself. Mintzberg developed these five types of management strategy into 10 “schools of thought”. the configuration or transformation school.[55] In 1997. and interactive. A number of strategists use scenario planning techniques to deal with change. He called the approach to discovering the emerging markets for disruptive technologies agnostic marketing. the learning. scenario planning is a technique in which multiple outcomes can be developed. The third and final group consists of one school. It involves multiple agents interacting in such a way that a glimpse of structure may appear.

or an opportunity exploited. and use information is a necessary requirement for business success in the information age.[68] D.[70] J. It is composed of human capital (the knowledge inside the heads of employees). (See organizational learning.Strategic management 75 Information. Daniel Bell (1985) examined the sociological consequences of information technology. who had collaborated with Arie de Geus at Dutch Shell. New patterns of thinking are nurtured.E. Peter Senge. see Garratt.[64] Zuboff. Carlos Jarillo. It provides guidance and energy for the journey ahead. self reliance. For an alternative approach to the “learning organization”. Senge identified five disciplines of a learning organization. This is what Senge calls the “Fifth discipline”.[65] In 1990. work teams.B. about the importance of flexible decentralized structure. and People are encouraged to see the “whole picture” together.[69] Manuel Castells. Lieleskin. for example. describes a network society characterized by: globalization. Probst. knowledge sharing. In 1984.and technology-driven strategy Peter Drucker had theorized the rise of the “knowledge worker” back in the 1950s. expanded it. and popularized it. and more would be applying their minds. in her five year study of eight pioneering corporations made the important distinction between “automating technologies” and “infomating technologies”. . including J. Stewart. • Mental models — We need to explore our personal mental models to understand the subtle effect they have on our behaviour. and the central role of the knowledge worker.[72] K. borrowed de Geus' notion of the learning organization.[71] Thomas Stewart. instability of employment. • Shared vision — The vision of where we want to be in the future is discussed and communicated to all. • Systems thinking — We look at the whole rather than the parts. Barton. This involves a shift from “a spirit of advocacy to a spirit of enquiry”. Thomas A. They are: • Personal responsibility. We make decisions and live with the consequences of them.P. • Team learning — We learn together in teams. Sveiby. however the profitability of what he calls the “information float” (information that the company had and others desired) would all but disappear as inexpensive computers made information more accessible. Quinn. He described how fewer workers would be doing physical labor. Senge claimed that an organization would need to be structured such that:[66] • • • • People can continuously expand their capacity to learn and be productive. and organizational structures.L. John Naisbitt theorized that the future would be driven largely by information: companies that managed information well could obtain an advantage. When a problem needs to be fixed. uses the term intellectual capital to describe the investment an organization makes in knowledge. analyze. and structural capital (the knowledge that resides in the company itself). The underlying theory is that a company's ability to gather. She studied the effect that both had on individual workers. (1987).[74] and Shapiro and Varian[75] to name just a few. Collective aspirations are encouraged. B.[73] Gilbert J. while Gloria Schuck and Shoshana Zuboff looked at psychological factors. customer capital (the knowledge inside the heads of customers that decide to buy from you). based not on position or hierarchy. and a social divide between those with access to information technology and those without. She largely confirmed Peter Drucker's predictions three decades earlier. Zuboff also detected a new basis for managerial authority.[67] J. Since 1990 many theorists have written on the strategic importance of information. but on knowledge (also predicted by Drucker) which she called “participative management”.) To do this. we take the initiative to learn the required skills to get it done. organizations structured as a network. managers. Manuel Castells. It is the glue that integrates the other four into a coherent strategy. and mastery — We accept that we are the masters of our own destiny.

the economy are all based on. are changing the competitive landscape. One manifestation of this is personalized marketing.. eclipsed by collaborative encyclopedias like Wikipedia that can operate at very low marginal costs. R. and Norton. differentiation. In many cases.. even far superior products. Competitors can copy them without fear of economic or legal consequences. But now.[77] They cite Encarta's demolition of the Encyclopædia Britannica (whose sales have plummeted 80% since their peak of $650 million in 1990).M. as they could be copied and adapted by competitors. comparative advantage) over competitors. Robert S. but they were at best temporary. Evans and Wurster describe how industries with a high information component are being transformed. Traditional ideas of market segments will no longer be relevant if personalized marketing is successful. and new product development to achieve a 'balanced' perspective.g. Moore showed how firms could attain this enviable position by using E. The fittest strategy employed after trail and error and combination is then employed to run the company in its current market. Failed strategic plans are either discarded or used for . scale is achievable by multiple organizations simultaneously. Without IP ownership and protection. redefining market segments. The technology sector has provided some strategies directly. with access to capital and a global marketplace. as elucidated by Michael Porter. however. D. it can literally be rented. Kaplan (Harvard Business School) and David Norton (Kaplan.e. It is a form of strategy to deal with complex adaptive systems which individuals. businesses. Rogers five stage adoption process and focusing on one group of customers at a time. amplification and repetition. organizational development. Access to information systems have allowed senior managers to take a much more comprehensive view of strategic management than ever before. cannot compete. Drucker's operational "strategies" – and as such are not true business strategy. customer loyalty is far less important and difficult to maintain as new brands and products emerge all the time. The principle is based on the survival of the "fittest". and disintermediating some channels. Evans also mentions the music industry which is desperately looking for a new business model. Information technology allows marketers to treat each individual as its own market. from the software development industry agile software development provides a model for shared development processes. A company must OWN the thing that differentiates it from competitors. Botten and McManus is the only way to maintain economic or market superiority (i. Encarta’s reign was speculated to be short-lived. using each group as a base for marketing to the next group. • Owning the customer had always been thought of as an important form of competitive advantage. If successful a firm can create a bandwagon effect in which the momentum builds and its product becomes a de facto standard. thereby eliminating the advantage. selection. In a post-industrial world these operationally focused business strategies hinge on conventional sources of advantage have essentially been eliminated: • Scale used to be very important. • Process improvement or “best practices” were once a favored source of advantage. Now. Cook[76] also detected a shift in the nature of competition. unburdened by cumbersome physical assets. The upstart information savvy firms. a market of one. 76 Knowledge Adaptive Strategy Most current approaches to business "strategy" focus on the mechanics of management—e. The most notable of the comprehensive systems is the balanced scorecard approach developed in the early 1990s by Drs. The most difficult step is making the transition between visionaries and pragmatists (See Crossing the Chasm). production. In industries with high technology content. technical standards become established and this gives the dominant firm a near monopoly. Once a product has gained market dominance. In such a world. Encarta's service was subsequently turned into an on-line service and dropped at the end of 2009. other products. any product. 1992). process or scale advantage can be compromised or entirely lost. For example. The same is true of networked industries in which interoperability requires compatibility between users.Strategic management Geoffrey Moore (1991) and R. It measures several factors financial. An example is word processor documents. marketing. This principle is based on the idea of evolution: differentiation. Frank and P.

The 11 forces are: Time. and the techniques of discriminating the factors of the situation. and form. A 1938 treatise by Chester Barnard. Perception. (For an explanation and elucidation of the "post-industrial" worldview. The terms pertinent to it are “feeling”. Opposing forces. “sense”. but how should banks change the way they make decisions to improve the quality of their decisions in the future? Mulcaster's Managing Forces framework addresses this issue by identifying 11 forces that should be incorporated into the processes of decision making and strategic implementation. He describes leadershipleaders as visionaries who inspire. and involving primarily oral. idea. For instance. flexible. It is a matter of art rather than science.The main difference between leader and manager is that. Typically senior managers have been asked how they go about making strategic decisions. Henry Mintzberg found that senior managers typically deal with unpredictable situations so they strategize in ad hoc. Cynefin model and the adaptive cycles of businesses are both good ways to develop KAS. and implicit ways. The psychology of strategic management Several psychologists have conducted studies to determine the psychological patterns involved in strategic management.) 77 Strategic decision making processes Will Mulcaster[78] argues that while much research and creative thought has been devoted to generating alternative strategies. 2-way communications. “The job breeds adaptive information-manipulators who prefer the live concrete situation. Bernard says “The process is the sensing of the organization as a whole and the total situation relevant to it. “proportion”. Learning capabilities. The trade off between risk and return is taken into account when deciding which strategy to take. too little work has been done on what influences the quality of strategic decision making and the effectiveness with which strategies are implemented. sees the process as informal. Incentives. Politics. John Kotter studied the daily activities of 15 executives and concluded that they spent most of their time developing and working a network of relationships that provided general insights and specific details for strategic decisions. Risk. Analyze the fitness landscapes for a product. Executives often sensed what they were going to do before they could explain why. Holistic effects. even at the most senior level. Adding value. She claims that prior to the widespread use of computer systems. plans.[81] Daniel Isenberg's 1984 study of senior managers found that their decisions were highly intuitive. . “balance”. dynamic. in retrospect it can be seen that the financial crisis of 2008–9 could have been avoided if the banks had paid more attention to the risks associated with their investments.”[80] In 1982.[83] Shoshana Zuboff (1988) claims that information technology is widening the divide between senior managers (who typically make strategic decisions) and operational level managers (who typically make routine decisions). these activities were moved further down the hierarchy. It transcends the capacity of merely intellectual methods. that was based on his own experience as a business executive. or service to better develop a more adaptive strategy.[84] He also claimed in 1989 that the rise of the manager was the main factor that caused the decline of American business in the 1970s and 80s. In 1977. intuitive. and he develops in his work a clear preference for live action. non-routinized. engaged in both strategic decisions and routine administration. Style—which can be remembered by using the mnemonic 'TOPPHAILORS'. They care about substance. “judgement”. leader has . “appropriateness”.Strategic management another aspect of a business.[82] He claimed in 1986 that one of the reasons for this is the complexity of strategic decisions and the resultant information uncertainty. but as computers facilitated (She called it “deskilled”) routine processes. managers. He says. Opportunity cost. reference Panarchy and Cynefin. leaving senior management free for strategic decision making. see George Ritzer and Daniel Bell. They tended to use “mental road maps” rather than systematic planning techniques. Whereas managers are claimed to care about process.”[79] In 1973. Abraham Zaleznik identified a difference between leaders and managers. The manager works in an environment of stimulous-response.

They interact at each stage of the process. For instance. volatile and uncertain environment. Kinichi. It is used worldwide in selecting and developing people into strategic roles.[85] Lack of leadership is most damaging at the level of strategic management where it can paralyze an entire organization. such as their market share. strategic outcome.[87] strategic decision making in organizations occurs at two levels: individual and aggregate. equipment. According to Corner. [88] 78 Reasons why strategic plans fail There are many reasons why strategic plans fail. and feedback. In capitalistic society leaders make decisions and manager usually follow or execute. storage and retrieval of information. The CPP is a computer based psychometric which profiles a person's capacity for strategic thinking. competition-oriented objectives are based on the knowledge of the financial status of competing firms. They have developed a model of parallel strategic decision making. Elliott Jacques book Requisite organization was published based on his 'Stratified Systems Theory'.[86] In 1997. encoding information. strategic choice. ambiguous. Dr Maretha Prinsloo developed the Cognitive Process Profile (CPP) psychometric from the work of Elliott Jacques. especially: • Failure to execute by overcoming the four key organizational hurdles[89] • Cognitive hurdle • Motivational hurdle • Resource hurdle • Political hurdle • Failure to understand the customer • Why do they buy • Is there a real need for the product • inadequate or incorrect marketing research • Inability to predict environmental reaction • What will competitors do • Fighting brands • Price wars • Will government intervene • Over-estimation of resource competence • Can the staff. The model identifies two parallel processes that both involve getting attention. The individual and organizational processes are not independent however. and processes handle the new strategy • Failure to develop new employee and management skills • Failure to coordinate • Reporting and control relationships not adequate • Organizational structure not flexible enough • Failure to obtain senior management commitment • Failure to get management involved right from the start • Failure to obtain sufficient company resources to accomplish task • Failure to obtain employee commitment • New strategy not well explained to employees • No incentives given to workers to embrace the new strategy • Under-estimation of time requirements .Strategic management followers and manager has subordinates. and Keats. From over 20 years of research Jacques concluded that the strategic leader works in an increasingly complex.

especially if it is rigidly enforced. When a strategy becomes internalized into a corporate culture. "Just do it!" while not quite what he meant. Gary Hamel coined the term strategic convergence to explain the limited scope of the strategies being used by rivals in greatly differing circumstances. but also satisfactory to the full range of organizational stakeholders. Populism or faddishness can have an impact on a particular theory's life cycle and may see application in inappropriate circumstances. the three elements are interdependent. An example of this is marketing myopia. fluidity can be more important than a finely tuned strategic compass. aligning with a popular marketing tagline. acceptability to stakeholders. He lamented that strategies converge more than they should. (ii) developing a plan for achieving the objectives.) In turn. administrative feasibility – have been lifted. and then address the mundane question of means.Strategic management • No critical path analysis done • Failure to follow the plan • No follow through after initial planning • No tracking of progress against plan • No consequences for above • Failure to manage change • Inadequate understanding of the internal resistance to change • Lack of vision on the relationships between processes. (There will usually be only a small number of approaches that will not only be technically and administratively possible. if one could deal first with the noble question of ends. But in the world where strategies must be implemented. technology and organization • Poor communications • Insufficient information sharing among stakeholders • Exclusion of stakeholders and delegates 79 Limitations of strategic management Although a sense of direction is important. is a phrase that nevertheless comes to mind when combatting analysis paralysis. It would be convenient. Many theories of strategic management tend to undergo only brief periods of popularity. it can also stifle creativity. Many theories tend either to be too narrow in focus to build a complete corporate strategy on. or too general and abstract to be applicable to specific situations. And so. in other words. believes that strategic planning must not dominate action. it can lead to group think. In an uncertain and ambiguous world. See business philosophies and popular management theories for a more critical view of management theories. Means are as likely to determine ends as ends are to determine means.[48] Ram Charan. The linearity trap It is tempting to think that the elements of strategic management – (i) reaching consensus on corporate objectives. and (iii) marshalling and allocating the resources required to implement the plan – can be approached sequentially. A summary of these theories thus inevitably exhibits survivorship bias (itself an area of research in strategic management).[90] The objectives that an organization might wish to pursue are limited by the range of feasible approaches to implementation. the fact is that it rarely makes sense to divorce oneself from the environment in which a strategy will have to . In 2000. because the more successful ones are imitated by firms that do not understand that the strategic process involves designing a custom strategy for the specifics of each situation. It can also cause an organization to define itself too narrowly. although participants in a typical “strategy session” may be asked to do “blue sky” thinking where they pretend that the usual constraints – resources. the range of feasible implementation approaches is determined by the availability of resources.

contrast is made between the externally existing opportunities and threats to determine if the 80 . Our brains can’t process “boundless possibilities”. some opportunities for pursuing objectives will disappear and others arise.[97] Strategic management is a question of interpreting. Applying the same logic. It’s at least as plausible to argue that acute awareness of constraints is the very thing that stimulates creativity by forcing us to constantly reassess both means and ends in light of circumstances. the possibilities presented by shifting circumstances for advancing an organization's objectives. The organization's strategy is built using its strengths to exploit opportunities. usually are the best method for such learning. serially modified on the basis of feedback.. Strategic management will add little value—indeed."[95] It serves little purpose (other than to provide a false aura of certainty sometimes demanded by corporate strategists and planners) to pretend to anticipate every possible consequence of a corporate decision. Thus a strategy will get remade during implementation because "humans rarely can proceed satisfactorily except by learning from experience. is. while managing the risks arising from internal weakness and external threats.. It further involves contrasting its strengths & weaknesses to determine if the organization has enough strengths to offset its weaknesses. issues too complex to be fully understood. Doing so requires strategists to think simultaneously about desired objectives. at the external level. and every possible point of view. Yes Strategic analysis takes place within the constraints of existing/potential organizational resources but its would not be appropriate to call it a trap. and continuously reinterpreting. the ultimate test is implementation. organizations and societies cope as well as possible with . An initial idea about corporate objectives may have to be altered if there is no feasible implementation plan that will meet with a sufficient level of acceptance among the full range of stakeholders. in the absence of perfect knowledge. previously impossible or unimagined. Strategic thinking/ identification takes place within the gambit of organizational capacity and Industry dynamics. what matters for the purposes of strategic management is having a clear view – based on the best available evidence and on defensible assumptions – of what it seems possible to accomplish within the constraints of a given set of circumstances. or because the necessary resources are not available. will become viable. Such an approach has been called the Strategic Incrementalisation Perspective.. You will inevitably need to adjust corporate objectives and/or your approach to pursuing outcomes and/or assumptions about required resources. because strategies are built on assumptions that. Strategy should be seen. The two common approaches to strategic analysis are value analysis and SWOT analysis. and the very idea of strategy only has meaning in the context of challenges or obstacles to be overcome.g. implementation planning and resources. As the situation changes. SWOT tool involves analysis of the organization's internal environment (Strengths & weaknesses) and its external environment (opportunities & threats).repetitive learning cycle [rather than] a linear progression towards a clearly defined final destination. it may well do harm—if organizational strategies are designed to be used as a detailed blueprints for managers. then.Strategic management be implemented. The essence of being “strategic” thus lies in a capacity for "intelligent trial-and error"[96] rather than linear adherence to finally honed and detailed strategic plans. and modest probes. "How can individuals. the best approach for achieving them. It may not be so limiting as suggested in "The linearity trap" above. For e..[93] Formulation and implementation of strategy must thus occur side-by-side rather than sequentially. and the resources implied by the chosen approach."[94] While assumptions can and should be tested in advance. Some implementation approaches will become impossible. The key question..[92] It involves toggling back and forth between questions about objectives. At the end of the day. or both. It’s probably impossible to think in any meaningful way about strategy in an unconstrained environment. every possible constraining or enabling factor. as laying out the general path—but not the precise steps—an organization will follow to create value. Strategic management is necessarily a ". while others. Even the most talented manager would no doubt agree that "comprehensive analysis is impossible" for complex problems. are never perfectly correct. given the fact that actions initiated on the basis of inadequate understanding may lead to significant regret?"[91] The answer is that the process of developing organizational strategy must be iterative. rather. It requires a frame of mind that admits of no boundary between means and ends.

1961. Made in America. A Passion for Excellence. G. [20] Peters. [24] Camp. com/ carpenter/ [6] Chandler. 1965. Productivity. “Three models of strategy”.. [19] Hamel. MIT Center for Advanced Engineering. C.[98] James Bandrowski declared in 1990 that strategy development should no longer be just an analytical exercise. and 3) creativity is now the single most important leadership competency. May–June 1989. J. 1979. 1. Benchmarking: The search for industry best practices that lead to superior performance. November–December 1982. and Gale. Scholes. MIT Commission on Industrial Productivity. New York. L. and Champy. D. 1954. & Prahalad. 3rd edition. C.What is strategic management. Journal of Management. New York. Bloomberg Press. including strategic thinking and planning. Reengineering the Corporation. and the pace of change and level of complexity have skyrocketed in the last decade. [22] Hammer. and Cooper. McGraw Hill. D.Strategic management organization is capitalizing enough on opportunities to offset emerging threats. the greater the chance of value-added breakthrough thinking and achieving stretch goals. In 2009. Boston. New York. He states. Harper Business. 1990. prenhall. pg 106–113. R. J. [27] Kearney. [5] http:/ / www. J. vol 10. 2000. Total Quality Control. Juran on Quality. Peter The Practice of Management. Quality. ISBN 978-0-273-71192-6 [4] Deacon. G. vol 17. [15] Traverso. May–June 1990. Boyden Competitive strategic management. Small is Beautiful: a Study of Economics as if People Mattered. New York. 81 Putting creativity and innovation into strategy Given that companies of all sizes are competing on the global stage.[99] He introduced a sine wave approach that amplifies the strategic thinking of all participants in the development and execution of strategy. R. [10] Chaffee. [30] Heskett. Strategic Management Journal. Hambrick. Random House. [25] Deming. New York. “The Core Competence of the Corporation”.. for every function in the organization.E. Maidenhead. as well as in mergers. Cambridge Mass. [2] Lamb. 1989. Guerrilla Marketing. N. “Strategic Intent”. [11] Buzzell. ISBN 0-06-131778-0 (also ISBN 0-88179-169-5) [13] Woo. ISBN 0-396-35350-5.-J. 1993. 1987. T. 1962. [26] Juran. Houghton Muffin Co. the bigger the amplitude (measure of the height and depth of a sine wave) of one’s thinking and feeling. New York. Academy of Management Review. [18] Hamel. he declared that a small amplitude both positively and negatively in one’s thinking is the metaphorical “box” in thinking outside the box. 1985 ISBN 0-446-38348-1) [21] Barney. Harvard Business Review. Secrets for making big profits from your small business. “The surprising case for low market share”. G. 1994. Quality is Free. [14] Levinson. Chen. "The Invisible Edge: Taking your Strategy to the Next Level Using Intellectual property(Portfolio. 1984. C. C. New York. [8] Ansoff. 2) enterprises are not equipped to cope with this complexity. Whittington. J. Igor Corporate Strategy McGraw Hill. Volume 28. acquisitions. B. and Austin.K. A.K. [9] Drucker. [12] Schumacher. Harvard Business School Press. [7] Selznick. References [1] Nag. Total Quality Management: A business process perspective. 1992. A. E.F. Harvard Business Review. but should be highly creative with an aim to conceiving and executing an innovative strategy that creates competitive distinction and elates customers.. Harvard Business Review. 1986. Free Press. Princeton. 1989. 1991. Outsmarting Goliath. G. Free Press. and turnarounds. [29] Feignbaum. 1984 [3] Johnson. 1985. Evanston Il. Robert. R. really? Inductive derivation of a consensus definition of the field. Quality Press. 8th Edition. 2008.. New York. The PIMS Principles: Linking Strategy to Performance. E. McGraw Hill. [28] Crosby. M. Philip Leadership in Administration: A Sociological Interpretation. IBM said that it is needed in all aspects of leadership. Harvard Business School Press. American Society for Quality Control. New York. Print. Doubleday.T. In 2010. Managing in the Service Economy. Milwaukee. New York. 1992. Ralph. Englewood Cliffs. (1991) “Firm Resources and Sustainable Competitive Advantage”. New York. It can be used at the corporate level. Boston. [23] Lester. 1982. Row. M.M. [16] Blaxill. pages 935–955. Essex. Mark & Eckardt. IBM released a study summarizing three conclusions of 1500 CEOs around the world: 1) complexity is escalating. FT Prentice Hall. P.C. . no. NJ: Prentice-Hall. C. & Prahalad. Alfred Strategy and Structure: Chapters in the history of industrial enterprise. K. creative strategy development is needed more than ever. divestitures. and Competitive Position. J. R.K. A. W. & Prahalad. Simulation and Gaming a Symposium. Boston. Amos R. Issue 9. R Exploring Corporate Strategy. March 2009) [17] Hamel. Wis. Harper and Row. Peterson. Kearney Pree Inc. 1985 (also Warner Books. September 2007. no 1. 1957. Competing for the Future.

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Strategic Management Journal.B.E. “From marketing mix to relationship marketing: towards a paradigm shift in marketing”. J. 2000. Pierre “Scenarios: Uncharted Waters Ahead”. J. no2. P. Peter The Art of the Long View. July/August 1987. F. B.. 1999 (Exists also in other languages) [75] Shapiro. Morrison. Henry “Crafting Strategy”. No 1. 1997. 1993. Daniel “How managers think”. H. New York. “The Four Faces of Mass Customization”. John Wiley. Alvin The Third Wave. New York. 1990. J. Mundt. Jan–Feb 1997. 1968). D. [34] Kingman-Brundage. No. W. Harvard University Press. [67] Quinn. The Strategy Process. Basic Books. [56] Christensen.. “Zero defects: Quality comes to services”. [47] Toffler. New York. “Is strategy making a difference?” Long Range Planning Review. "Customer Satisfaction is rooted in Employee Satisfaction. J. W. 1990). 1997). Harper Books. 1980. Oxford. 1995. 1999. Richard Managing on the Edge. winter 1996.Strategic management [31] Davidow.R. [38] Reichheld. [65] Zuboff. 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"Strategic Management. Boston. 1990 83 External links • The Journal of Business Strategies (http://COBA." in Redner. Horton (eds. Blue Ocean Strategy. Harvard Graduate School of Business. 1996. passim. [88] J. 1989. p. 1977. pdf). New York: Macmillan. No. 19 (1959). vol. Strategy Process. Harvard Business Review.uk/) • The Association of Internal Management Consultants (http://www. [84] Zaleznik. Howard. Content and Context. Limdblom. 140 [96] Ibid. 1993. P. January 1986. 140 [94] Elcock. 1993. Working paper 9-786-020.. Abraham The Managerial Mistique. Managing the New Public Services. Greene (2007). 2005 [90] Lindblom. [87] Corner.. Boulder.org)-The nationwide network of Strategic Management and Planning professionals . Harry. Harper and Row. Free Press. Cambridge: Harvard University Press. May–June." in Farnham. Edward J. A. Thomson Learning 2008 [93] Ibid. and David Collingridge. Vol.. "Incrementalism. ed. “Integrating organizational and individual information processing perspectives on choice”. 56. Creating Public Value: Strategic Management in Government. B. Capitalizing on Complexity: Insights from the Global Chief Executive Office Study.. Scott Armstrong and Kesten C.aimc. New York. Abraham “Managers and Leaders: Are they different?”. and Keats. Corporate Imagination Plus. 2nd Edition. and S. and the Future of Political Decision Theory. D. Organizational Science. [95] Woodhouse and Collingridge. James.SHSU. wharton. p. An Heretical Heir of the Enlightenment: Politics. .sps. Charles E. Intelligent Trial-and-Error. Policy and Science in the Work of Charles E." Public Administration Review. "The Science of Muddling Through. upenn. management [86] Zaleznik. [98] IBM. Harvard Business Press. [85] leadership vs. p. 139 [92] de Wit and Meyer. 1995. "Competitor-oriented Objectives: The Myth of Market Share" (http:/ / marketing.org. C): Westview Press. 2 [91] Woodhouse. edu/ documents/ research/ CompOrientPDF 11-27 (2). July 2010 [99] Bandrowski. New York. Kinicki.Strategic management [83] Isenberg. Daniel Strategic Opportunism: Managing under uncertainty.).edu/jbs/) • Strategic Planning Society (http://www. 116–134. 3. p. 1994. [89] Kim and Mauborgne. Mark H. [97] Moore.

Marketing management 84 Marketing management Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. and others. In company analysis. For example. and analysis of the industry context. they often conduct market research (alternately marketing research) to obtain this information. Marketing managers will examine each competitor's cost structure. historical responses to industry developments. joint venture partners. and other factors. distributors and other channel partners. More recently. As such. Marketers also attempt to track these segments' perceptions of the various products in the market using tools such as perceptual mapping. marketers focus on understanding the company's cost structure and cost position relative to competitors. Marketing management employs various tools from economics and competitive strategy to analyze the industry context in which the firm operates. competitive positioning and product differentiation. breaking down the market into various constituent groups of customers. in a large consumer products company. An analysis of complementary products may also be performed if such products exist. marketers build detailed profiles of each competitor in the market. which are called customer segments or market segmentation's. and competitor analysis (so-called "3 Cs" analysis).[3] In analyzing these issues.[1] Marketing managers are often responsible for influencing the level. and other factors may all be examined. corporate culture. this is because the role of a marketing manager can vary significantly based on a business's size. In part. Structure Traditionally. timing. the regulatory context may also be important to examine in detail. company analysis. Customer analysis is to develop a schematic diagram for market segmentation.[4] The firm's collaborators may also be profiled. geographic. and composition of customer demand accepted definition of the term. Rapidly emerging forces of globalization have led firms to market beyond the borders of their home countries. These include Porter's five forces. analysis of strategic groups of competitors. In competitor analysis.[5] Depending on the industry. psycho graphic. degree of vertical integration. competitor analysis. as well as working to identify a firm's core competencies and other competitively distinct company resources. firms must possess a detailed. making international marketing highly significant and an integral part of a firm's marketing strategy. sources of profits. Marketers employ a variety of techniques to conduct market research. Marketing managers may also work with the accounting department to analyze the profits the firm is generating from various product lines and customer accounts. objective understanding of their own business and the market in which they operate. and industry context. value chain analysis and others. focusing on any number of variables that may differ among the segments: demographic. the marketing manager may act as the overall general manager of his or her assigned product [2] to create an effective. marketing analysis was structured into three areas: customer analysis. Marketing managers work to develop detailed profiles of each segment. but some of the more common include: . it has become fashionable in some marketing circles to divide these further into certain five "Cs": customer analysis. Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. resources and competencies. behavioral. the discipline of marketing management often overlaps with the related discipline of strategic planning. company analysis. needs-benefit. The company may also conduct periodic brand audits to assess the strength of its brands and sources of brand equity. collaborator analysis. which may include various suppliers. cost-efficient Marketing management strategy.

The selected strategy may aim for any of a variety of specific objectives. some form of sustainable competitive advantage. or can develop. In conjunction with targeting decisions. or brand to occupy in the target customer's mind. whereas BMW has traditionally positioned its brand to be perceived as the leader in "performance". makes frequent purchases. Volvo has traditionally positioned its products in the automobile market in North America in order to be perceived as the leader in "safety". or other factors. non-targeted customers. or other goals. Customer segments are often selected as targets because they score highly on two dimensions: 1) The segment is attractive to serve because it is large. and 2) The company has the resources and capabilities to compete for the segment's business. revenue growth." [6] The implication of selecting target segments is that the business will subsequently allocate more resources to acquire and retain customers in the target segment(s) than it will for other. such as focus groups and various types of interviews Quantitative marketing research. can meet their needs better than the competition. marketers typically identify one or more target customer segments which they intend to pursue. is not price sensitive (i. a firm's positioning can be maintained over a long period of time because the company possesses. including optimizing short-term unit margins. may deny entry to unfashionably dressed individuals because the business has made a strategic decision to target the "high fashion" segment of nightclub patrons.Marketing management • • • • Qualitative marketing research. for example. the firm may go so far as to turn away customers who are not in its target segment. and can do so profitably.[7] .[7] For example. In some cases. marketing managers are able to make their own key strategic decisions and develop a marketing strategy designed to maximize the revenues and profits of the firm.The doorman at a swanky nightclub. is willing to pay high prices). Ideally. To achieve the desired objectives. long-term profitability. marketing managers will identify the desired positioning they want the company.[3] In fact. growing. a commonly cited definition of marketing is simply "meeting needs profitably.[8] The positioning should also be sufficiently relevant to the target segment such that it will drive the purchasing behavior of target customers.e. market share. such as statistical surveys Experimental techniques such as test markets Observational techniques such as ethnographic (on-site) observation 85 Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis. Marketing strategy If the company has obtained an adequate understanding of the customer base and its own competitive position in the industry. product. This positioning is often an encapsulation of a key benefit the company's product or service offers that is differentiated and superior to the benefits offered by competitive products.

sales and distribution channels). marketing communications. low. More broadly.g. Marketing executives may therefore manage any number of specific projects. often subdivided into marketing objectives and financial objectives The marketing strategy the business has chosen. product or brand has been determined. the target market selected. and use a variety of process management techniques to keep them operating smoothly. builds customer loyalty and brand equity among target customers.Marketing management 86 Implementation planning After the firm's strategic objectives have been identified. product development efforts. The content of marketing plans varies from firm to firm. and vendor management Once the key implementation initiatives have been identified. marketing managers focus on how to best implement the chosen strategy. In many cases. Taken together. The Marketing Metrics Continuum provides a framework for how to categorize regional. Marketers use a variety of project management techniques to ensure projects achieve their objectives while keeping to established schedules and budgets. place (the place or area where the products are going to be sold. pricing (at what price slot does a producer position a product. marketing management will develop a marketing plan to specify how the company will execute the chosen strategy and achieve the business' objectives. The fifth P is politics. marketing managers work to oversee the execution of the marketing plan. specifying the target segments to be pursued and the competitive positioning to be achieved • Implementation choices for each element of the marketing mix (the 4(5)Ps) Project.e. metrics from the tactical to strategic. and pricing. Now a new P has been added making it a total of five P's. but commonly includes: • • • • • An executive summary Situation analysis to summarize facts and insights gained from market research and marketing analysis The company's mission statement or long-term strategic vision A statement of the company's key objectives. brand management. such as new product development. medium or high price). and achieves the firm's marketing and financial objectives. Marketers may employ the tools of business process reengineering to ensure these processes are properly designed. Traditionally. such as sales force management initiatives. which affects marketing in a significant way. e. and the desired positioning for the company. which could be local. countrywide or international) (i. . meaning the mix of elements the business will employ to "go to market" and execute the marketing strategy. the company's implementation choices across the 4(5) Ps are often described as the marketing mix. The overall goal for the marketing mix is to consistently deliver a compelling value proposition that reinforces the firm's chosen positioning. and Promotion. marketing managers work to design and improve the effectiveness of core marketing processes. channel marketing programs and the execution of public relations and advertising campaigns. process. this has involved implementation planning across the "4 Ps" of marketing: product management.

marketing executives often act as a "brand champion" and work to enforce corporate identity standards across the enterprise. such as sales forecasts. incentive compensation. material requirements planning (MRP). Another technique. or other functional areas to implement the marketing plan. Cultural barriers may exist in a given business unit or functional area that the marketing manager must address in order to achieve this goal. is a CRM database-driven approach that attempts to estimate the value of marketing mix executions based on the changes in customer behavior these executions generate. and inventory management systems. RFx's and storage of agency information in a supplier database. especially those with multiple business units. Achieving a market orientation. In larger organizations.[6] Reporting. In order to effectively manage these resources. top marketing managers may need to coordinate across several marketing departments and also resources from finance. such as enterprise resource planning (ERP).Marketing management Effective execution may require management of both internal resources and a variety of external vendors and service providers. sales force and reseller incentive programs. In some cases. Brand valuation. sales force management systems. Under the area of marketing agency management (i. Recently. measurement. also known as "customer focus" or the "marketing concept". requires building consensus at the senior management level and then driving customer focus down into the organization. integrated marketing communications (IMC). Measuring the return on investment (ROI) of and marketing effectiveness various marketing initiatives is a significant problem for marketing management. feedback and control systems Marketing management employs a variety of metrics to measure progress against objectives. working with external marketing agencies and suppliers) are techniques such as agency performance evaluation. and thereby estimate the financial value of specific investments in brand equity. manufacturing. engineering. Additionally. accounting and financial tools are used to help estimate the ROI of marketing investments. some software vendors have begun using the term "marketing operations management" or "marketing resource management" to describe systems that facilitate an integrated approach for controlling marketing resources. for example. It is the responsibility of marketing managers – in the marketing department or elsewhere – to ensure that the execution of marketing programs achieves the desired objectives and does so in a cost-efficient manner. scope of work. research and development. attempts to identify the percentage of a company's market value that is generated by the company's brands. 87 Organizational management and leadership Marketing management may spend a fair amount of time building or maintaining a marketing orientation for the business. Marketing management therefore often makes use of various organizational control systems. these efforts may be linked to various supply chain management systems. marketing executives may need to spend much of their time focused on political issues and inter-departmental negotiations. operations.[9] . Various market research. The effectiveness of a marketing manager may therefore depend on his or her ability to make the internal "sale" of various marketing programs equally as much as the external customer's reaction to such programs. efficient consumer response (ECR). and customer relationship management tools (CRM).e. Marketers may therefore coordinate with the company's Purchasing department on the procurement of these services. such as the firm's advertising agency.

Jack Trout (2000). Marketing Management.1177/1059601195202004. Competitive Advantage (revised ed. investors fund credit in the forms of (1) debt capital (e. New Delhi and New York ISBN 0-19-567123-6 link = Philip Kotler.g.g. The “economy” is a social institution that organizes a society’s production.amazon. Michael (1998). product development) and science (e. (2003).+Marketing+ROI:+ The+Path+to+Campaign. Kevin J. Philip. doi:10. however. J. the safety of debtors’ claims against assets. Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization (http://www. and governments that acquire resources and transact business. marketing. (2005) International Marketing. Clancy. K. Laura (2008). and management of cash and money surrogates through a variety of capital accounts. distribution and amount of control. Finance is conceptualized. and perceptions of quality.. Kevin Lane (2002). Counter intuitive Marketing. . Although closely related. Retrieved 2008-11-03. (2) equity capital (e. listed and unlisted company shares). Rakesh Mohan. Peter C.g. Kitchen (2000). mortgage securities and other credit instruments). Kevin Lane Keller (2006).” all of which must be financed.+Customer. and markets created for transacting and trading assets.).g. Racom Communications. C. corporate and government notes and bonds. ISBN 0-13-145757-8.). Lenskold (http://books.. measurement). and consumption of goods and services. Networks of financial businesses exist to create. ISBN 0-684-84148-7. Schultz. Financial performance measures assess the efficiency and profitability of investments. In practice. Philip J. ISBN 0-07-135916-8. Pearson Prentice Hall. Porter. is a family of business activity that includes the origination. insurance companies. negotiate. and Corporate Profitability by James D. ISBN 0-13-041150-7.com/Marketing-Metrics-Action-Performance-Driven-Organization/dp/1933199156/ ref=sr_1_6?ie=UTF8&s=books&qisbn=1225704819&sr=1-6). ISBN 0-684-84146-0. Porter. 12th ed. The financial system consists of public and private interests and the markets that serve them. Prentice Hall. Philip.. McGraw-Hill. and regulated by a complex system of power relations within political economies across state and global markets. Organizational culture. 2nd ed. Michael (1998). The Free Press. brokerage and fund management firms) to other individuals. and the likelihood that derivative instruments will protect investors against a variety of market risks. The Free Press. ISBN 0-13-145757-8. Economists make a number of abstract assumptions for purposes of their analyses and predictions. Positioning: The Battle for Your Mind (20th anniversary ed. ISBN 1933199156. • Patterson. Ries. ISBN 0-684-85555-0.. AS (1995). Pearson Prentice Hall. the disciplines of economics and finance are distinctive. Marketing Management. Palgrave Macmillan.. Customer. Oxford University Press. Kevin Lane Keller (2006). Communicating Globally.2 Finance By 'RheaSethi' Finance is often defined simply as the management of money or “funds” management. property. Retrieved 2008-11-03. and insurance products. 12th ed. commodities. Group & Organization Management. With the expectation of reaping profits. banks. although these activities increasingly converge through the intense technical and institutional focus on measuring and hedging risk-return relationships that underlie shareholder value. McGraw-Hill Professional. instruments.). distribution.g. and (3) the derivative products of a wide variety of capital investments including debt and equity securities. Kriegafsd (2000). ISBN 0-333-92137-2. Don E. Keller. [1] Modern finance. Weidner.+Marketing+ROI.google. market. and trade in evermore-complex financial products and services for their own as well as their clients’ accounts.com/?id=-ByzlitSB9QC&dq=Lenskold. Kotler. structured. They generally regard financial markets that function for the financial system as an efficient mechanism...Marketing management 88 References [1] [2] [3] [4] [5] [6] [7] [8] [9] Joshi. Al. R. Strategic Brand Management.. The Path to Campaign. It provides capital from individual and institutional investors who transfer money directly and through intermediaries (e. liabilities. ISBN 0071413634. and risks. James D. • Masi. Competitive Strategy (revised ed.+Jim. firms. however.+and+Corporate+Profitability+By+James+Lenskold). Further reading • Lenskold. The Free Press. Finance is both art (e.

are impossible to predict. trusts. A bank aggregates the activities of many borrowers and lenders. On the other hand. 2) corporate finance: the finances of for-profit organizations including corporations. of different sizes. and income security in later life. housing.Finance emerging research is demonstrating that such assumptions are unreliable. Financial assets. or increasing its income. The bank then lends these deposits to borrowers. financial markets are subject to human error and emotion. the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies. labor force participation. transportation. and 3) public finance: the financial affairs of domestic and international governments and other public entities. consumption. Instead. Recent research in "behavioral finance" is promising. businesses and governing bodies within them—sometimes in a single day. Finance is one of the most important aspects of business management and includes decisions related to the use and acquisition of funds for the enterprise. Three overarching divisions exist within the academic discipline of finance and its related practices: 1) personal finance: the finances of individuals and families concerning household income and expenses.” “work. . or buy notes or bonds in the bond market. partnerships and other entities. mutual funds. saving and investing. by businesses (corporate finance) and by a wide variety of other organizations. A bank accepts deposits from lenders. on which it pays interest. the effects of macro and micro level financing that mold and impact these and other domains of human and societal life typically have been treated by researchers as “policy. The lender receives interest. including schools and non-profit organizations. are strong players in public finance. The lender can find a borrower. albeit a relative newcomer. art. Loans have become increasingly packaged for resale. an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims. credit and debt management. power relations and practices of the financial system can uplift or cripple whole economies and the well-being of households. The study of finance is subsumed under economics as financial economics.[4] The investor can then hold the debt and collect the interest or sell the debt on a secondary market. [2] New research discloses the mischaracterization of investment safety and measures of financial products and markets so complex that their effects. to the existing body of financial research that focuses primarily on measurement. the borrower pays a higher interest than the lender receives. although private equity. acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy. with consideration to their institutional setting. such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom. and the financial intermediary earns the difference for arranging the loan. governments or charities. [3] Areas of study within (and the interactions among) these three levels affect all dimensions of social life: politics. a financial intermediary such as a bank. In general. Bonds are debt instruments sold to investors for organizations such as companies. decreasing its expenses. especially under conditions of uncertainty.” “stratification. sports. known as investments.” “welfare. but the scope. Banks allow borrowers and lenders. by governments (public finance). religion. Central banks. or have been largely unexplored. hedge funds. and other organizations have become important as they invest in various forms of debt. While each has a vast accumulated literature of its own. poverty and wealth. including debt such as bonds as well as equity in publicly traded corporations. are financially managed with careful attention to financial risk management to control financial risk. media. meaning that an investor buys the loan (debt) from a bank or directly from a corporation. to coordinate their activity.[5] 89 Overview of techniques and sectors of the financial industry An entity whose income exceeds its expenditure can lend or invest the excess income. and education. taxes. speed.” and so forth. Finance is used by individuals (personal finance). Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges. Banks are the main facilitators of funding through the provision of credit. health care.

buying insurance. These areas often overlap with the firm's accounting function. health and property insurance. The second. In the first. management must decide which "projects" (if any) to undertake. Short term financial management is often termed "working capital management". board elections).financial institutions such as investment banks and pension funds — or private individuals. and when? How can people protect themselves against unforeseen personal events. "the financing decision" relates to how these investments are to be funded: capital here is provided by shareholders. may be institutional investors . as well as those in the external economy? How can family assets best be transferred across generations (bequests and inheritance)? How does tax policy (tax subsidies or penalties) affect personal financial decisions? How does credit affect an individual's financial standing? • How can one plan for a secure financial future in an environment of economic instability? Personal financial decisions may involve paying for education.. financial accounting is more concerned with the reporting of historical financial information. Short-term funding or working capital is mostly provided by banks extending a line of credit.g. 90 Areas of finance Personal finance Questions in personal finance revolve around • • • • • How much money will be needed by an individual (or by a family). financing durable goods such as real estate and cars. investing and saving for retirement. "the investment decision".and debtors management. . however. or debt obligations. Corporate finance Managerial or corporate finance is the task of providing the funds for a corporation's activities (for small business. which typically include the right to receive declared dividends and to vote the proxy on important matters (e. Ownership of a share gives the shareholder certain contractual rights and powers. in the form of equity (privately or via an initial public offering). while attempting to maximize an entity's wealth and the value of its stock. often in the form of bonds. a company's capital structure is the total mix of financing methods it uses to raise funds. The owners of both bonds and stock. Another method is equity financing . and may employ standard business valuation techniques or even extend to real options valuation. inventory. requires management to determine whether any unappropriated profit is to be retained for future investment / operational requirements. see Financial modeling. and generically entails three interrelated decisions. while these financial decisions are directed toward the future of the firm. The third.Finance In corporate finance. Personal financial decisions may also involve paying for a loan. One method is debt financing. the original shareholders of a share. and if so in what form.the sale of stock by a company to investors. Corporate finance generally involves balancing risk and profitability. and relates to cash-.g. "the dividend decision". The balance between these elements forms the company's capital structure. and the firm's operations (cash flow). or instead to be distributed to shareholders. creditors. The discipline of capital budgeting is devoted to this question. e. called private investors or retail investors. which includes bank loans and bond sales. this is referred to as SME finance).

in this sense it overlaps with financial engineering. and formulating plans to address these. these are largely synonymous. Shape.g. Arguably. etc. in contrast to pure finance.) It focuses on when and how to hedge using financial instruments. See Outline of finance: Mathematical tools. although the latter focuses on application. In the banking sector worldwide. It is concerned with: • • • • Identification of required expenditure of a public sector entity Source(s) of that entity's revenue The budgeting process Debt issuance (municipal bonds) for public works projects Financial risk management Financial risk management is the practice of creating and protecting economic value in a firm by using financial instruments to manage exposure to risk. counties. such as prices. The field is largely focused on the modelling of derivatives. mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). at least formally.) and related public entities (e. Finance theory Financial economics Financial economics is the branch of economics studying the interrelation of financial variables. and can be qualitative and quantitative. "Financial economics". municipalities. Modigliani-Miller theorem) and hence also contributes to corporate finance theory. measuring it (see: Risk measure: Well known risk measures). Similar to general risk management. and to the Black Scholes theory for option valuation. financial risk management requires identifying its sources. school districts) or agencies. although other important subfields include insurance mathematics and quantitative portfolio problems. and extend. The subject has a close relationship with the discipline of financial economics. Liquidity. the Basel Accords are generally adopted by internationally active banks for tracking. which is concerned with much of the underlying theory. Sector. Financial mathematics Financial mathematics is a field of applied mathematics. (Other risk types include Foreign exchange. Outline of finance: Derivatives pricing. . as opposed to those concerning the real economy. It essentially explores how rational investors would apply decision theory to the problem of investment. etc. the mathematical or numerical models suggested by financial economics. Generally. Financial economics concentrates on influences of real economic variables on financial ones. it further studies phenomena and models where these assumptions do not hold. Inflation risks. or are extended. interest rates and shares. also considers investment under "certainty" (Fisher separation theorem. the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM). mathematical finance will derive. while the former focuses on modeling and derivation (see: Quantitative analyst). particularly credit risk and market risk. Volatility. It centres on decision making under uncertainty in the context of the financial markets.Finance 91 Finance of public entities Public finance describes finance as related to sovereign states and sub-national entities (states/provinces. and the resultant economic and financial models. Here. credit and market risks. Financial Econometrics is the branch of Financial Economics that uses econometric techniques to parameterize the relationships suggested. reporting and exposing operational. concerned with financial markets. In terms of practice. "theory of investment value".

Certified International Investment Analyst (CIIA). Empirical studies that demonstrate significant deviations from classical theories. Behavioral finance includes such topics as: 1. Master of Financial Mathematics (MFM).UK certification / CA .certification in Commonwealth countries). ACMA/FCMA ( Associate/Fellow Chartered Management Accountant) from Chartered Institute of Management Accountant(CIMA). trademarks. information diffusion and aggregation. Master of Financial Administration (MFA) • Certifications: Chartered Financial Analyst (CFA). Certified Treasury Professional (CTP). which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Master of Financial Economics. Behavioral finance has grown over the last few decades to become central to finance. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions. Certified Public Accountant (CPA. and attempt to discover new principles on which such theory can be extended. Among other topics. etc. Related professional qualifications There are several related professional qualifications. Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Intangible asset finance Intangible asset finance is the area of finance that deals with intangible assets such as patents. UK. that can lead to the field: • Generalist Finance qualifications: • Degrees: Masters degree in Finance (MSF). Certificate in Quantitative Finance (CQF). quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets. 2. Master of Quantitative Finance (MQF). . Certified Valuation Analyst (CVA).. 4. Master Financial Manager (MFM). Research may proceed by conducting trading simulations or by establishing and studying the behaviour of people in artificial competitive market-like settings. Don Balenovich. price setting mechanisms. Chartered Alternative Investment Analyst (CAIA) • Quantitative Finance qualifications: Master of Financial Engineering (MSFE). reputation. Models of how psychology affects trading and prices Forecasting based on these methods. Vladimira Ilieva. Behavioral finance Behavioral Finance studies how the psychology of investors or managers affects financial decisions and markets. Ahmet Duran). Association of Corporate Treasurers (ACT). Corporate Finance Qualification (CF). • Accountancy qualifications: • Qualified accountant: Chartered Accountant (ACA . Master of Computational Finance (MCF). Master of Finance & Control (MFC). Studies of experimental asset markets and use of models to forecast experiments. 3. goodwill. David Porter. A strand of behavioral finance has been dubbed Quantitative Behavioral Finance. US certification). and returns processes. Studies by Jeff Madura. UK certification). Certified Market Analyst (CMA/FAD) Dual Designation.Finance 92 Experimental finance Experimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows. Some of this endeavor has been led by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics). Chartered Certified Accountant (ACCA.

Master of Science in Management (MSM). Master of Commerce (M. and R. like budgeting.upenn. P. These resources may include tangible investments like computer hardware.[4] These resources supported a single set of requirements and processes. valuation and investment management and syndicate finance. webcitation. along with other aspects that are unique to technology.Finance • Non-statutory qualifications: Chartered Cost Accountant CCA Designation from AAFM • Business qualifications: Master of Business Administration (MBA). refers to the IT related management activities in organizations. (2005). this increase requires business and technology management to work as a creative. et al. Federalreserve. and managed in this silo-like fashion.wharton. and collaborative team instead of a purely mechanistic span of control according to Bird.[6] [7] The efficiencies of having this type of integrated and automated management environment allows .Comm).) The Handbook of Economic Sociology. Merriam Company. tech support etc. synergistic. While the value creation for an organization involves a network of relationships between internal and external environments. networks and data centre facilities.oecd.[2] IT Management. software design. like change management. Springfield.stern.provides resources covering three areas in finance: corporate finance. charitytimes. A primary focus of IT management is the value creation made possible by technology. network planning. data.com (http:/ / www. networking. • Professor Aswath Damodaran (http://pages. (Archived by WebCite at Webcitation. & C. software. one set of resources was dedicated to one particular computing technology.[1] IT Management is a different subject from management information systems.[5] This has led the leading technology providers to build out and complement their product-centric infrastructure and management offerings with Converged Infrastructure environments that converge servers. Doctor of Business Administration (DBA) 93 References [1] Gove.org (http:/ / www. com/ EBchecked/ topic/ 207147/ finance) [4] Charitytimes. business application or line of business.org/finance) Observation of UK Finance Market • Wharton Finance Knowledge Project (http://knowledge. M. This requires the alignment of technology and business strategies.J.cfm?cid=1) . as stated in the above definition.nyu. N. Managing this responsibility within a company entails many of the basic management functions.gov (http:/ / www. staffing. Master of Management (MM).edu/~adamodar/) (New York University Stern School of Business) . Information technology management IT management is the discipline whereby all of the technology resources of a firm are managed in accordance with its needs and priorities. britannica. teachers.[3] Historically. com/ pages/ ct_news/ news archive/ July_06_news/ 030706_wellcome_trust_charity_bond. Finance. federalreserve. The latter refers to management information methods tied to the automation or support of human decision making. 1961. Webster's Third New International Dictionary of the English Language Unabridged. security. [2] Berezin. and self-learners. htm) Accessed: 2010-01-16. storage.aimed to offer free access to finance knowledge for students. Princeton University Press: Princeton. as well as the staffs who are hired to maintain them. and organizing and controlling. management and facilities. NJ [3] Encyclopædia Britannica Online: britannica. gov/ aboutthefed/ mission. However.edu/category. Massachusetts: G.com (http:/ / www. Swedberg (eds. Mission of the Federal Reserve System. "Emotions and the Economy" in Smelser. and can’t easily be optimized or reconfigured to support actual demand. org/ 5mpS52OAl)) External links • OECD work on financial markets (http://www. htm) [5] Board of Governors of Federal Reserve System of the United States. MIS as it is referred to is focused mainly on the business aspect with a strong input into the technology phase of the business/organization. Second Edition. technology plays an important role in improving the overall value chain of an organization.

and administration of emerging and converging information and communications technologies. implementation. test. . principles. concepts. facilities. software. concepts. in order to develop. facts. deliver.[15] Most IT management programs are designed to educate and develop managers who can effectively manage the planning. and theories in IT management when developing solutions to IT management multifaceted problems in complex situations. information and communication technologies. networks. and business processes in support of organizational strategic goals. control or support IT services. facts. The program curriculum provides students with the technical knowledge and management knowledge and skills needed to effectively integrate people. analytic techniques. and enables IT to more rapidly adjust IT resources (such as servers. to integrate (or synthesize) important facts. 2.[10] List of IT management disciplines The below concepts are commonly listed or investigated under the broad term IT Management:[11] [12] [13] [14] • • • • • Business/IT alignment IT governance IT financial management IT service management Sourcing • IT configuration management IT managers IT managers have a lot in common with project managers but their main difference is one of focus: an IT manager is responsible and accountable for an ongoing program of IT services while the project manager's responsibility and accountability are both limited to a project with a clear start and end date.Information technology management enterprises to get their applications up and running faster. processes and documentation are not part of IT Infrastructure. storage and networking) to meet fluctuating and unpredictable business demand. to explain the important terminology. design. Graduates should be able 1. concepts. principles. with easier manageability and less maintenance. and theories used in IT management. Associated people. use. 3. analytic techniques. (including all of the information technology). and theories in IT management when analyzing complex factual situations. to apply important terminology. principles. monitor.[8] [9] 94 IT infrastructure The term IT infrastructure is defined in ITIL v3 as a combined set of hardware. etc. selection.

et. com/ content/ converged-infrastructure-0) [9] Golden. "Cloud Computing: Two Kinds of Agility. (http:/ / www. . Lane. Over time.[2] Academically. IT Business Edge (http:/ / www. hardware storage capacities grew. and information or decision making. "IT Managers and Project Management" (http:/ / www. D. jsp [13] McKeen. com/ archives/ 2011/ 08/ 18/ the-battle-for-the-converged-data-center-network/ ) [7] Harris. As more and more data was stored and linked.. and other data that would help in managing the enterprise. Prentice Hall 2004 [15] Thomas. resource and . (2010). The term "MIS" arose to describe such applications providing managers with information about sales. Chris. Modern Management Guide to Information Technology.” ChannelInsider. these computer applications became more complex. October 10. datacenterknowledge. Making IT Happen: Critical Issues in IT Management. 2003 [14] CIO Wisdom: Best Practise from Silicon Valley's Leading IT Experts. and Smith. decision support systems. Management information systems are distinct from other information systems in that they are used to analyze operational activities in the organization. [3] Bird. Early business computers were used for simple operations such as tracking sales or payroll data. Boston: Irwin McGraw-Hill. (http:/ / www. (ed). al. com/ c/ a/ Hewlett-Packard/ HP-Adds-to-Converged-Infrastructure-Lineup-636059/ ) [5] Gardner. (http:/ / gigaom. ISBN 9789087530570. Retrieved December 13. jsp [12] 28 Nov. com/ article/ 599626/ Cloud_Computing_Two_Kinds_of_Agility) [10] Veen. Bernard. 2008 http:/ / www. 2010. PM Hut. with little detail or structure. Prentice Hall. November 15. 2011. Management information system A management information system (MIS) provides information which is needed to manage organizations efficiently and effectively. Van Haren Publishing. M.[2] Overview Initially in businesses and other organizations. thectoforum. biz) [4] Talbot. J (1999). managers sought greater detail as well as greater abstraction with the aim of creating entire management reports from the raw. 2010. ISBN 0071123733. as a by-product of the accounting system and with some additional statistic(s). gartner. (2009). cio. June 7. inventories. (http:/ / harvardbookstore. Heather A. com/ it-managers-and-project-management). 2009. Private Clouds.” February 9. Foundations of ITIL V3. [2] O’Brien. gartner. [11] 28 Nov. information began to be distinguished from data and systems were developed to produce and organize abstractions. channelinsider. com/ it/ products/ research/ topics/ topics. com/ cloud/ can-open-converged-infrastructure-compete-2/ ) [8] Oestreich. the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making. Jan van Bon (2007). Annelies van der. e. summaries. As computational technology developed. internal reporting was produced manually and only periodically. Barbara. Lisa. “HP Adds to Converged Infrastructure Lineup. 2011. Data was organized manually according to the requirements and necessity of the organization. the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems. com/ it/ products/ research/ research_services. Rhané (June 15. Dana. pmhut. "Converged Infrastructure." CIO. and executive information systems. itbusinessedge. 2009).. Ken. and technologies improved for connecting previously isolated applications. relationships and generalizations based on the data.Information technology management 95 References [1] McNurlin. "Converged Infrastructure Approach Paves Way for Improved Data Center Productivity. stored data. com/ cm/ community/ features/ guestopinions/ blog/ converged-infrastructure-approach-paves-way-for-improved-data-center-productivity-private-clouds/ ?cs=39310) [6] Huff. "Can Open Converged Infrastructure Compete?" GigaOM. technology. Derrick. Wiley Series in Information Systems. August 18. "Information Systems Management in Practice (8th ed.[1] Management information systems involve three primary resources: people. expert systems. (http:/ / www. Create Space.)". 2010. and gave limited and delayed information on management performance. “The Battle for the Converged Data Center Network. (http:/ / www. Management Information Systems – Managing Information Technology in the Internetworked Enterprise. July 16." CTO Forum. Today. 2010. James D. 2008 http:/ / www.g.” Data Center Knowledge.

The fourth (enterprise) era enabled by high speed networks. Types Most management information systems specialize in particular commercial and industrial sectors. tablet pcs.[3] The first (mainframe and minicomputer) era was ruled by IBM and their mainframe computers. 3) client/server networks. 4) enterprise computing. providing reports based upon performance analysis in areas critical to those plans. As the complexity of the technology increased and the costs decreased. These reports include near-real-time performance of cost centers and projects with detail sufficient for individual accountability. information technology management are often confused. produce fixed. • Management information systems (MIS). including recruitment and training regimens. MIS not only indicate how things are going. the need to share information within an enterprise also grew. This allowed for large amounts of data to be accessed by thousands and even millions of people simultaneously. or management substructure. ERP and.Management information system people management applications. Information technology management concerns the operation and organization of information technology resources independent of their purpose. enterprise resource planning (ERP). project management and database retrieval applications. and smartphones. but why and where performance is failing to meet the plan. The successful MIS supports a business's long range plans. This. Smaller. The second (personal computer) era began in 1965 as microprocessors started to compete with mainframes and minicomputers and accelerated the process of decentralizing computing power from large data centers to smaller offices. This proliferation of computers created a ready market for interconnecting networks and the popularization of the Internet. enterprise performance management (EPM). As technology advanced these computers were able to handle greater capacities and therefore reduce their cost. The fifth and latest (cloud computing) era of information systems employs networking technology to deliver applications as well as data storage independent of the configuration. Information systems and MIS are broader categories that include ERP. led to new levels of mobility in which managers access the MIS remotely with laptops. tied all aspects of the business enterprise together offering rich information access encompassing the complete management structure. and 5) cloud computing. supply chain management (SCM). IBM supplied the hardware and the software. allowing businesses to provide their employees access to computing power that ten years before would have cost tens of thousands of dollars. per se. along with high speed cellphone and wifi networks. these computers would often take up whole rooms and require teams to run them. regularly scheduled reports based on data extracted and summarized from the firm’s underlying transaction processing systems[4] to middle and operational . 2) personal computers. location or nature of the hardware. with feedback loops that allow for titivation of every aspect of the enterprise. more affordable minicomputers allowed larger businesses to run their own computing centers in-house. information system. Terminology The terms MIS. aspects of the enterprise. 96 History Kenneth and Jane Laudon identify five eras of MIS evolution corresponding to five phases in the development of computing technology: 1) mainframe and minicomputer computing. giving rise to the third (client/server) era in which computers on a common network were able to access shared information on a server. In the late 1970s minicomputer technology gave way to personal computers and relatively low cost computers were becoming mass market commodities. customer relationship management (CRM).

often including teaching and learning materials. sales. • Information is considered to be an important asset for any company in the modern competitive world. Enterprise applications • Enterprise systems. employees' performance record etc. • Supply chain management (SCM) systems enable more efficient management of the supply chain by integrating the links in a supply chain. retrieval. OAS may be implemented at any and all levels of management. • Knowledge management system (KMS) helps organizations facilitate the collection. 97 • • • • • Advantages The following are some of the benefits that can be attained for different types of management information systems. accounting records. and controlling of all core business processes across multiple locations. accounting. This may include suppliers. . production. Modules of ERP systems may include finance. wholesalers. also known as enterprise resource planning (ERP) systems provide an organization with integrated software modules and a unified database which enable efficient planning. • The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers. Office automation systems (OAS) support communication and productivity in the enterprise by automating work flow and eliminating bottlenecks. and service. manufacturer. inventory management and distribution. The consumer buying trends and behaviours can be predicted by the analysis of sales and revenue reports from each operating region of the company. marketing. The identification of these aspects can help the company improve their business processes and operations. and unrecorded procedures. recording. managing. School management information systems (MIS) cover school administration. Marketing information systems are MIS designed specifically for managing the marketing aspects of the business.Management information system level managers to identify and inform structured and semi-structured decision problems. retailers and final customers. human resources and operations. Decision support systems (DSS) are computer program applications used by middle management to compile information from a wide range of sources to support problem solving and decision making. practices and skills. Executive information systems (EIS) is a reporting tool that provides quick access to summarized reports coming from all company levels and departments such as accounting. This may include documents.[5] • Companies are able to highlight their strengths and weaknesses due to the presence of revenue reports. • Customer relationship management (CRM) systems help businesses manage relationships with potential and current customers and business partners across marketing. human resources. organization. • Giving an overall picture of the company and acting as a communication and planning tool. and dissemination of knowledge. The effective management of customer data can help the company to perform direct marketing and promotion activities.

. Strategic Information Systems Planning: A Review. S. [5] Pant.&Laudon. J (1999).htm) (U. Information Resources Management Association International Conference. employee record keeping. Atlanta. Conversion is the process of changing or converting the old system into the new. production and finally maintenance. External links • Computer and Information Systems Managers (http://www.chris-kimble. Management Information Systems: Managing the Digital Firm (11 ed.. These include system analysis.edu. May 21–24. [3] Laudon.bls. Laudon..html) (Bournemouth University) • MIS Links (http://www. conversion..com/Research/ Executive-Information-Systems. and shipping.uk/library/resources/ism_web.au/journals/) • MIS Web sites (http://www.html) (University of York) • Executive Information Systems: Minimising the risk of development (http://www.). Department of Labor) • Index of Information Systems Journals (http://lamp. J. C. pdf [2] O’Brien. Prentice Hall/CourseSmart. gov/ handbook/ mis.infosys. These actions usually take place in that specified order but some may need to repeat or be accomplished concurrently. Management information systems: Managing the digital firm.chris-kimble. [4] Transaction processing systems (TPS) collect and record the routine transactions of an organization.). Kenneth C.gov/oco/ocos258.S. Boston: Irwin McGraw-Hill.deakin.bournemouth. programming/implementation. (2009). This can be done in four ways: • Direct cutover – The new system replaces the old at an appointed time. Jane P. ISBN 0071123733. Management Information Systems – Managing Information Technology in the Internetworked Enterprise. Upper Saddle River. (2010). K. [6] Laudon.html) . Examples of such systems are sales order entry. NJ: Pearson Prentice Hall. treas. system design. occ. If good then the new system expands to the rest of the company. p. (1995). Hsu. 164. • Phased approach – New system is introduced in stages.Management information system 98 Developing Information Systems "The actions that are taken to create an information system that solves an organizational problem are called system development"[6].com/Courses/mis/mis_links. • Pilot study – Introducing the new system to a small portion of the operation to see how it fares. payroll. (11th ed. hotel reservations. testing. References [1] http:/ / www.ac.

the CEO is typically responsible for the entire operations of the corporation and reports directly to the chairman and board of directors. References [1] Project Management Pitfalls (http:/ / www. In Project Management. sales. higher management. pmhut. Chief Financial Officer (CFO) – Also reporting directly to the CEO. the CFO routinely checks the corporation's financial health and integrity. preparing budgets and monitoring expenditures and costs. Positions A management team is directly responsible for managing the day-to-day operations (and profitability) of a company. The CFO is required to present this information to the board of directors at regular intervals and provide this information to shareholders and regulatory bodies such as the Securities and Exchange Commission (SEC). as executive management. reporting financial performance. There are most often higher levels of responsibility. Chief Operations Officer (COO) –the COO looks after issues related to marketing. they hold specific executive powers conferred onto them with and by authority of the board of directors and/or the shareholders. More hands-on than the CEO. the CFO is responsible for analyzing and reviewing financial data.[1] They are sometimes referred to. or management team is generally a team of individuals at the highest level of organizational management who have the day-to-day responsibilities of managing a company or corporation. It is the CEO's responsibility to implement board decisions and initiatives and to maintain the smooth operation of the firm. or simply seniors. executive management. Positions that are commonly considered to be part of that team include the following: Chief Executive Officer (CEO) – As the top manager.99 Managerial levels and hierarchy Senior management Senior management. within corporations. Often. such as a board of directors and those who own the company (shareholders). the CEO will also be designated as the company's president and will be one of the inside directors on the board (if not the chairman). with the assistance of senior management. production and personnel. com/ project-management-pitfalls) . the COO looks after day-to-day activities while providing feedback to the CEO. Also usually referred to as a senior vice president. upper management. senior management is responsible for authorizing the funding of projects. but they focus on managing the senior or executive management instead of the day-to-day activities of the business. The COO is often referred to as a senior vice president. top management.

Middle Managers. foreperson. but the actual hiring authority rests in the hands of a Human Resource Manager. Two of the key differences between a supervisor and a manager are (1) the supervisor does not typically have "hire and fire" authority. The supervisor has several manager-like roles. but in some other category. If an employee cannot do the above. Operational supervisors may be considered middle management or may be categorised as non-management staff. 191. Lacking budget authority means that a supervisor is provided a budget developed by management within which constraints the supervisor is expected to provide a productive environment for the employees of the supervisor's work group. A supervisor is first and foremost an overseer whose main responsibility is to ensure that a group of subordinates get out the assigned amount of production. p. and (2) the supervisor does not have budget authority. overseer. depending upon the policy of the particular organisation. A supervisor is responsible for the productivity and actions of a small group of employees. . Normally.[1] Middle management may be reduced in organisations as a result of reorganisation. facilitator. Institute of Public Administration of Canada. being subordinate to the senior management but above the lowest levels of operational staff. ISBN 9780920715024 Supervisor A supervisor. delayering and outsourcing. As a member of management. The changes may be made in order to reduce costs. legally he or she is probably not a supervisor. team leader. budget affecting requests such as travel will require not only the supervisor's approval but the approval of one or more layers of management. or area coordinator is a manager in a position of trust in business. Give instructions and/or orders to subordinates.Middle management 100 Middle management Middle management is the intermediate management of a hierarchical organisation. The supervisor may recommend to management that a particular employee be terminated and the supervisor may be the one who documents the behaviors leading to the recommendation but the actual firing authority rests in the hands of a manager.[1] The US Bureau of Census has four hundred titles under the supervisor classification. when they are supposed to do it and within acceptable levels of quality. as middle management is commonly paid more than junior staff. 2. responsibilities. Be held responsible for the work and actions of other employees. References [1] Peter Aucoin (1989). a supervisor's main job is more concerned with orchestrating and controlling work rather than performing it directly. The supervisor may participate in the hiring process as part of interviewing and assessing candidates. or the changes may be made to make the organisation flatter — empowering the employees and making the organisation more innovative and flexible. such as lead hand. Such changes include downsizing. A supervisor is also given the power to approve work hours and other payroll issues. An employee is a supervisor if he has the power and authority to do the following actions (according to the Ontario Ministry of Labour): 1. A supervisor will usually have the authority to make purchases within specified limits. costs and safety. Lacking "hire and fire" authority means that a supervisor may not recruit the employees working in the supervisor's group nor does the supervisor have the authority to terminate an employee. and powers. cell coach.

Supervisor

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Responsibilities
Supervisors are uniquely positioned through direct daily employee contact to respond to employee needs, problems, and satisfaction. Supervisors are the direct link between management and the work force and can be most effective in developing job training, safety attitudes, safe working methods and identifying unsafe acts and conditions.

Training
Supervisors often do not require any formal education on how they are to perform their duties but are most often given on-the-job training or attend company sponsored courses. Many employers have supervisor handbooks that need to be followed. Supervisors must be aware of their legal responsibilities to ensure that their employees work safely and that the workplace that they are responsible for meets government standards.

Academia
In academia a supervisor is a senior scientist or scholar who, along with their own responsibilities, aids and guides a postgraduate research student, or undergraduate student, in their research project; offering both moral support and scientific insight and guidance. The term is used in several countries for the doctoral advisor of a graduate student.

Gaffer
In colloquial British English gaffer means a foreman, and is used as a synonym for "boss". In the UK the term is also commonly used to refer to sports coaches (football, rugby, etc). The term is also sometimes used colloquially to refer to an old man, an elderly rustic. The word is probably a shortening of "godfather", with "ga" from association with "grandfather". The female equivalent was "gammer", which came to colloquially refer to an old lady or gossip.[2] In 16th century English a "gaffer" was a man who was the head of any organized group of labourers. In 16th and 17th century rural England it was used as a title slightly inferior to "Master", similar to "Goodman", and was not confined to elderly men. The chorus of a famous Australian shearer's song, The Backblocks' Shearer (also known as Widgegoeera Joe), written by W. Tully at Nimidgee, NSW (c.1900), refers to a gaffer: Hurrah, me boys, my shears are set, I feel both fit and well; Tomorrow you’ll find me at my pen When the gaffer rings the bell. With Hayden's patent thumb guards fixed And both my blades pulled back; Tomorrow I go with my sardine blow For a century or the sack! • In glassblowing, a gaffer is the central figure in the creation of a piece of art. For example, At the Corning Glass Works in Corning, New York, a gaffer is a skilled artisan who blows through a long tube to shape molten glass into a variety of useful and/or artistic objects. A business district of Corning has been named "The Gaffer District" in honor of these artisans.

Supervisor

102

References
[1] supervisor (http:/ / www. merriam-webster. com/ dictionary/ supervisor). (2010). In Merriam-Webster Online Dictionary. Retrieved July 13, 2010. [2] The Concise Oxford Dictionary, 5th Edition, OUP 1964

Team leader
A team leader or team lead is someone (or in certain cases there may be multiple team leaders) who provides guidance, instruction, direction, leadership to a group of other individuals (the team) for the purpose of achieving a key result or group of aligned results. The team lead reports to a project manager (overseeing several teams). The team leader monitors the quantitative and qualitative result that is to be achieved. The leader works with the team membership. The team membership may not directly report or answer to the team leader, (who is very often a senior member of the organization but may or may not be a manager) but would be expected to provide support to the team leader and other team members in achieving the team's goals. A good team leader listens constructively to the membership and to the customer(s) of the results that the team is charged with delivering. The responsibilities of a team lead vary greatly between organizations, but usually includes some responsibility for team building and ensuring teamwork. The term is used to emphasize the cooperative nature of a team, in contrast to a typical command structure, where the head of a team would be its "commander". Some of the roles/responsibilities of a team leader are as follows: 1. Prepare reports and maintain records of work accomplishments and administrative information, as required, and coordinate the preparation, presentation, and communication of work-related information to the supervisor. 2. Report to the supervisor periodically on team and individual work accomplishments, problems, progress in mastering tasks and work processes, and individual and team training needs. 3. Intercede with the supervisor on behalf of the team to inform the supervisor of performance management issues/problems and to recommend/request related actions, such as assignments, reassignments, promotions, tour of duty changes, peer reviews, and performance appraisals. 4. Coach, facilitate, solve work problems, and participate in the work of the team 5. Observe training needs and relay training needs and requests to supervisor Read more: http:/ / wiki. answers. What_are_the_duties_and_responsibilities_of_a_team_leader#ixzz1kz5JorUu com/ Q/

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