Principles of Management 4

Prelude
Principles of Management 1

1. Deciding vs decision
2. Product/service vs organization vs business plan
1. Product or service issues from the production process (value creation process).
1. For example, (i) buy materials and parts, (ii) manufacture more parts from the
materials, and (iii) assembly all the materials to make a product
2. The business’s organization issues from the process of organizing.
1. For example, given the process above the work is allocated among 1 purchaser, 1
manufacturer and 1 assembler.
2. We may also need to hire someone to take care of accounting, finance, marketing and
human resources.
3. In practice, most businesses with only 2-5 employees will pay for external accounting
services, and the external accountant usually also gives financial advice and sometimes
even marketing and human resource advice.
3. Similarly, the business plan issues from the planning process
 Past work
• The 4Ps define your business, because they define the opportunity
you will exploit and the value you create.
• Once you have defined the 4 Ps, you must decide how to achieve the
4Ps: design the value creation or production process. This process is a
series of actions.
• Once you have design the process, you must decide how to allocate
the different actions across employees.
• (You then hire the employees according to this organizational plan)
• You then instruct the employees as to their work.
Class
 Summary of past work
Plan: goals The 4Ps define your business, because they define the opportunity you will
exploit and the value you create.

Plan: Once you have defined the 4 Ps, you must decide how to achieve the 4Ps:
actions + design the value creation or production process. This process is a series of
sequence actions.

Organize Once you have designed the process, you must decide how to allocate the
different actions across employees.

(HR) (You then hire the employees according to this organizational plan)
Command You then instruct the employees as to their work.
Principles of Management 1

Plenary: A bit of theory 2

• The theory of this week involves getting many actors to work together to
exploit the opportunity by accomplishing the production process.
• You will be permitted to have “general” managers at any level of the
organization.
 Take notes here:

Organizational design

1. Task
2. Structure
3. Links
4. (and incentives, but we will
leave them out)
 Plenary: A bit of theory 3
• Your design for the production process, your
organizational design, and the instructions you give to
your employees may fail on contact with reality – for
example, sequencing can go wrong, and the output of
one person’s work may not be an appropriate input for
the next person.
• So there must be adjustments as we implement all
these decisions. This also has a technical name.
 Plenary: A bit of theory 6
• The history of the “administrative process”
• Henri Fayol
• Administrer, c’est prévoir, organiser, commander, coordonner et controller.
• https://mip-ms.cnam.fr/servlet/com.univ.collaboratif.utils.LectureFichierg
w?ID_FICHIER=1295877017978

• He supposes a business already in operation in a stable industry: mining.

• Here is one English translation:
https://books.google.co.in/books?id=WFp5DQAAQBAJ&printsec=frontcov
er&dq=Overview+of+Functions+of+Management&hl=en&sa=X&ved=0ahU
KEwits7Kg6priAhUFfisKHdTABlcQ6AEIKDAA#v=onepage&q&f=false
• The translator takes some liberties with the terminology.
 Plenary: today’s activity

• Describe your business with 500 employees

• Accounting, finance, human resource management and market
analysis will be done by an external service.
• All 500 hundred employees are involved in the production of value or
manage personnel producing value.