Management Principles and Practices Course Overview

Great Land College
Management Principles and Practices

Cuorse Code: MBA 611
Cr. Hr 2
Girma Birhanu worku (MBA)

birhanug477@gmail.com
+251 913325679
Girma Birhanu worku 1

COURSE OBJECTIVES:
• Upon the successful completion of this course, students should be
able to:
Critically analyze and evaluate Management Principles and Practices;
Get understanding on how the Management discipline has evolved;
Develop the organizational change and development skills;
Understand the roles of managerial functions in organizations;
Acquainted with managerial decision making
Be able to reflect on and generate their own management competencies and
apply in the today's complex and global workplace
Girma Birhanu worku 2

Course outline
Chapter 1
Overviews Of Chapter 2
Management Chapter 3
Classical
Management Chapter 4
Thought Modern
Management theory Chapter 5
Management
Function
Chapter 6
Management
Decision-making
Contemporary issues
in Management
3
Teaching and learning methods
• Dynamic and interactive lecture and discussion sessions
• Discussions are built around in-class exercises, case discussions and presentations
Organizing the 3H’s understand, memory, analysis

Head
Using image and videos
3H
Heart Hand
Learning with inspiration Writing assignment and
and motivation examinations
4
Assessment
• Assignment-30%
• Article Review-20%
• Final Exam-50%
• Total= 100%
5
Chapter 1
MANAGEMENT AN OVERVIEW
6
Brain storming question
• Management is a set of principles relating
to the functions of planning, organizing,
What is management directing, and controlling,
and its functions? • The applications of these principles in
Why you study harnessing physical, financial, human and
management…? informational resources efficiently and
effectively to achieve organizational goals.
7
1.1. Definition and concept
“Management is the process of coordinating all resources through the five major functions
to achieve organizational goals/desired objectives.”
Coordination of all
resources through
integrating the
Goal of mgt in
five managerial
• Profit oriented business is ROI
functions:
• Public org citizen service
People
• NGOs development and social
Material resources
service achieved
Financial
Machine
information
Planning
Organizing
Function Staffing,
Directing
Controlling 8
Definition…
• Management refers to the process of getting things done, through other people, in
an efficient and effective manner.
An effective manager focuses on both work and people.
the job of every manager is to achieve organizational goals through the
combined efforts of people.
• This expresses managers are concerned not only with attaining goals
(effectiveness) but also attaining them (efficiently).
• Efficiency: doing the thing correctly; refers to the relationship between
inputs and outputs; seeks to minimize resource costs
• Effectiveness: doing the right things; goal attainment
• According to Henery Fayol; "to manage is to forecast and plan, to organize, to
command, to coordinate, and to control” for effectiveness of the organization
9
Definition…
• Management is the process of achieving organizational goals through engaging in the five
major functions of planning, organizing, staffing, leading and controlling .
Planning
Organizing
The Process Staffing

of Management
Leading
This definition recognizes that: Controlling

→ Management is an ongoing activity
→ Entails reaching important goals, and
→ Involves knowing how to perform the five major functions of management. 10
Definition…
Management process refers to the primary functions that managers perform. Referring
to inputs and outputs, doing the task right is being efficient. Doing the right task is being
effective.
Human
Resources
Financial
Resources
Manager Planning→ Organising→Leading→ Controlling Goals
Physical
Resources
Information
Resources
11
Definition…
• Management as a discipline refers to that branch of knowledge which is
connected to study of principles & practices of basic administration.
• It specifies certain code of conduct to be followed by the manager & also
various methods for managing resources efficiently
Resources include:
Human resources e.g. employees
Financial resources e.g. bank loan or investment from shareholders
Physical resources e.g. machinery, inventory
Information resources e.g. knowledge
12
Definition…
• All the definition can be summarized as
Management refers to the

managerial functions of : Management co-ordinates both human and
Planning, organizing, staffing, non-human resources (land, labor, capital) for
leading and controlling. the accomplishment of objectives.
Management is applied to all types

of organization: Profit or not for Management deals with creating a comfortable
profit; Large, medium or small internal environment, with a great
organization; Manufacturing or consideration of the external environment.
service giving, etc.
13
1.2. Nature of Management
• Universal application: Management is applied in any organization (large, small in size, or service
or manufacturing or for-profit or not-for-profit) and its functions are practiced in any level of
management
• Goal oriented: Any organization is established to achieve objectives, and management is important
for any organization to achieve its pre-stated objectives efficiently and effectively.
• Management is a human activity: Management functions are discharged by individuals not by
machines such a computers. However, it can be aided by such instruments as computers.
• Management signifies authority: Since the significance of management is to direct/to guide and to
control, it has to have authority.
• Leadership: the manager has to lead/influence a team of workers. he/she must be capable of
inspiring, motivating and winning their confidence
• Management is multidisciplinary: It has grown as a body of discipline taking the help of so many
social sciences like sociology, psychology, economics, etc.
14
Nature of Management
• Encyclopedia of the Social Sciences states that there are three dimensions of
the nature of management:
i. Methods, through which some pre-determined objectives can be reached,
ii. Combined effect of human efforts and
iii. Some total of all those managers and employees who are associated with these
efforts.
• Nature of management is defined as the co-ordination of

a. Transformation, i.e., turning some factors and elements into products,
b. Social system, which satisfies employees' needs through motivation, communication
and leadership,
c. Administrative system, through which the activities of the employees are controlled.
15
Nature of Management
• The nature of management can be stated as:
Management is a system comprising planning, organizing, staffing, leading, and
controlling.
Elements of production of an organization such as labor, capital, land, equipment
etc.
Management applies to any type of organization.
It has to render social responsibilities.
Management is both science and art.
The aim of all managers is to create a surplus.
Managing is concerned with productivity, thereby implying efficiency and
effectiveness.
16
Scope of management
• An economic resource: As viewed by the economist, management is one of the
factors of production together with land, labor and capital.
• A system of authority: As viewed by a specialist in administration and

organization, management is a system of authority. Historically, management
first developed an authoritarian philosophy
• class and status system. As viewed by a sociologist, management is a class-

and-status system. The increase in the complexity of relationships in modern
society demands that managers become an elite of brains and education
17
Breaking question
• From now on, you will focus on leadership tasks and other tasks that you will
delegate to your co-workers.
• Respect and trust of employees.
• Self-confidence and the ability to assert themselves.
• Do you want to o Authenticity.
be a manager? • Ability to delegate.
• Empathy and knowledge of people.
• Is management
• Stress management.
for you? • Organizational skills.
• Challenges to be • Challenges to be a manager
manager…? • Effective communication with employees.
• Shifting your mindset along with your new role.
• Pressure to perform as a new manager.
• Shifting from coworker to boss.
• Managing your time.
• Setting clear goals and expectations.
• Encouraging productivity.
• Hiring for your team.
18
New Workplace Issues and Challenges:
Technology and Speed
Networking and
Boundaryless Globalization
Relationships and Diversity
Ethics and Knowledge,

Social Learning,
Responsibility Quality, and
Continuous
Improvement
Participative
Management, Knowledge
Empowerment, Management
and Teams
Change, Creativity, Innovation,

and Entrepreneurship
19
Management and Organization
• An organizationis a systematic arrangement of people to accomplish some specific
purpose. Every organization has a purpose, people or members, and a systematic
structure.
• Management coordinating those elements of organization: goal, structure & people
The purpose of an Within the organization’s

organization is structure, its employees
expressed in terms strive to achieve these
of a goal or set of goals.
goals
20
Why management?
• The Importance of Management
• Achieving objectives requires skilled management
• Management is important for process designing to achieve an organization’s

objectives by using its resources efficiently to be effective in a changing environment.
• Management is indispensable for make decisions – utilization of resources – achieve
objectives:
• Management imperative in new product development
• Management is for resource acquisition & coordination (People, Raw materials,

Equipment, Money, Information)
21
Why management?
 Management and managers are universal
 It affects the accomplishment of social, economic, political and organizational

goals
 Management is needed to coordinate and direct the efforts of individuals, groups
and the entire organization
Is management the same throughout any organization? (Yes/No why?
Yes: because all managers perform the five managerial functions.

No: because despite the fact that they perform all managerial functions,with
different emphasis and scope.
22
1.3. Management roles
• Managers play various roles as necessary while performing their management
functions so as to achieve organizational objectives.
• These roles are ten in three: decisional, informational and interpersonal roles
23
Management roles…
Figureheads perform ceremonial or symbolic roles.
Interpersonal Leaders train, motivate, and discipline employees.
Role
Liaisons contact external information sources.
Monitors collect information from outside sources.

Disseminate information to organizational members.
The Roles Informational
Spokes-persons represent their organizations to
Role
of outsiders.
Management
Entrepreneurs innovation to improve organizational
performance
Decisional Disturbance handling action to respond to unforeseen problems
Role Allocate and control human, mechanical, and monetary resources
Negotiate/ bargain with others to gain advantage for their own
units.
24
Managerial roles in-detail (read)
 Henry Mintzberg identified 10 managerial roles which are in turn grouped into three categories:
1. Interpersonal Roles involve developing and maintaining positive relationships with significant others in
the organization.
i. Figurehead Role: managers perform symbolic duties of a legal or social nature.
 The manager represents his work unit at ceremonial or symbolic functions.
 The top level managers represent the company legally and socially to those outside of the organization.
E.g. Signing documents, presiding at a ceremonial event, greeting visitors, attending a subordinate’s
weeding, taking a customer to lunch, university president hands out a diploma for graduates – in all
these cases the manager is representing his/her organization.
ii. Leadership Role: The manager is the environment creator – she/he makes the environment
conducive for work by improving working conditions, reducing conflicts, providing feedback for
performance and encouraging growth.
iii. Liaison Role/Coordinator role: The liaison maintains a network of contacts outside the work
unit to obtain information.
 She/he fulfills this role through community service, conferences, social events, etc
 The top management uses this role to gain favors and information
25
2. Informational Roles focuses on the transmission of important
information to and from internal and external sources.
i. Monitor role: is also called information gathering role.
 The manager is constantly monitoring the environment to determine what is
going on.
 Information is gathered from news reports, trade publications, magazines,
clients, associates, and a host of similar sources, attending seminars &
exhibitions.
ii. Disseminator Role: the manager passes on to subordinates some of the information
that would not ordinarily be accessible to them.
iii. Spokesperson/representative Role: the spokesperson transmits information about
the organization to outsiders.
 One aspect of this role is to keep superiors well informed
 second aspect is to communicate outside the organization like press, government
agencies, customers and labor unions. 26
3. Decisional Roles: involve making significant decisions that affect the organization.
i. Entrepreneur Role: (initiator of change) In the role of entrepreneur, the manager tries to
improve the unit.
 The entrepreneur acts as an initiator, designer, and encourager of change and innovation.
ii. Disturbance Handler Role: solution seeking role.
 The disturbance handler is responsible for taking corrective action when the organization
faces important, unexpected difficulties.
. Resource Allocator Role: deciding on the allocation of the organization’s physical, financial and human
resources.
This involves:
 assigning work to subordinates,
 scheduling meetings,
 approving budgets,
 deciding on pay increases,
 making purchasing decisions
 and other matters related to the firm’s human, financial, and material resources.
iv. The Negotiator Role: representing the organization in all important/major negotiations. 27
1.4. Managerial skill
• Skill is ability to do something expertly and well. It is meant ability
related to performance that is not necessarily in born but which can be
developed/acquired.
• Managerial skills are classified into four distinct categories:
Technical skill,
Interpersonal skill,
Conceptual skill and
Decision-making Skills
Management skill are essential for envision leaders
28
Managerial skill ….
The ability to view the The ability to lead, motivate,

organization as a whole and manage conflicts, and work
recognize its relationships to the with others.
environment (business world).
Conceptual Interpersonal
General Management Skills
Technical Decision-making
The ability to apply specific Ability to select alternatives to
methods, procedures, and solve problems,
techniques to perform a tasks take advantage of opportunities
29
Variation of skills necessary at different level
Decision making &

Conceptual
Topmgt
Skill
Interpersonal
MiddleMgt
skill
Technical
skill
First lineMgt
Management level Managerial Skills 30

31
• Managerial skill is essential for leading in balancing od job skills and people skills in
order to succeed
• Responsibilities of a Manager & Supervisor.mp4
32
Summary-
• A good manager need to have three management
Good manager skills
1. Strong leadership skill: influence make impact
• How can be a good etc.
manager? 2. Strong interpersonal skill: communicable and
exceptional interpersonal skill
3. Strong body language: understanding of body
language is essential for every manager
5 Top Management Skills How to Be a Great Manager.

mp4
33
Untapped potential of manager skills
1. Be a meeting pro (argument for evidence)
Meeting goal: productive, effective, collaborative, creative, strategic
Untapped potential of
Meeting warm ups: motivating

Agenda having an outstanding agenda
2. Dealing with difficult employees: hardest management aspect
manager
Set up expectation
Be fast to set boundaries and give feedback
3. Manage in every channel: go for managing all channels in the org
Determine how do you prefer to communicate (in person/online)
Know how your team prefer to communicate
4. The single best team building exercise: team strength
5. Manage your boss: good managers has ability of managing up
34
The Systems Relationship among the Management Functions
Planning
Management
Functions
Controlling Organizing
Management
Skills
Leading
35
1.5. Managerial Levels – Vertical Dimension
Management level is the hierarchy of management position from top to bottom
Three level of management in organization
Top-management
Top-management: e.g. Board of
Directors, CEO, President, Vice President
Middle-management
Middle-management: e.g. branch
manager, department head
First-line management First-line management: e.g. supervisor,

team leader
36
Management Levels and Functional Areas
37
Managerial Levels
Managers can be divided based on two criteria. These are:
1) Levels of management (vertical difference)
2) Scope of responsibilities (horizontal difference)
 Levels refer to hierarchical arrangement of managerial positions or

persons in an organization.
The number of managerial levels in an organization depends on the size

of the organization.
38
Managerial Levels…
Top-management
• Managers at the level are ultimately responsible for the following:
Develop overall structure of the organization.
t, or
Direct the organization in accordance with the environment s iden Top-
, pre t
Make long-term plans . C EO iden management
e.g pres
Establish policies vic
e Middle-
management
Represent the company
• Referred to as executives of the company First-line
management
• Oversees the overall planning for the company
• Provide overall leadership of the organization towards accomplishment
of its objectives
39
Middle-management
• They interpret and implement top management directives and forward messages to
and from first-line management.
• Managers at middle-level are responsible for the following: Top-
management
• Develop detailed plans and procedures to implement goals er,
g
• Make decisions ana r Middle-
s m age management
• Direct first-level managers . Sale man
e.g anch First-line
br management
• Are responsible for the proper implementation of policies and strategies

defined by top level managers.
40
First-line management Top-
management
• First-line management is directly responsible for the Middle-
following: management
er, anager
Implement plans r e
e a d
w l ffice m First-line
C
Assist middle-level managers e.g. visor, o
r management
s up e
Oversee workers
Oversee the day-to-day operations to ensure the company is
smoothly run
• They are responsible for overseeing and coordinating the
work of operating employees.
41
To sum up
Highest position Linking level Operative level

Long-term goal of product, market Interpret plan and set Implement plans
Business, plan for the entire org Action, plan for sub-units Job title: team leader/supervisor
Job title: BoD, CEO, managing director Job title: Manager
Concerned with directions & controlling
Ultimate source of authority Mediating the top and function of management
operational level
42
• Directly responsible for assigning non-managerial employees to
Top Level specific jobs.
Management • • Focus on specific operations, products, or customer groups within an
company.
Middle Level • Responsible for developing detailed promotion plans and procedures
to implement the firm’s strategic plans, e.g. enter into a new market.
Management •
• Making decisions such as whether or not to enter new market of
another age group.
First-line
• Devote most of their time to developing long-range plans for their
Management •
company.
• Working with the employees who produce and sell the firm’s goods
and services such as visit each large customer once each month to
maintain a good relationship and introduce new product.
43
Transition question • Managers at different level perform Management Functions
1. Planning
• Setting objectives and determining in advance exactly (?) how the objectives will be
met.
• Monitor for Change and Anticipate or React
• Plan – Do – Check – Act
• What Do 2. Organizing
Managers • Delegating and coordinating tasks and allocating resources to achieve objectives.
Do? 3. Staffing:
• equipping the organization with qualified people and strive to HR development
4. Leading
• Influencing employees to work
toward achieving objectives.
• Setting an Example (Shadow of the Leader)
5. Controlling
• Establishing and implementing mechanisms to ensure that objectives are achieved.
44
Management as science (read)
Science is a systematic body of knowledge pertaining to a specific field of study that contains
general facts which explains a phenomenon.
Universally acceptance principles Management also contains some fundamental principles which
- Scientific principles represents basic truth can be applied universally like the Principle of Unity of
about a particular field of enquiry. Command i.e. one man, one boss. This principle is applicable to
all type of organization - business or non business.
Experimentation & Observation: Scientific Management principles are also based on scientific enquiry &
principles are derived through scientific observation and not only on the opinion of Henry Fayol.
investigation & researching i.e. they are
based on logic
Cause & Effect Relationship - Principles of The same is true for management, therefore it also establishes
science lay down cause and effect cause and effect relationship. E.g. lack of parity (balance)
relationship between various variables between authority & responsibility will lead to ineffectiveness.
Test of Validity & Predictability - Validity of Principles of management can also be tested for validity. E.g.
scientific principles can be tested at any principle of unity of command can be tested by comparing two
time or any number of times i.e. they stand persons - one having single boss and one having 2 bosses. The
the test of time performance of 1st person will be better than 2nd.
45
Management as art (read)
Art implies application of knowledge & skill to trying about desired results. An art may be defined
as personalized application of general theoretical principles for achieving best possible results.
Practical Knowledge: Every art requires practical knowledge A manager must know how to apply various principles in real
therefore learning of theory is not sufficient. It is very important situations by functioning in capacity of manager.
to know practical application of theoretical principles
Personal Skill: Although theoretical base may be same for every Similarly management as an art is also personalized. Every
artist, but each one has his own style and approach towards his manager has his own way of managing things based on his
job. knowledge, experience and personality, that is why some
managers are known as good managers
Creativity: Every artist has an element of creativity in line. That is Management is also creative in nature like any other art. It
why he aims at producing something that has never existed before combines human and non-human resources in useful way so as to
which requires combination of intelligence & imagination achieve desired results. It tries to produce sweet music by
combining chords in an efficient manner.
Perfection through practice: Practice makes a man perfect. Every similarly managers learn through an art of trial and error initially
artist becomes more and more proficient through constant but application of management principles over the years makes
practice them perfect in the job of managing.
Goal-Oriented: Every art is result oriented as it seeks to achieve Managers use various resources like men, money, material,
concrete results. In the same manner, management is also directed machinery & methods to promote growth of an organization.
towards accomplishment of pre-determined goals
46
Management process (read)
• As a process, management refers to a series of inter-related functions. It is the process
by which management creates, operates and directs purposive organization through
systematic, coordinated and co-operated human efforts
• As a process, management consists of three aspects:
• Management is a social process - Since human factor is most important among the
other factors, therefore management is concerned with developing relationship among
people. It is the duty of management to make interaction between people - productive
and useful for obtaining organizational goals.
• Management is an integrating process - Management undertakes the job of bringing
together human physical and financial resources so as to achieve organizational
purpose. Therefore, is an important function to bring harmony between various factors.
• Management is a continuous process - It is a never ending process. It is concerned with
constantly identifying the problem and solving them by taking adequate steps. It is an
on-going process.
47
Chapter 2
CLASSICAL MANAGEMENT THOUGHT
48
2.1. The Evolution of Management Theory
• Effective management played a key role in the construction of the
pyramids, the use of communication and control of the Roman Empire, and
the legal framework of commerce in 14th century VENICE.
• The most significant historical point of reference in the evolution of
management was the advent of the Industrial Revolution.
• By the turn of the 20th century the science and practices of management
were on a rapid and continuing path of development.
49
The Evolution of Management Theory
50
The Evolution of Management Theory
• Major Schools of Thought
• Classical: A focus on developing universal principles for use in various management
situations.
• Human Resource: A focus on human needs, the work group, and the role of social
factors in the workplace.
• Quantitative or Management Science: A focus on the use of mathematical
techniques for management problem-solving.
• Modern Approach: A focus on total systems and contingency thinking, and an
awareness of global developments in management.
• Continuing Directions: Emphasis on quality and performance excellence, global
awareness, and leadership roles for a new management.
51
Note
Classical Management Theory
 Principles of Scientific Management ( F.W. Taylor)
 Administrative principles of Management (H. Fayol)
 Bureaucratic theory of Management (Max Weber)
Neoclassical Management Theory

 Human relation theory (Hawthorne)
 Theory of behavior in organizations (Chester Bernard)
Modern Theory of Management
 The systems approach (Kenneth Boulding)
 Socio-technical approach
 Contingency theory (Joan Woodward)
The focus of the chapter is classical management theory and neoclassical

management theory while modern theory of management will discussed in chapter 4
52
Management in Antiquity and Pioneer Contributors
• Management attention has been shaped over a period of centuries by three major
sets of forces.
• These forces are:
 Social
 Economical and
 Political
• The development of management thought dates back to the days when people first
attempted to accomplish goals by working together in groups.
53
1. Egypt - The construction of the Egyptian pyramid (5000-525 BC) is a testimony of the
ancient Egyptian organization and managerial abilities.
The ancient Egyptians constructed the pyramid by 100,000 labor forces for 20
years on 13 hectares of land using 2,300,000 stones.
2. Greece: Exhibited a real skill and capacity for management in the
operation of trading companies.
They recognized the means to maximize output through the use of uniform methods
and motion study.
54
3. Romans - the ancient Romans also provided numerous illustrations of effective management.
 There were far too many people and matters of importance for the emperor to handle individually.
 Abandoning the old structure, in which all provincial governors reported directly to him, Diocletian
established more levels in the hierarchy.
He reorganized the Roman Empire as: Empire into 100 provinces with 13 dioceses and 4 major
geographical areas.
• Hierarchy of authority: there was a hierarchical structure from Pope - Bishop - priest - laity.
• Specialization of activities: there was a training to be Pope, Bishop, Priest and Laity.
• Use of staff managers:
• Compulsory staff service
• Staff independence
•So many explore for yourself !!!
55
Pre classical contributors
• Among the principal pre-classical contributors:
1. Robert Owen (1771 - 1858)
Robert Owen was a British industrialist and an owner-manager of several successful
cotton mills in Scotland.
He was called industrialist and reformer and considered as ‘father of modern
personnel management.’
He introduced in his organization the following:
 Reduce working hrs from 13 hrs to 10hrs a day,
 Set a minimum hiring age (10 year) to protect children from the abuses of employers,
 Provide meal, housing, and shopping facilities for employees,
 Improved working conditions in the factory
56
Pre classical contributors…
2. Charles Babbage (Prof.) (1792-1871) : is widely known as "the father of modern
computing".
• His management interest stemmed from his difficulties with directing his various projects.
• He became convinced that the application of scientific principles to work processes would both
increase productivity and lower expenses.
• Babbage was particularly enthralled with the idea of work specialization.
• Work specialization is the degree to which work is divided into various jobs.
• He was an avid proponent of:
• Division of labor, Incentive pay, Profit sharing
• Economies of scale in manufacturing
• Application of mathematical concepts in production
• Harmonious relationship between management and workers
• Babbage laid the groundwork for much of the work that later became known as Scientific
Management
57
Pre classical contributors…
3. Adam Smith: Smith made an important contribution to the development of
management thought regarding the impact of division of labor on manufacturing in his
book ‘The Wealth of Nations’ in 1976.
• His conclusion was specialization could lead to increased efficiency. This is because:
• Specialization increases the dexterity in every particular work person.
• Specialization saves the time lost in passing from one species of work to another.
• Specialization helps to the invention of great number of machines, which facilitates and
bridge and enable one person to do the work of many.
58
2.2. Classical Management Theory
59
• Basic Assumption: People Are Rational
• People will rationally consider the opportunities available to them and do whatever
is necessary to maximize their economic gain.
• There were two factors that had contributed for the emergence of classical
management theory.
i. the research or writings of pioneers such as Charles Babbage,
ii. the evolution of large-scale business management and practices.
• Classical management theory: concentrate on the problems of top
managers dealing with the everyday problems of managing the entire
organization.
60
• Classical management Theory: The approach that assumes that there
is a single best way to design organizations.
• This approach assumes that managers need to have close control over
their subordinates and calls for designing organizations with tall
hierarchies and a narrow span of control.
61
1. Scientific Management theory
• The prominent of scientific management thought was Frederick Taylor
(1856-1915) is known as "the father of scientific management.“
• Defined by Frederick Taylor in the late 1800’s
• The systematic study of the relationships between people and tasks
for the purpose of redesigning the work process for higher efficiency.
• Wanted to replace “rule of thumb”
• Sought to reduce the time a worker spent on each task by optimizing
the way the task was done.
62
1. Scientific Management theory ….
• Develop a science for every job, including rules of motion, standardized work
implements, and proper working conditions.
• Carefully select workers with the right abilities for the job.
• Carefully train these workers and provide proper incentives.
• Provide these workers with the necessary support.
• Emphasizes the scientific study of work methods in order to improve worker
efficiency.
• Its objective was to find the most efficient method for performing any task and to
train workers in that method.
63
• Four Principles of Scientific Management
1. Study the ways jobs are performed now and determine new ways to do them.
• Gather detailed time and motion information.
• Try different methods to see which is best.
2. Codify the new methods into rules.
• Teach to all workers the new method.
3. Select workers whose skills match the rules.
4. Establish fair levels of performance and pay a premium for higher performance.
• Workers should benefit from higher output
64
• Four basic tenets (Frederick Taylor):
• Develop one best way to do each job
• Select the best individual for the position
• Ensure the work is carried out in prescribed fashion (training and increased
wages as the carrot).
• Divide work among employees so that activities such as planning, organizing,
and controlling are the prime responsibilities of managers
65
2. Administrative classical theory of management
• Administrative principles of Management(H. Fayol )
• The study of how to create an organizational structure that leads to high efficiency and
effectiveness.
• Administrative management focuses on the functions and principles of management.
• H. Fayol initiated a theoretical analysis appropriate to all organizations and attempted
towards a comprehensive theory of management:
“Management plays a very important part in the government of undertakings; of all
undertakings, large or small, industrial, commercial, political, religious or any other”.
66
2. Administrative classic al theory of management
Fayol’s Fourteen Principles of Management

1. Division of work
8. Centralization
2. Authority
9. Scalar chain (Line of authority )
3. Discipline
10. Order
4. Unity of command
11. Equity
5. Unity of direction
12. Stability of tenure of personnel
6. Subordination of the individual to
the general interest 13. Initiative
7. Remuneration 14. Esprit de corps
67
Fayol’s 14 administrative principles
1. Division of labor: allows for job specialization.
• Division of work (labor) encompasses three basic concepts:
i. Breaking down a task into its components.
ii. Training workers to become specialist in specific duties, and
iii. Putting activities in sequence so one person’s efforts build on another’s
2. Authority and responsibility: Both formal and informal authority resulting from
special expertise.
 Authority is the right to give orders, to exact obedience.
 Responsibility, on the other hand, is a sense of obligation that goes with authority .
3. Discipline: Obedient, applied, respectful employees are necessary for the
organization to function.
 Fayol saw the necessity for discipline and precise and exact obedience at all levels for the smooth
running of a business.
 Members in an organization need to respect the rules and agreements that govern the organization.
68
4. Unity of Command
• Each worker should have only one boss with no other conflicting lines of command.
5. Unity of Direction
 One head, one plan, one set of objectives.
 This improves coordination and ensures that energies are channeled in the proper direction
 Unity of command does not exist without unity of direction but does not necessarily flows
from it
6. Subordination of individual interest to general interest/common good
 In any undertaking, the goals and interests of an organization must take precedence
over those of individuals or groups of employees.
7. Remuneration of Personnel
• Payment is an important motivator
• An equitable uniform payment system that motivates contributes to organizational
success. 69
8. Centralization
 Fayol believed that managers should retain final responsibility but also need to give their
subordinates enough authority to do their jobs properly.
9. Line of Authority (Scalar chain)
• A hierarchy is necessary for unity of direction later communication is fundamental .
• A clear chain of command from top to bottom of the firm.
10. Order
Both material and social order are necessary for minimize waste and achieve objective.
The arrangement of employees where they will be of the most value to the organization
and to provide career opportunities.
11. Equity
Is dealing with subordinates, managers should be friendly, fair, kind and lawful.
Treating employees well is important to achieve equity.
70
12. Stability of Tenure of Personnel
• Long-term employment is important for the development of skills that
improve the organization’s performance.
• Labor turnover should be minimized and stability nurtured.
13. . Initiative
• The fostering of creativity and innovation by encouraging employees to act on their own.
• an intelligent executive is to be able to scarify his personal vanity and instill those under
him with the attribute to make initiative.
14. Esprit de corps
• Comradeship, shared enthusiasm foster devotion to the common cause (organization).
• Management must foster the morale of its employees.
71
Administrative Principles
(Henry Fayol)
• Rules of Mgmt. (5) • Principles of Mgmt.
• Foresight • Division of work

• Organization • Scalar Chain
• Command
• Unity of Command
• Coordination
• Control • Unity of Direction
Much of knowledge of organizational structure came from this

theory
72
Application Of Fayol’s Principles
• Change and Organization.
• Decision-making.
• Skills. Can be used to improve the basic effectiveness of a manager.
• Understand that management can be seen as a variety of activities,
which can be listed and grouped.
73
3. Bureaucratic theory of Management
• Quick discussion Reflection

Bureaucracy: literally rule of the office
• What is your understanding Bureaucracy is the structure and set of rules that control the
of „bureaucracy“ or activities of people that work for large organizations and
„bureaucratic“? government.
• Historically, a bureaucracy was a government administration
managed by departments staffed with non-elected officials.
• Today, bureaucracy is the administrative system governing
any large institution, whether publicly owned or privately
owned.
74
3. Bureaucratic theory of Management (Max Weber)
• It is a form of organization that is characterized by division of
labor, a clearly defined hierarchy, detailed rules and regulations
and impersonal relationships.
• The major contributor to this theory was Max Weber (1864-
1920), a German sociologist, consultant professor, and author.
• Max Weber developed the concept of bureaucracy as a formal
system of organization and administration designed to ensure
efficiency and effectiveness.
• Max Weber Reacted to the prevailing norms of class
consciousness and nepotism
75
• Two fundamental principles:
• Rule based power
• Hierarchy
• Typical elements of a Bureaucracy
Rigorous division of labor
Authority limited to clearly defined scope
Knowledge & competence appointment functional authority
Hierarchy
Defined processes
Emphasize on documentation/written communication
Compensation of employees only based on position
Unpersonal communication
Separation of administrative and personal possesion
Rationale discipline
76
• Bureaucratic Organization
• An ideal, intentionally rational, and very efficient form of organization founded on
principles of logic, order, and legitimate authority.
1. Clear Division of Labor
2. Well Defined Hierarchy of Authority
3. Formal Selection
4. Formal Rules and Procedures
5. Impersonality
6. Careers Based on Merit
77
3.
3. Bureaucratic
Bureaucratic theory
theory of
of Management..
Management..
• Weber’s Principles of Bureaucracy
Asfaw Temesgen (Assistant Professor 78

3. Bureaucratic theory of Management..
• Major characteristics of Weber’s Ideal bureaucracy:
1. Specialization: jobs are broken into routine, well-defined tasks so that members know what is
expected of them and can become extremely competent at their particular subset of tasks
(Specialization with Division of Labor).
2. Formal rules and procedures: written rules and procedures specifying the behaviors desired
from members facilitate coordination and ensure uniformity (Technical Competence
Guidelines).
3. Impersonality: rules, procedures, and sanctions are applied uniformly regardless of individual
personalities and personal considerations (Impersonality and Personal Indifference)
4. Well-defined hierarchy: multiple levels of positions, which carefully determined reporting
relationships among levels (Hierarchical Authority Structures)
5. Career advancement based on merit: selection and promotion is based on qualification and
performance of members.
79
Breaking Classical Organization Theory
question •Organizations exist to accomplish production-
related and economic goals.
Strength
• Why classical theory •Effective management techniques and principles
of management Shortcoming
• Evaluate its strength • Organization were closed system and organizational
and weakness factors are under the control of management.
• Theorists of these theories look at workers as mere
devices, motivated only by financial incentives.
80
Neoclassical Management Theory
Neoclassical theory
Rationality and satisfaction
Human relation Approaches Behavioral Management theory

Hawthorne Studies Chester Bernard, Elton Mayo
Humans especial concern Employee motivation and encouragement
81
Neoclassical management Theory
• Neoclassical Management Theory: An attempt to improve on the classical
management theory that argues that not only economic effectiveness, but also
employee satisfaction, should be goals of an industrial organization.
• This approach assumes that managers do not have to carefully monitor their
subordinates and calls for designing organizations with flat hierarchies and a wide span
of control.
82
• The neoclassical theorists gained their reputation by attacking the classical
theories.
• Important source of the power and politics, organizational culture, and systems
theory.
• Herbert Simon.
• Bounded rationality and satisficing.
• Programmed and non-programed decision-making.
• Management information systems.
83
• Neoclassical organizational theory is a criticism of classical theory;
attempt to humanize the rigid structure
• Follows workflow and productivity of classical, but meets employee
needs
• According to neoclassical organizational theory, effective
organizations are designed with flat hierarchical structures and a high
degree of decentralization
84
1. Human relation Approaches
• Basic Assumption: People are Social and Self-Actualizing.
• The Hawthorne Studies
• Established the human resource as an essential concern for
management, and one that has unique properties.
• We learned that the nature of the Work Group should be important.
• We learned about the tendency of people who are singled out for
special attention to perform as anticipated merely because of
expectations created by the situation.
85
1. Human Resource Approaches
• The Human Relations Movement
• Assertion is that managers who use good human relations in the workplace will
achieve productivity.
• This movement has evolved as the field of Organizational Behavior-the study of
individuals and groups in organizations.
• They had the same basic values:-
Efficiency and Productivity: same ends but different means
86
According to Human Relations approach
 Organizations exist to serve human needs
 Organizations and people need each other
 A good fit between individual and organization benefits both
 First work that put the human factor at the center of their work
87
• Studies of how characteristics of the work setting affected worker
fatigue and performance
• Findings and implications of Hawthorne
• Physical working conditions did not seem to explain the changes that were
related in productivity.
• There are other factors other than physical factors and monetary incentives,
which affect productivity. Theses factors are social and psychological in nature.
• Social environment:
• Ability to talk to each other.
• The right to choose their rest periods.
• The right to leave the workstation without permission.
• The right to have a say in suggested changes.
88
Principle Human Relation Theories
• Maslow - Theory of Human Needs
People act to satisfy "deprived" needs- needs for which a satisfaction "deficit" exists.
Hierarchy of Needs
Self-Actualization
Esteem
Social
Safety
Physiological
89
2. Behavioral Management theory
• Behavioral Management
• The study of how managers should behave to motivate employees and
encourage them to perform at high levels and be committed to the achievement
of organizational goals.
• Focuses on the way a manager should personally manage to motivate employees.
• Human behavior based on orientation to personal growth, accomplishment, and
inner development.
90
Behavioral Management theory
• Behavioral management theory was stimulated by a number of writers and theoretical
movements.
• Among writers Abraham Maslow, Douglas Mc Gregor and Elton Mayo were well-
known.
• It emphasized on human relations
• They used concepts from psychology, sociology and anthropology to assist managers
understand human behavior in the work place.
• They focused on motivation, communication, work group formation and leadership.
91
2. Behavioral Management theory
• According to behavioral Management theory
• Jobs must provide the opportunity to develop themselves
•Theory of behavior in organizations
 Definite communication channels within the organization and accessed to
everyone
 Short and direct lines of communication
 Adequate Competence of persons serving as communication centers
 Special and general incentive to workers to improve effectiveness
92
Breaking discussion
• Discuss the difference between human relations approach and behavioral sciences
approach
Attributes Human relations approach Behavioral science approach
Laid emphasis on the individual, stressed upon groups and group
Focus his needs and behavior. behavior.
It focused on inter-personal It focused on group relationships
Relationships relationships
It was based on the Hawthorne It is a much more systematic study
Scope Experiments and so its scope is of human behavior in
limited Organizations and has a wide scope
It laid emphasis on informal groups Group dynamics, informal

Motivation motivation, job satisfaction and organization, leadership motivation,
morale and participative management.
93
Short discussion
• Neoclassical Organization Theory
• The organization in general is a social system
(behavior of people impact org performance)
Why
neoclassical
Strength
theory of
• Introduced the concept of informational
management
organization and human behavior approach
What are the
strength and
criticism?
Criticism
• Assumptions on which this theory is based are
sometimes not factual
94
Summary questions
• The classical school emphasizes production of goods and services
as the key focus of economic analysis. Neoclassical economics
focuses on how individuals operate within an economy. As such,
• What is the the neoclassical school emphasizes the exchange of goods and
main difference services as the key focus of economic analysis.
between • The main difference between classical and neoclassical is that
classical and classical theory (approach) assumes that managers need to have
neoclassical close control over their subordinates and calls for designing
theories organizations with tall hierarchies and a narrow span of control.
Whereas Neoclassical theory approach assumes that managers
do not have to carefully monitor their subordinates and calls for
designing organizations with flat hierarchies and a wide span of
control.
95
Chapter 3
MODERN MANAGEMENT THOUGHT
96
Modern theory of management: overview
• Basic assumptions
• Organizations are rational institutions whose primary purpose is to
accomplish established objectives through control and coordination.
• There is a “best” structure for any organization in light of objectives,
environment, products or services, and the technology of the production
process.
• Specialization and division of labor increase the quality and quantity of
production
• Most problems result from structural flaws.
97
Modern theory of management: overview
• Basic assumptions …
• A focus on total systems and contingency thinking, and an awareness of
global developments in management.
• Based On The "Modern Management Approaches“
• recognize that no one approach applies universally in all situations, or the
exclusion of the others.
• Modern theory of management believes management is mechanistic and
organic
• Mechanistic: traditional bureaucracy, best in stable conditions.
• Organic: less rigidity, more participation, and more reliance on workers,
best in dynamic conditions.
98
Modern Management Foundations
• Foundations for continuing developments in management
Quantitative analysis and tools
Systems theory of organizations (KennethBoulding)
Contingency approach (Joan Woodward)
Commitment to quality and performance
Knowledge management and learning organizations
Evidence-based management
1. Quantitative Analysis and Tools
• Assumption: applied mathematics can solve management problems

• According to quantitative analysis quantitative management utilizes linear
programming, modeling, simulation systems and chaos theory.
The scientific applications

of mathematical
techniques to
Network
management problems
Quantitative approach is also
models called
‘Mathematical’ ,
Linear Value chain ‘Operations Research’ or
programming analysis ‘Management Science’
approach.
Queuing Supply chain
theory management
Quality Inventory
control management
3.1. Quantitative Analysis and Tools…..
• Typical quantitative approach to managerial problem-solving
• Problem encountered, it is systematically analyzed, appropriate mathematical
models and computations applied, optimal solution identified
• Quantitative analysis involves the use of statistics, optimization models, information

models, and computer simulations to improve management decision making for
planning and control.
• The basic feature of the quantitative management thought is the use of mixed teams
of scientists from several disciplines.
101
Quantitative Analysis: A scientific approach to managerial decision making
whereby raw data are processed and manipulated resulting in meaningful
information.
Quantitative Meaningful
Raw Data Analysis Information
Analytics – the use of large databases and mathematics to solve problems and
make informed decisions using systematic analysis
102
Steps of quantitative analysis
A clear and concise statement that gives direction and meaning to the subsequent
Quantitative Analysis steps and requires specific, measurable objectives.
A realistic, solvable, and understandable mathematical statement showing the

relationship between variables (y= a +b1x2+b2x2….).
Accurate input data that may come from a variety of sources such as company
reports, company documents, interviews, on-site direct measurement etc.
The best model solution is found by manipulating the model variables until a practical
and implemental solution is obtained.
The collection of data from a different source to validate the accuracy and
completeness and sensibility of both the model and model input data
Conducting a sensitivity analysis (a change to input values or the model) to
evaluate the impact of a change in model parameters.
The incorporation of the solution into the company and the monitoring of the
results.
103
• quantitative analysis is scientific approach to managerial decision making consider both
quantitative and qualitative factors
Quant.Analysis
Logic
Historic Data
Marketing Research
Problem Scientific Analysis
Modeling Decision
? Qual. Analysis
Weather
State and federal
legislation
New technological
breakthroughs
Election outcome 104
3.1. Quantitative Analysis and Tools…
• This school used scientific tools for providing a quantitative
base for managerial decisions.
• The techniques commonly used for managerial decision-making include
• Linear Programming,
• Critical Path Method (CPM),
• Program Evaluation Review Technique (PERT),
• Break-Even Analysis.
105
Breaking question
Reflection
What is strength • Strength
and limitation of
This approach helps in defining and solving complex
quantitative problems resulting in orderly thinking.
approach?
• Limitation
The critics of this approach regard it as too narrow since it
is concerned merely with the development of mathematical
models and solutions for certain managerial problems.
106
3.2. Systems Theory
• Systems theory views an organization as a whole is a complex set of dynamically

intertwined and interconnected elements, interrelationship of its parts-
subsystems) including inputs, processes, outputs, feedback loops, and the
environment.
Any change in one element causes changes in other elements.
• Systems theory postulates that the performance of the whole is greater than the sum of
the performance of its parts
• The organization is seen as a collection of interrelated parts that function together to

achieve a common purpose.
• Systems theory entails that there is synergy, interdependence & interconnections

within the organization and between the organization and the environment
107
3.2.SYSTEM Theory…
• System concepts
• Wholeness and interdependence
• In a system the whole is more than the sum of its parts;
• It is a product of the forces or interactions among its parts;
• It s parts cannot be understood separately;
• The interdependence creates organization in the system (e.g., a family);
• Hierarchy
• Systems tend to be embedded within one another;
• Every complex system consists of subsystems;
• Given that systems are within systems, it is fuzzy as to where to locate the
boundary between the system and the environment ;
108
3.2.SYSTEM Theory…
• System concepts…
• Self-regulation and control
• Systems are often viewed as goal oriented;
• They are governed by their purposes;
• The parts operate according to guidelines and adapt to the environment on the basis of feedback;
• This aspect of system functioning is cybernetics (automation);
• Interchange with the environment;
• Inputs and outputs;
• The system affects and is affected by the environment;
• Balance (homeostasis);
• Self-maintenance;
• Sensing deviations from the norm and correcting those “faults”;
• Change and adaptability;
• The system must adapt to its environment;
• Equifinality:
• A particular final state may be achieved in different ways;
109
3.2. SYSTEM Theory…
• System theory emphasizes an interactive and interrelated set of elements
Environment
 Inputs (equipment, supplies, employees)
 Processes
Outputs (products or services) System Model
 Feedback
This entails that organization as a system

comprise four elements
1. Input (resources)
2. Transformational process
3. Outputs (products and services)
4. Feedback (reactions from the
environment)
110
• Organizations as Systems
• System
• Defines a system as a set of interrelated and interdependent parts arranged in
a manner that produces a unified whole
• System view of organization is the collection of interrelated parts that
function together to achieve a common purpose
• System consists of attributes;
• Internal relationships among its objects (mutual effects);
• An environment-they are affected by their surroundings;
111
• Subsystem
• Part of organization which is smaller component of a larger system that working
together for common purpose
• Subsystem includes
• Production (technical) Subsystems - concerned with through outputs-assembly
line
• Supportive Subsystems - ensure production inputs are available-import raw
material
• Maintenance Subsystems - social relations in the system-HR, training
• Adaptive Subsystems - monitor the environment and generate responses (PR)
• Managerial Subsystems - coordinate, adjust, control, and direct subsystems
112
3.2.Systems Theory….
• Organization as a system ….
• According to system theory of management organization is Closed system or Open systems
• Closed system
• a system that is not influenced by and does not interact with its environment
• Closed system:
• Do not recognize they are embedded in a relevant environment
• Overly focused on internal functions and behaviors
• Do not recognize or implement equifinality
• Inability to use feedback appropriately
• Open systems
• Organizations that interact with their environments in the continual process of
transforming resource inputs into outputs
• Open systems takes resources from its external environment and converts them into goods
and services that are then sent back to that environment for purchase by customers.
• Modern management theory is favoring on open organization system
113
3.2. Systems Theory….
• Open-Systems Theory Principles
• Parts that make up the system are interrelated.
• Health of overall system is contingent on subsystem functioning.
• Open systems import and export material from and to the environment.
• Permeable boundaries (materials can pass through)
• Relative openness (system can regulate permeability)
• Second Principle of Thermodynamics (ENTROPY)
• Entropy must increase to a maximum
• Negentropy increases growth and a state of survival
• Synergy (extra energy causes non-summativity--whole is greater than sum of parts)
114
SYSTEM Theory… Micro-level organizational
Micro-level organizational
Environment
Environment
Organizations as Systems….
• The Organization and
its Environment
The systems theory implies that
• Organizational effectiveness is governed
by three micro-level factors:
i. individuals in the organization,
ii. the organization itself and
iii. the environment in which an
organization exists
• Organizational effectiveness also
impacted by macro-level environments
i. Global environment
ii. Political issues of the world
iii. Technological advancement
iv. Socio-economy
115
SYSTEM Theory…
Process within the Export outputs to the

Open systems organization
Import inputs from Environment environments
116
SYSTEM Theory…
Breaking questions
Reflection
• What are the General distinction
deference • Classical and also neoclassical theories prescribe organizational behavior,
between organizational structure or managerial practice (prediction and control).
classical theory machine/device (closed system). Whereas Systems theory provides an
analytical framework for viewing an organization in general (description and
and systems explanation-open system). Organism (“A set of elements standing in inter-
theory? relations” )
Simple distinction
1. According to classical theory, management is simplistic and unidimensional
but as per system theory management (organization) is complex and
multidimensional.
2. Classical theory believe that management is formal and static while system
theory argues that management (organization) is dynamically seeking
shifting states of equilibrium
117
3.3. Contingency Approaches
• Contingency Approaches to management assert that there is no one best way to
manage, and that what is best depends in any given circumstance on the nature of the
situation.
• In short the best way depends upon the situation.
It is the idea that the organizational structures and control systems that
managers choose depend on characteristics of the external environment in
which the organization operates
• Examples of characteristics of the external environment include (but are not limited
to):
Changes in the environment;
The entry of new competitors;
Unstable economic conditions.
3.3. Contingency Approaches ….
• Contingency approach implies the situational approach to management that
replaces more simplistic systems and integrates much of management theory
• Contingency approaches of modern management theory focuses on determining
the best management approach for a given situation
• A research effort to determine which managerial practices and techniques are
appropriate in specific situations
Different situations require different managerial responses for decision
making.
119
• Contingency thinking
• Tries to match managerial responses with problems and opportunities unique to
different situations
• No “one best way” to manage
• Appropriate way to manage depends on the situation
• Four popular contingency variables
• Organization size
• Routineness of task (technology)
• Environmental uncertainty
• Individual differences
120
Contingency Approaches ….
• As per contingency approaches management has to decide scientific,
bureaucratic, administrative, Behavioral etc.
• For instance if production manager needs to improve productivity, he/she
decides on
decides on a new work method is a scientific),
decides on restructure of the organization is bureaucratic), or
decides on new motivation approach behavioral
121
• Organizational systems should vary based on the level of stability in the environment
• Burns and Stalker (1968) suggested two different types of management systems
• Mechanistic systems - appropriate for stable (little to no change) environment
• Organic systems - required in changing (unstable conditions) environments
Characteristics of the external
environment
In a stable environment, In a greatly changing

mechanistic works best Determine the design of an environment, organic
organization’s structure and works best
control systems
Organizations in stable environments Organizations in changing environments

choose a MECHANISTIC structure (i.e., choose and ORGANIC structure (i.e.,
centralized authority, vertical communication decentralized authority, horizontal
flows, control through strict rules and communication flows, intra-departmental
procedures) cooperation)
122
Mechanistic vs. Organic Structures

Mechanistic Structures exhibit: Organic Structures exhibit:
 Managerial authority resting at the top &  Middle & 1st line managers are encouraged to take
controlling the behavior of subordinates responsibility & act quickly to acquire scarce resources
 Close supervision of subordinates with  Tasks & roles are left ambiguous to encourage
employees to cooperate & respond quickly to the
tasks & roles clearly defined unexpected
 An emphasis on strict discipline & order  Cross-departmental teams (authority rests with the
 An example is McDonald’s – supervisors individuals, departments and teams best poised to
make all important decisions; employees control the specific problem facing the organization)
are closely supervised & follow well-  More expensive to operate as it requires more
defined rules & standard operating managerial time, money & effort to be spent on
procedures coordination
 Only used when needed; i.e. when the external
environment is unstable & rapidly changing
 An example is Nokia – teams make important decisions;
teams are given autonomy & are allowed to be creative
123
Breaking discussion
• Discuss the difference between Systems approach and Contingency approach
Systems Approach Contingency Approach
It lays emphasis on the interdependencies and It identifies the nature of inter-dependencies and
interactions among systems and sub-systems. the impact of environment of organizational
design and managerial style.
It treats all organizations alike. Size of the Each organization is to be studied as a unique
organization, and its socio-cultural setting are not entity.
considered.
It studies organization at the philosophical level. It follows an action-oriented approach and so is
pragmatic. It is based on empirical studies
It does not comment on the validity of It rejects the blind application of the classical
the classical principles of management. principles of management.
It simply lays down that the organization The impact of environment on the
interacts with the environment. organization structure and managerial style is
the major concern of contingency approach.
124
3.4.Commitment to quality and performance
• Quality management
• Managers and workers in progressive organizations are quality conscious
• Quality and competitive advantage are linked
• Emphasis on quality and performance excellence, global awareness, and
leadership roles for a new management.
• Total quality management (TQM)
• Comprehensive approach to continuous quality improvement for a total
organization
• Creates context for the value chain
• TQM focuses on analyzing input, conversion, and output activities to
increase product quality.
• Continuous improvement
• Continual search for new ways to improve quality
• Something always can and should be improved
• ISO certification
• Global quality benchmark
• Refine and upgrade quality to meet ISO standards
126
• Quality management activities
• Quality assurance
• Establish organisational procedures and standards for quality
• Quality planning
• Select applicable procedures and standards for a particular project and
modify these as required
• Quality control
• Ensure that procedures and standards are followed by the software
development team
127
3.5.Knowledge Management and Organizational Learning
Knowledge Management is
• The systematic process of creating, maintaining and nurturing an
organization to make the best use of knowledge to create business
value and generate competitive advantage
 Knowledge is the human capacity (potential & actual ability-intellectual

capital) to take effective action in varied and uncertain situations.
128
3.5.Knowledge Management and Organizational Learning
• Knowledge management is leveraging relevant intellectual assets to enhance
organizational performance
• Knowledge management is the process of using intellectual capital for competitive
advantage
• Portfolio of intellectual assets include patents, intellectual property rights, trade secrets,
and accumulated knowledge of the entire workforce
• Knowledge Management involves everyone in an organization in sharing knowledge
and applying it to continuously improve products and processes.
• Knowledge management requires that people change in order to continually improve.
Knowledge Management
• Why Knowledge Management?
Organizing existing corporate knowledge
New ways to share tacit knowledge
Support for research and knowledge generation
New ways to share explicit knowledge
Knowledge is smart tools to aid decision making
130
Knowledge Management…
• “The basic economic resource is no longer capital, nor
natural resources, nor labor. It is and will be knowledge.”
Peter Drucker
• What is long Because knowledge is
lasting economic
The cutting edge of organizational success (Nonaka, 1991)
resource?
The engine transforming global economies (Bell, 1973, 1978)
The sum total of value-added in an enterprise (Peters, 1993)
131
Learning organizations
• Organizational learning is a process of creating, diffusing, and applying
knowledge in organizations
• Focuses on continuous learning and a systems approach to distributing and
sharing knowledge
• Dynamic process of creating and sharing knowledge
• A learning organization:
• Acquires, organizes, and shares information and knowledge
• Uses new information and knowledge to change its behavior in order to
achieve its objectives and improve its effectiveness
• Is able to transform itself by acquiring and disseminating new knowledge and
skills organization-wide and at all levels
132
• Organizations that are able to continually learn and adapt to new

circumstances
• Core ingredients include:
Empowerme
Information
Encourage
Participation
Teamwork
learning
sharing
nt
133
A learning organization:
• Has an enhanced capacity to learn, adapt, and change its culture
• Has the ability to make sense of and adapt and respond to its environment –
internal/external
Learning results in continual improvements in:
• Work systems
• Products and productivity
• Services
• Management and employee behavior
• Efficiency and effectiveness
134
5.6.Evidence-based management
• Evidence-Based Management
• Making management decisions on “hard facts” about what really works
• Where does it come from?
135
3.6.Evidence-based management
• Evidence-based management refers to making decisions about the
management of employees, teams or organizations through the
conscientious, explicit and judicious use of four sources of information:
. Managerial
The best available (Practitioner) expertise
scientific evidence and judgment
Evidence-
Based
Management
Organizational facts, Stakeholders’ values

metrics and and concerns
characteristics
136
Discussion questions
• How do you • Modern management theory focuses the development of each factor of
understand Modern workers and organization.
management • Modern management theory refers to emphasizing of the use of systematic
theory mathematical techniques in the org system with analyzing and understanding
• How does modern the inter-relationship of management and workers in all aspect.
theory of • Organization is a system which has to adapt to changes in its environment and
management individuals interact for objectives.
criticized? Strength
•Modern theory of organization considers organization as open unit system,
dynamic in interaction with structure and it is multidisciplinary.
Pitfalls
•It has not yet developed sufficiently as theory of explanation; the promises to
provide adequate and comprehensive explanation of organization is not yet
fulfilled.
137
Chapter 4
MANAGEMENT FUNCTIONS
138
Management Functions
• Regardless of the type of firm and the organizational level, all managers perform basic
management functions.
• ‘Management functions refers to a strict separation of the duties and the kinds of work
performed by various positions in an organization.
Planning
• The five key functions
Organizing
of management
Mgt
Controlling functions
Staffing
Directing
139
Interrelation of Management functions
Determine destination of org through
promoting management spirit
Planning
Setting goals &
Designing and
performance evaluation
comprehensive process
ways to attain
implementing systems
them
monitoring and
to attract, develop and
Design appropriate
motivate individuals
org structure and

within the organization
Controlling Staffing
Monitor activities Organizing
job design
Human resources Assign responsibility
& make
management for tasks
corrections
Leading
Use influence to motivate
Contribute to efficiency and

effectiveness of leaders in decision 140
Setting objectives Determining how they’ll
be met
Recruit employees performing the tasks
Delegating and coordinating tasks
Allocating resources
Influencing employees to achieve objectives
Make sure objectives are met
141
Management functions
Planning Organizing Staffing Leading Controlling

Lead to
Setting goals, Determining Assigning the Motivating, Monitoring
establishing what needs right position to leading, and activities
strategies, and to be done, the right person any other to ensure
developing how it will (the function of actions involved that they are
plans to be done, and recruiting, in dealing with accomplished
coordinate who is to do it selection training people as planned
activities and placement)
142
Planning
How do you understand plan and planning?
• Plan is a statement of action • Planning is the process of setting

steps to be taken in order to goals and deciding how best to
accomplish the objectives achieve them
Tasks Planning involves

 Determining what tasks that must be performed to
attain organizational goals,
Planning strategy
 outlining how the tasks must be performed, and
Action plan  indicating when they should be performed.

143
Planning..
 Determining organizational goals and means to reach them
 Managers plan for three reasons
1.Establish an overall direction for the organization’s future
2.Identify and commit resources to achieving goals
3.Decide which tasks must be done to reach those goa
144
Planning
• Planning
• Includes defining goals, establishing strategy, and developing plans to coordinate activities
• Objectives and goals
• Identify the specific results or desired outcomes that one intends to achieve
• Examples of company’s goals:
• Become the leader of the industry.
• Integrate different elements from novels, comics, movies and music in order to create outstanding
games.
• Maintain a market share of 20% in the industry.
• Introduce a new product next year.
• Achieve a 10% growth in sales in a year. Where you
want to be?
• Keep cost of goods no more than 50% of sales.
• Achieve a net profit of $2 million in next year. How to get
•… there?
Where you
are?
145
Planning
1. To coordinate human resource for actively involving persons from all
areas of an organization
• Reasons for
Planning 2. To reduce uncertainty in operation through forecasting of future
events that and clarifying the consequences of any business decisions
3. To reduce overlapping and wasteful activities enables better
organization of company’s resources.
1. Improves focus and flexibility

2. Improves action orientation
• Benefits of 3. Improves coordination and control
planning:
4. Improves time management
146
Planning process
• Once managers understand the goals of the company, they can take
steps to implement the planning process in their company.
• Implementation of planning process is important because if the planning
cannot be transformed into action, it will not be able to generate
benefits to the company.
ng
ini
ess
Atta
Proc
Nurture
ing
Lead
10
Define the future
What are the steps destination of the company
(purpose of the company
of planning?
(May you fill the box??
Visioning
Amend and update the
plan based on feedback Determine where the
from the M & E Revising Setting Goals & company stands and
Plans Objectives what to be achieved
Developing Analyze alternatives

Monitoring &
alternatives strategies and make
Monitoring the Evaluation
a plan
progress and the final
result (performance
Implementation
Putting the plan into

action to obtain the
result
148
Types of plan
• setting broad, comprehensive, and longer-term action
• Strategic plans directions for the entire organization
(long-term)
• Setting Vision: clarifies purpose of the organization and
what it hopes to be in the future
• Typically done by senior managers.
• Tactical plans
(short-term) • Helps to implement all or parts of the strategic plan
• Indicates how different operations within the

• Functional plans organization will help accomplish the overall
(functional area) strategy
• Production plans Financial plans
• Facilities plans Logistics plans
• Marketing plans Human resource plans
149
Types of plan ….
• Identify short-term activities to implement strategic plans
• Policies are standing plans the communicate guidelines
• Operational plans for decisions
(specific action plan) • Procedures are rules that describe actions to be taken in
specific situations
• Budgets are plans the commit resources to projects or
activities
• Zero based budgets allocate resources as if each budget
were brand new
150
Types of plan
• Implementing Plans to Achieve Results
151
Planning Tools and Techniques
• Attempts to predict the future
1. Forecasting • Qualitative forecasting uses expert opinions
• Quantitative forecasting uses mathematical models and
statistical analysis of historical data and surveys
• Identifying alternative courses of action to take when

2. Contingency things go wrong
planning • Contingency plans anticipate changing conditions
• Contingency plans contain trigger points
152
Planning Tools and Techniques
• A long-term version of contingency planning
• Scenario planning • Identifying alternative future scenarios
• Plans made for each future scenario
• Increases organization’s flexibility and preparation for future
shocks
• Benchmarking • Use of external and internal comparisons to plan for

future improvements
• Adopting best practices: things people and organizations
do that lead to superior performance
• Staff planners assist in all steps of the planning process
153
Organizing
• Organizing is the process of allocating and arranging resources so that plans can be carried
out successfully
• The purpose of organizing function is to turn Plans into Actions
• Organizing means assigning the planned tasks to various individuals or groups within the
organization and cresting a mechanism to put plans into action.
• Process of deciding where decisions will be made, who will perform what jobs and tasks,
and who will report to whom in the company
• Includes creating departments and job descriptions
sk
Ta
e
ur
ed
oc
pr
ee
oy
pl
Em
154
Organizing…
• Organizing
• Includes determining what tasks to be done, who is to do them, how the
tasks are to be grouped, who reports to whom, and where decisions are to
be made
155
Organizing Steps
(see for yourself)
3. Assign work 5. Evaluate the

1. Determine
to specific 4. Coordinate results
the specific 2. Group these
employees and the work of ororganisingpro
activities activities into a
provide different groups cess and make
needed to logical sequence
resources and employees appropriate
implement
required adjustment
4
Organizational Structure (read)
• Good management should be able to design an organizational
structure to ensure employees can carry out the work assigned to
them effectively.
• The use of an organization chart can also help to visualize the
relationships between levels of the organizational structure.
7
Implications of an Organization Chart
• Show the activities of the organization by level.
• Highlight subdivisions of the organization.
• Identify different types of work performed.
• Provide information about different management levels.
• Show the lines of authority in the organization and the flow of communications
within an organization.
158
Organizing…
159
Staffing
• The managerial function of staffing involves filling the organization
structure with qualified staffs through proper and effective selection,
appraisal and development of the personnel to fill the roles assigned
to the employers/workforce.
“Staffing pertains to recruitment, selection, development and compensation

of subordinates.”
• Staffing function refers to the process of filling positions with the right
kind of people in the right job at the right time.
160
Nature of Staffing Function
• Staffing is an important managerial function:
Staffing function is the most important managerial act along with planning,
organizing, directing and controlling. The operations of these four functions depend
upon the human power which is available through staffing function.
• Staffing is a pervasive activity:

As staffing function is carried out by all mangers and in all types of concerns where
business activities are carried out.
• Staffing is a continuous activity:
This is because staffing function continues throughout the life of an organization
due to the transfers and promotions that take place.
161
Need and Importance of staffing
• Staffing function gives more emphasis on the human elements such as attitude,
aptitude, commitment, loyalty while selecting the right person for the right job.
• Researches on various aspects of staffing such as recruitment, selection, compensation,

incentives, training and development are utilized for better results.
• Staffing function has been assumed on greater importance these days because of rapid
development of technology, increasing size of organization and complicated behavior of
human beings.
• It ensures the optimum utilization of human resources by way of avoiding surplus of

workforce and prevents under utilization of personnel.
162
Steps involved in Staffing Process
1 Manpower Requirements
2 Recruitment
3 Selection
4 Orientation and Placement
5 Training and Development
6 Remuneration
7 Performance Evaluation
8 Promotion and Transfer
163
Leading
◦ Leading (directing) is a function of management performed by top level management
in order to achieve organizational goals.
◦ It is very important and necessary function of management for it involves influencing
others to achieve the organization’s goals and objectives.
◦ Direction consists of the process and techniques utilized in issuing instructions and
making certain the operations are carried as originally planned.
◦ Management has to undertake various activities like, guide people, inspire and lead
them as well as supervision of their activity is required in order to achieve desired
results.
164
Leading
• Leading is the process of influencing others to engage in the work
behaviors necessary to reach the organization goals
• Getting others to perform the necessary tasks by
motivating them to achieve the organization’s goals
• Crucial element in all functions
• Leading (Influencing) means guiding the activities of the organization

members in appropriate directions. Objective is to improve productivity.
165
The Leading Function (read)
• Leading is to move the people towards the common objectives of the organization already
defined in the planning stage
• It is influencing the members of organization to perform in a way that will help in
achieving the organization objectives
• It guides and helps the subordinates to complete the given task properly and as per
schedule.
• It provides the necessary motivation to subordinates to complete the work satisfactorily
and strive to do them best.
• It helps in maintaining discipline and rewarding those who do well.
• Directing involves supervision, which is essential to make sure that work is performed
according to the orders and instructions.
166
Leading u lt fi n ding
Supervision
s i on is not fa nd
i
Supervision is directing efforts of employees and Superv is education a e
but it u b or d inat
other resources to accomplish stated work u id a n ce of s
g
outputs. ple
o
d pe an
Supervision
vate er th ple
m oti ett eo
b dp
ti on s g
ly m
h for ate
ica de i
H er tiv
u n tu es ’ p mo
mm atti oye un
co ing pl Motivation
ti ve old p em inspiring, stimulating or encouraging the
ffec in m g u le. sub-ordinates with passion to work.
E ps din ora Components of
l l m Motivation
he bui Communication
Leading (directing) Positive, monetary, non-monetary
d
an incentives may be used for this purpose.
Communication
ve s t he
the process of passing i m pro he
p
rshi nce of t
information, experience, a d e
le fo rma ees.
opinion etc Leadership p e r loy
Transmitting ideas, facts, Leadership
e mp
Leadership is essentially a continuous process of
thoughts, feelings & values. In influencing behaviour. The process of passing
its absence, organisation would information, experience, opinion etc from one
cease to exist. person to another. 167
Controlling
Controlling is the process of evaluating and
correcting individual performance to ensure that
outcomes conform to the standard set before.
Concerned with regulating organizational

activities so that actual performance meets
accepted organizational standards and goals.
168
Controlling…
• The concept of controlling which is the
process of 1. Setting
standard
1. establishing standard; 4. Taking
corrective
2. measuring actual performance; action
3. comparing actual performance with
standard; and 2. Measuring
4. taking action to correct deviations. actual
performance
3. Comparing
actual
performance
with standard
169
The Controlling Function (read)
• Matching the actual performance with the performance standards
• This is done in 4 steps:
• Establishing standards of performance
• Measuring the performance
• Assessing deviation from standards agreed
• Taking corrective actions
• The purpose of controlling is to keep the organization on the path
planned for it
170
1. Establishing Standard
Standard must be reasonable and achievable.
Ideal standard which is unachievable may frustrate
employees and cannot help achieve the standards set.
Low standard which is too easy to achieve cannot make
improvement for company’s operation
2. Measuring Actual Performance

For a given standard, manager must decide how to
measure actual performance.
Setting control criteria: for company and also for
employee
171
3. Comparing Actual Performance with Standard
Compare the actual performance against the standards based on
the control criteria and identify the deviations, if any.
Deviations are noted if:
Actual performance below the standard.
Actual performance above the standard
4. Taking Corrective Action

If no deviation or deviation is insignificant, no action is
required.
Otherwise, take corrective actions such as changing the
existing strategy, employees’ remunerations, training
etc., OR
Revise the standard if it is not realistic, fair and
achievable.
172
Chapter 5
MANAGEMENT DECISION MAKING
173
Manager
• The individual responsible for achieving organizational objectives through
efficient and effective utilization of resources
Managers and • The Manager’s Resources
responsibility o Human, financial, physical, and informational
• Performance
o Means of evaluating how effectively and efficiently managers use
resources to achieve objectives.
o Today often means “How” as well as “What”
f the o Responsibility
o
it i es o Providing a direction to the organization (vision, mission
s i bil e e
o n s th s, th e o Managing the growth and ensure the survival of the firm
resp ard mer s, th
al ow sto lier y.
t ic t u
cri r are the c e sup , the soci
p e t o Must find new and creative solutions to the problems faced by the
e
Th nage ees, s, th itors the firm
ma ploy lder cred even
em reho , the and o Plan and prepare for the competition in the market
sha ailer ment
ret vern (all these are through implementing management function)
go
174
• Managers’ Qualities
Managers  Integrity, industriousness, and
the ability to get along with
people
• Management Skills
 Technical
 Human and communication
(Teaming)
 Conceptual and decision-making
skills “Systems Thinking” & “Critical
Thinking”
(Recall ch1)
(6 Traits of Manager Success – Inverse Order)
175
Types of Managers
• Supervise the activities of several departments.
1. General
Managers • Oversee work of functional managers
• Need to acquire strategic and multicultural competencies to guide
organization
• Supervise the activities of related tasks.
2. Functional • Common functional areas:
 Marketing /Sales/Product Development
Managers
 Operations/Production /Services Delivery
 Finance/Accounting
 Human Resources/personnel management
 Infrastructure (IT, Real Estate, Lega
• Use communication, planning and administration, teamwork and self-
management competencies to get work
3. Project • Coordinate employees across several functional departments to
Managers accomplish a project task.
176
Managers ….
• Differences among management levels in skill
needed and the functions performed:
177
Managerial Competencies
 Competency a combination of knowledge, skills,
behaviors, and attitudes that contribute to personal
effectiveness
What is Competency?
• Managerial Competencies is sets of knowledge, skill,

What is Managerial
behaviors, and attitudes that a person needs to be
Competencies
effective in a wide range of positions and various
types of organizations
178
A Model of Managerial Competencies
effectively exchanging information
Communication Competence in decide

Competency • task to be done
Accomplishing Planning and • How to be done
Teamwork
tasks through small Administration • resource allocation
groups Competency
Competency
Collective Managerial • …..
responsibility
Effectiveness
Recognizing Global Strategic
diversity in the org Awareness Action Knowing org
Political/cultural/ec Competency Self-Management Competency mission /value
onomic Making employees
Competency
action towards the
mission
Knowing own self & taking responsibility
179
• Communication Competency effectively exchanging information
• Planning and Administration Competency: Deciding what tasks need
strategy, allocating resources an monitoring progress to ensure that
they are done
• Teamwork Competency: Accomplishing tasks through small groups
of people with collective responsibility
180
A Model of Managerial Competencies (Read)
• Communication • Ability to effectively transfer and exchange
Competency information that leads to understanding
between yourself and others
Planning and • Deciding what tasks need to be done,

Administration determining how (strategy) they can be done,
Competency
allocating resources to enable them to be
done, and then monitoring progress to ensure
that they are done
Teamwork • Accomplishing tasks through small groups of people

Competency
who are collectively responsible and whose job requires
coordination
181
A Model of Managerial Competencies… (Read)
• Strategic • Understanding the overall mission and
Action values of the organization and ensuring that
Competency employees’ actions match with them
• Self- • Developing own self and taking

Management
responsibility
Competency
• Personal drive and resilience
• Multicultural
(global awareness)
• Understanding, appreciating and responding
Competency to diverse political, cultural, and economic
issues across and within nations
182
Important Managerial Competencies
• Managers need to use your strengths to do your best

• Managers need to know your weaknesses
• Managers need developmental experiences at work to
Why Managerial become successful leaders and address your weakness
Competencies are
Important? • Managers probably like to be challenged with new learning
opportunities
• Organizations do not want to waste human resources
• Globalization deregulation, restructuring, and new
competitors add to the complexity of running a business
183
Decision Making
Decision Making involves evaluating alternatives and making choices among

them.
• Decision Making is at the heart of organizational effectiveness, climate, and
health.
• Two dominant issues affect how decisions are made in organizations;
• Stability (application of existing practices and maintenance of existing
performance levels)
• Change (environmental demands for quick response and emerging
problems that are ambiguous)
184
Types of Decisions
Programmed • Decisions are made in situations that occur often enough to
decisions enable decision rules to be developed (known situation &
complete information .
Non-programmed • Decisions are made in response to situations that are unique,

are poorly defined and largely unstructured (uncertainity).
decisions:
Analytical • It involves a problem with a larger number of decision variables

decisions
• Judgmental-It involves a problem with a limited number of decision
Judgmental
variables, but the outcomes of decision alternatives are unknown
decisions
Adaptive • Adaptive-It involves a problem with a large number of decision variables,

decisions: where outcomes are not predictable
185
Decision Making Conditions (read)
Certainty • All the information of the decision (alternative causes of action and the outcome) are
fully known to the decision makers
• Decision has clear-cut goals.

Risk • Good information is available.
• Future outcomes associated with each alternative are subject to chance.
Uncertainty • Managers know which goals they wish to achieve.

• Information about alternatives and future events is incomplete and may
not known by decision maker.
• Managers may have to come up with creative approaches to
alternatives.
186
Decision Making Conditions … (read)
• By far the most difficult decision situation.

• Ambiguity • Goals to be achieved or the problem to be solved is unclear.
• Alternatives are difficult to define.
• information about outcomes is unavailable
• Depends on the manager’s personal preference.

• Selection of a • Whether the decision is programmed or non-programmed.
Decision • Depends on the extent to which the decision is characterized by
Making Model risk, uncertainty, or ambiguity.
187
Conditions That Affect the Possibility of Decision Failure
Organizational
Problem
Low Possibility of Failure High

Certainty Risk Uncertainty Ambiguity
Programmed Nonprogrammed
Decisions Decisions
Problem
Solution
188
Three Decision Making Models
Decision making under normal disagreement

Political
 Political and conflict over problems and solutions.
Model
Model
Managers actually make decisions in situations
Administrative
 Administrative characterized uncertainty, and ambiguity
Model
Model
Classical
 Classical Company accomplishes goals
Model
Model under certainty and completely
known information
189
Decision Making Models
• Accomplishes goals that are known and agreed upon.
• Classical • Strives for certainty by gathering complete information.
Model • Criteria for evaluating alternatives are known.
• Decision maker is rational and uses logic.
190
Decision Making Models….
 How managers actually make decisions in situations
characterized by non-programmed decisions, uncertainty, and
ambiguity.
 Focuses on organizational, rather than economic.
 Two concepts are instrumental in shaping the administrative
Administrativ
model.
e Model
bounded rationality: means that people have limits or
boundaries on how rational they can be.
satisficing: means that decision makers choose the first
solution alternative that satisfies minimal decision criteria.
 Is considered to be descriptive.
 It is considered intuitive.
191
Decision Making Models….
• Closely resembles the real environment in which most

managers and decision makers operate.
• Political • Decisions are complex.
Model
• Disagreement and conflict over problems and solutions are
normal.
• Coalition building is important.
192
Comparisons of Decision Making Models
Classical Model Administrative Model Political Model

Clear-cut problem and goals.
Vague problem and goals. Pluralistic; conflicting goals.
Condition of certainty.
Condition of uncertainty. Condition of
Full information about uncertainty/ambiguity.
Limited information about
alternatives and their
alternatives and their Inconsistent viewpoints;
outcomes.
outcomes. ambiguous information.
Rational choice by individual
Satisfying choice for Bargaining and discussion among
for maximizing outcomes.
resolving problem using coalition members.
intuition.
193
Decision making process
• Steps
1. Define problem
2. Generate alternative solution
3. Choosing the fitting solution among the alternatives
4. implement the solution (make the decision)
5. Evaluate the result
6. Double check ethical reasoning at all steps
194
Decision making process
The decision-making process begins with the recognition that
1. Define Problem a problem exists
Gathers information relating to the problem, taking care to

2. Generate Alternatives separate fact from opinion. Analyze the with respect to the
Double check ethical
Utility, problem
reasoning
rights,
justice, 3. Choosing the fitting Identifying the best fitting alternative solution to address
caring alternatives the problem
4. Take Action (implementation A good way to generate alternatives and creative

the decision) solutions is to engage in a process
Measures performance results against initial goals and examines

5. Evaluate Result
both anticipated and unanticipated outcomes.
Monitoring the implemented Observing the effects of

alternatives an implemented alternative
195
The Decision-Making Process
• Focuses on information gathering, information processing, and
deliberation
• Decision objectives should be established
Step 1 Identify and
define the problem • Common mistakes in defining problems:
• Defining the problem too broadly or too narrowly
• Focusing on symptoms instead of causes
• Choosing the wrong problem
Step 2 Generate and • Potential solutions are formulated and more information is gathered, data
Evaluate Alternative are analyzed, the advantages and disadvantages of alternative solutions are
identified
Courses of Action
• Approaches for evaluating alternatives:
• Stakeholder analysis
• Cost-benefit analysis
196
The Decision-Making Process…
Step 3 Decide on a • Two different approaches

Preferred Course of Action • Behavioral model leads to satisficing decisions
• Classical model leads to optimizing decisions
• Involves taking action to make sure the solution decided

Step 4 Implement the upon becomes a reality
Decision • Managers need to have willingness and ability to
implement action plans
• Lack-of-participation error should be avoided
197
The Decision-Making Process
• Involves comparing actual and desired results
Step 5 Evaluate • Positive and negative consequences of chosen course of action should
Results + be examined
• If actual results fall short of desired results, the
manager returns to earlier steps in the decision-making process
At all steps, check Utility ●

Does the decision satisfy all constituents or stakeholders?
ethical reasoning
• Ask these spotlight Rights ●
Does the decision respect the rights and duties of everyone?
questions
Justice ●
Is the decision consistent with the canons of justice?
Caring ●
Is the decision consistent with my responsibilities to care?
198
CHAPTER 6
Contemporary Issues in Management
199
Fundamentals of Social Responsibility
• Corporate Social Responsibility (CSR) is the obligation of organization management to
make decisions and take actions that will enhance the welfare and interests of society as
well as the organization
• Businesses should have broader responsibilities mainly responsible to:

 worker of the company,
shareholders
suppliers
Society
200
Fundamentals of Social Responsibility…
• Company Should be
responsible for the community
such as street dwellers
• Businesses need to donate for the health of the
community
• Company should be responsible for the lives of
the very poor
This implies that company need to avoid
Malpractices in their business for instance,
exploiting child labor, abusing their workers
201
CSR
• Management's obligation to make choices and take actions that
What is Social will contribute to the welfare and interests of society as well as to
Responsibility? the welfare and interests of the organization
 Economic: the duty of managers, as agents of the company

owners, to maximize stockholder wealth
 Legal: the firm’s obligations to comply with the laws that
Types of Social regulate business activities
Responsibility  Ethical: the company’s notion of right and proper business
behavior.
 Discretionary: this is optional voluntarily assumed by a
business organization.
202
Concern of CSR (read)
• Public Health Issues. What to do about inherently dangerous products such as alcohol,
tobacco, vaccines, and steroids.
Responsibilities to • Protecting the Environment. Using resources efficiently, minimizing pollution.
the General Public • Recycling. Reprocessing used materials for reuse.
• Developing the Quality of the Workforce. Enhancing quality of the overall workforce
through education and diversity initiatives.
• Corporate Philanthropy. Cash contributions, donations of equipment and products, and
supporting the volunteer efforts of company employees.
• The Right to Be Safe. Safe operation of products, avoiding product liability.

Responsibilities • The Right to Be Informed. Avoiding false or misleading advertising and providing
to Customers effective customer service.
• The Right to Choose. Ability of consumers to choose the products and services
they want.
• The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate parties
203
Concern of CSR (read)
• Workplace Safety. Monitored by Occupational Safety and Health Administration.
• Quality-of-Life Issues. Balancing work and family through flexible work
schedules, subsidized child care, and regulation such as
the Family and Medical Leave Act of 1993.
Responsibilitie • Ensuring Equal Opportunity on the Job. Providing equal opportunities to all
s to employees without discrimination; many aspects regulated by law.
Employees • Age Discrimination. Age Discrimination in Employment Act of 1968 protects
workers age 40 or older.
• Sexual Harassment and Sexism. Avoiding unwelcome actions of a sexual nature;
equal pay for equal work without regard to gender.
Responsibilities • Obligation to make profits for shareholders.

to Investors • Expectation of ethical and moral behavior.
• Investors protected by regulation by the

Securities and Exchange Commission and state regulations. 204
Acting Responsibly to Satisfy Society
Social Responsibility
• Management’s consideration of profit, consumer satisfaction, and societal well-being of equal
value in evaluating the firm’s performance.
• Contributions to the overall economy, job opportunities, and charitable contributions and
service.
• Organizations measure through social audits.
Activities for social responsibility performance
1. Perform all legally required social responsibility activities.
2. Consider voluntarily performing social responsibility activities beyond those legally
required.
3. Inform all relevant individuals of the extent to which the organization will become
involved in performing social responsibility activities.
205
CSR
• CSR is the idea that business has a duty to serve society in
• CSR & general as well as the financial interests of stockholders.
Profitability • The dynamic between CSR and success (profit) is complex.
They are not mutually exclusive, and they are not
prerequisites of each other.
• The mission statement embodies what company believes

• CSR’s Effect on
Mission • Managers must identify all stakeholder groups and weigh
Statement their relative rights and abilities to affect the firm’s success
206
The Davis Model of CSR (read)
Proposition 1
Social responsibility arises from social Power
• Business has a significant amount of influence on, or power over critical social issues.
• Society can and must hold business responsible for social conditions that result from the
exercise of this power
Proposition 2
• Business shall operate as a two-way open system, with open receipt of inputs from
society and open disclosure of its operations to the public
• Business must be willing to listen to what must be done to sustain or improve societal
welfare
• Society must be willing to listen to business reports on what it is doing to meet its social
responsibilities
• There must be ongoing, honest, and open communications between business and society
207
The Davis Model of CSR (read)
Proposition 3
• The social costs and benefits of an activity, product, or service shall be thoroughly
calculated and considered in deciding whether to proceed with it
Proposition 4
• The social costs related to each activity, product, or service shall be passed on to
the consumer
Proposition 5
• Business institutions, as citizens, have the responsibility to become involved in
certain social problems that are outside their normal areas of operation
208
Social Responsiveness
• The degree of effectiveness and efficiency of an org
• What is Social displays in pursuing its social responsiveness.
Responsiveness? 1. Determining Whether a Social Responsibility Exists
2. Deciding how to pursue social responsibilities
3. Choosing approaches to meeting Social Responsibilities
• Social 1. Planning Social Responsibility Activities

Responsiveness 2. Organizing Social Responsibility Activities
Activities and
Management 3. Influencing Individuals Performing Social Responsibility
Functions Activities
4. Controlling Social Responsibility Activities
209
Business Ethics
• How do you • Ethics – the moral principles that reflect society’s beliefs about
understand the actions of an individual or a group that are right and wrong
ethics • The code of moral principles and values that govern the behaviors
of a person or group with respect to what is right or wrong.
Business ethics is the standards of conduct and moral values

Business governing actions and decisions in the work environment.
Ethics • Social responsibility.
• Balance between what’s right and what’s profitable.
• Often no clear-cut choices.
• Often shaped by the organization’s ethical climate.
210
Business Ethics…
How managers
can decide 1. Focus on consequences
what is right 2. Focus on duties, obligations, and principles (honesty, fairness,
and wrong? justice, & respect for persons)
3. Focus on integrity (character of the person involved in the
decision)
• To help ensure consistence in the application of
ethical standards, an increasing number of
• Code of professional associations and businesses are
Business establishing codes of ethical conduct.
Ethics
211
Views of ethics (4 approaches-read)
• The ethical concept that moral behaviours produce the greatest
• Utilitarian good for the greatest number (useful and practical approach.
approach
• This approach views decision-making as selecting alternatives that
optimizes the satisfaction for the greatest number of people.
• This view contends that acts are moral and ethical when they
• Individual
promote the individual’s long-term interest, which leads to the
approach
greatest good.
• Moral-rights • The ethical concept or rights view is concerned with respecting and
approach protecting individual liberties, and privileges, including the right to
privacy, freedom of conscience, free speech, and due process.
• Justice • The ethical concept that moral decisions must be based on standards
approach of equity, fairness, and impartiality.
212
How Organizations Shape Ethical Conduct
Structure of ethical environment Ethical Leadership
Executives must demonstrate ethical behavior in
their actions
Ethical Action
Helping employees recognize and reason
through ethical problems and turning them into
ethical actions.
Ethical Education
Codes of conduct cannot detail a solution for every
ethical situation, so corporations provide training in
ethical reasoning.
Ethical Awareness
Code of Conduct Formal statement that defines how
the organization expects and requires employees to
resolve ethical questions.
213
Sustainability
• Sustainability is the degree to which an entity can meet its present needs
without compromising the ability of other entities to meet their needs in
the future
1. Minimizing waste by not overproducing goods and
• How Do We Build a generating a fair profit for stakeholders
Sustainable 2. Protecting natural resources like air, water, and land
Organization?
3. Maintaining the well-being and protection of the
communities in which it does business
• Meeting our society’s needs in ways that don’t compromise
• What is the ability of future generations to meet theirs.”
Sustainability? • “At its core, sustainability is about being responsible with
resources – people, land, energy, water, materials and
capital.”
214
Sustainability…
• Sustainability can be understood through a ‘Triple Bottom Line’ framework,
which has three parts:
• Economic,
• Social and
• Environmental
• Sustainability also called the three Ps (three pillars of sustainability)

• People, Planet and Profit
215
Management and Diversity
• Diversity is a characteristic of a group of people where differences
exist on one or more relevant dimensions such as gender.
￫ Diversity is a group characteristic, not an individual characteristic
￫ Diversity exists
• in a group or organization
• when its members differ from one another
• along one or more dimensions
216
Common Dimensions
• Gender
• Race
• Ethnicity
• Age
• Religion
• Social Class
• Sexual Orientation
• Personality
• Functional Experience
• Geographical Background
217
Management and Diversity…
Diversity Management
• Places a much heavier role on
• Recognizing & appreciating differences among people at work
&
• Attempting to accommodate those differences to the extent that is
feasible & possible.
Effective diversity management:
• Requires recognition of
• how people are similar to &
• how they are different from one another
• Requires respect for the differences
218
Advantage of Diversity
1. Strengthen cultural values within the org
2. Enhance corporate reputation
• What are 3. Help to attract and retain highly talented people
Advantages of 4. Improve motivation and efficiency of existing staff
Diversity in
Organizations? 5. Improve motivation and creativity among
employees
6. Enhance service levels and customer satisfaction
219
Managing diversity
• To Manage Diversity
• Create an inclusive environment
• Communicate commitment to all staff
• Involve all when designing the program
• Avoid stereotyping
• Respect affirmative action
• Recognize those who are part of a solution
• All training is inclusive and ongoing
• Value differences
220
Management in the Global Arena
International management
• The performance of management activities across national borders
• Reaching organizational objectives by extending management
activities
• to include an emphasis on orgs in foreign countries
• Can take several different forms,
• from simply analyzing and fighting competition in foreign markets
• to establishing a formal partnership with a foreign company
221
The internationalization of business
1. Increased travel
2. Rapid & extensive global communication
3. Free trade
What are the 4. Education
Driving forces for 5. Migration of large number Increased travel of
Enterprises to be
people
global? 6. Knowledge sharing
7. Search for new markets
8. Homogenization of cultures
9. E-commerce
222
The internationalization of business….
Globalization is the ever increasing
The ◦ interaction,
increasing ◦ interconnectedness, and
importance ◦ integration of people, companies, and countries.
• These connections are powerful and increasing in
importance
• continues to grow in terms of
• Enterprises conducting business across borders
• Foreign direct investment (FDI)
• The value of trade between countries
223
Categorizing Organizations by
International Involvement
Domestic International Multinational Transnational
Organizations Organizations Organizations (Global)
Organizations
No or Low involvement High involvement
Continuum (range) of international involvement
224
Risk and the Multinational Corporation
• Developing a Multi-National Company (MNC) requires a substantial
investment
• Political complications involving the parent company
• Various factions (group) within the host country
• A poor decision to invest in another country can cause serious
financial problems
225
The Workforce of Multinational Corporations
• International Business Managers should have the knowledge and the skills to
manage and handle cross-cultural processes, stakeholders, the capability to
conduct transactions that may involve multiple currencies and
environments in a right way.
• Managers of MNCs face the continual challenge of building a

competitive business team made up of people of different races who
speak different languages and come from different parts of the world
226
IHRM selection approaches
• Four distinct approaches have been identified for recruitment in multinational
companies.
1. Ethnocentric, where the majority of key positions are filled by nationals of
the parent company.
2. Polycentric, where host country nationals fill the majority of key positions in
the subsidiary.
3. Regiocentric, where decisions will be made on a regional basis (the new
subsidiary will be based in one country of the region), with due regard to the
key factor or success of the product or service.
4. Geocentric, where the ‘best people’ are recruited regardless of nationality
for all parent and subsidiary positions:
Thank you so much
Hard work on the

materials
See you for final exam
228

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Great Land College

Management Principles and Practices

Girma Birhanu worku (MBA)

Girma Birhanu worku 1

Girma Birhanu worku 2

Organizing the 3H’s understand, memory, analysis

The Process Staffing

This definition recognizes that: Controlling

Management refers to the

Management is applied to all types

• Nature of management is defined as the co-ordination of

• A system of authority: As viewed by a specialist in administration and

• class and status system. As viewed by a sociologist, management is a class-

Technology and Speed

Ethics and Knowledge,

Change, Creativity, Innovation,

The purpose of an Within the organization’s

• Management is important for process designing to achieve an organization’s

• Management is for resource acquisition & coordination (People, Raw materials,

 It affects the accomplishment of social, economic, political and organizational

Is management the same throughout any organization? (Yes/No why?

Yes: because all managers perform the five managerial functions.

Monitors collect information from outside sources.

The ability to view the The ability to lead, motivate,

Variation of skills necessary at different level

Decision making &

Management level Managerial Skills 30

• Responsibilities of a Manager & Supervisor.mp4

5 Top Management Skills How to Be a Great Manager.

Meeting warm ups: motivating

First-line management First-line management: e.g. supervisor,

 Levels refer to hierarchical arrangement of managerial positions or

The number of managerial levels in an organization depends on the size

• Are responsible for the proper implementation of policies and strategies

Highest position Linking level Operative level

Neoclassical Management Theory

The focus of the chapter is classical management theory and neoclassical

Fayol’s Fourteen Principles of Management

• Rules of Mgmt. (5) • Principles of Mgmt.

• Foresight • Division of work

Much of knowledge of organizational structure came from this

• Quick discussion Reflection

Asfaw Temesgen (Assistant Professor 78

Rationality and satisfaction

Human relation Approaches Behavioral Management theory

It laid emphasis on informal groups Group dynamics, informal

Systems theory of organizations (KennethBoulding)

Contingency approach (Joan Woodward)

Commitment to quality and performance

Knowledge management and learning organizations

• Assumption: applied mathematics can solve management problems

The scientific applications

• Quantitative analysis involves the use of statistics, optimization models, information

A realistic, solvable, and understandable mathematical statement showing the

• Systems theory views an organization as a whole is a complex set of dynamically

• The organization is seen as a collection of interrelated parts that function together to

• Systems theory entails that there is synergy, interdependence & interconnections

This entails that organization as a system

• Parts that make up the system are interrelated.

• Health of overall system is contingent on subsystem functioning.

• Permeable boundaries (materials can pass through)

• Relative openness (system can regulate permeability)

• Second Principle of Thermodynamics (ENTROPY)