ORGANIZATION &

MANAGEMENT
Week 1
Meaning, Functions, Types and Theories of
Management
 Learning Competency
Explain the meaning, functions,
types and theories of management
Management
Nature of Management
Management is a science as well as an art.
 Why Science?
- it evolved from a number of theories that involved
extensive studies and experiments.
- the management principles practiced by business
people and professionals are based on scientific
principles, scholarly studies, and statistical data.
- the problem-solving nature of management
benefits
greatly from methods and practices adopted from
scientific principles.
Why an Art?
A good manager must be able to look at situations and
use creativity and imagination in coming up with
solutions to the problems.
Creativity and ingenuity are important traits of managers
that enable them to effectively use business strategies in
any situation, and make innovations that result in new
products, services, and processes.
This ingenuity can be drawn from the effective
application of knowledge and skills of decision-makers.
Good management is the
art of making problems
so interesting and their
solutions so
constructive that
everyone wants to get to
work and deal with
them.
- Paul Hawken
 Organizations: People working together and
coordinating their actions to achieve specific
goals.

 Goal: A desired future condition that the

organization seeks to achieve.
 Management is process of
Planning,
Organizing,
Leading, and
Controlling

the activities and resources of an organization

effectively and efficiently to achieve its goals.
Resources are organizational assets and
include:
 People,
 Machinery,
 Raw materials,
 Information, skills,
 Financial capital.

Managers are the people responsible for

supervising the use of an organization’s
resources to meet its goals.
Management also provides the means to maintain a
firm’s competitive advantage.
It lays out the foundation of successful operations that
lead to efficiency and profitability, and establishes the
link between the development of strategies and their
implementation and control.
The effective application of plans require skilled
managers who are able to combine resources ad capital
in executing strategies and sustaining the operations of
their organizations.
Efficiency & Effectiveness
Efficiency is the ability to maximize output
with minimum input. It is often referred to
as “doing things right”, and seeks to limit
the wasted input which is costly for business.

There is an element of speed in

efficiency since it requires things to be done
quickly to avoid wasting time and effort
Efficiency & Effectiveness
Effectiveness is the capacity to attain an
intended objective or result. It is often called
“doing the right thing.”

The intention is to meet the desired goal

regardless of the amount of input required.
Careful analysis and critical thinking are
present in effectiveness.

If there is a goal that needs to be achieved,

the things that need to be done are prioritized
to achieve that goal.
To achieve high performance…
Organizations must provide goods or
service desired by its customers.
 Joseph A. Campbell and John Thompson Dorrance,
founders of Campbell Soup manages the firm to provide
quality food products since 1940.
Factors Influencing Management
 1. GLOBALIZATION
Globalization refers to the phenomenon of growing
interconnectivity and interdependent relations between
nations greatly influenced by advancements in technology,
transportation, communications, education and gradual
deregulation of trade.
 2. TECHNOLOGY
Technology is one of the driving forces of business.
Advancements in this area have immensely improved
business trends and have rendered business functions
and related tasks easier to accomplish, bringing about
increased levels of productivity.
Marketing, distribution, and manufacturing have
improved with real-time information systems.
Customers order products online, companies finalize
transactions within minutes, and deliveries are done at
the soonest possible time.
Outsourcing is one of the significant
phenomenon brought about by
technology. It is defined as the
transfer of a organizational function
to a third party.
When the third party is located in
another country, the transfer is
called offshore outsourcing or
simply “offshoring”.
 3. Sustainability and Corporate Social
Responsibility (CSR)
 Sustainability in business means that
companies should plan and conduct long-
term business operations to ensure
minimal negative impact on the social,
cultural, and economic aspects of their
external environment or community.
e.g. Cost-savings mechanism such as
Recycling, energy consumption reduction,
environmentally friendly products
 Corporate Social Responsibility is the
willingness of companies to run their
business operations in sustainable and
responsible manner. E.g. Outreach
programs, support of causes
 4. Psychology
The study of psychology is an important facet in
management since it focuses on developing people
management skills and analyzing customer satisfaction.
A better understanding of psychological concepts such
as motivation, behavior, attitude, and personality is vital
for effective management.
5. Ecosystems
A business ecosystem consists of a group of firms that
provide related products and services. The emergence
of ecosystems has resulted in improvements and
innovations in industries. A good example is the
collaboration between telecommunication firms, media
and technology to disseminate information to the
public.
Development of Management
1100 BC – Chinese had been using already the 4
functions of Management
400 – 350 BC - The Greeks developed a scientific
approach to work, and the Greek Philosophers Socrates
and Plato discussed concepts such as leaderships and job
specialization.
 The ancient Romans, meanwhile, practiced
decentralized management to effectively manage their
vast empire.
5-15th Century – Venetians introduced the inventory
system
1780-1840 AD – Industrial Revolution
 th
Theories of Management
SCIENTIFIC MANAGEMENT
THEORY

Frederick Winslow Taylor, an

American Engineer, was the
first to advocate Scientific
Management.
Book – The Principles of
Scientific Management
The father of Scientific
Management
SCIENTIFIC MANAGEMENT
THEORY
Scientific Management is a theory which studies the
application of scientific methods and principles for the
purpose of redesigning the work process to increase
efficiency.

Emphasis is the importance of labor in the production

process.

Focus on improving the efficiency of workers in

production.
SCIENTIFIC MANAGEMENT
THEORY
Taylor introduced the four principles of Scientific
Management:

1. Replace rule-of-thumb methods with those that are

scientifically proven.
(Rule-of-thumb – a general rule based on practice or
experience rather than facts or scientific evidence.
SCIENTIFIC MANAGEMENT
THEORY
2. Select, train, and develop each worker based on
scientific methods.

3. Cooperate with the workers to ensure that scientific

methods are being observed and implemented in their
work.

4. Divide work between managers and workers to ensure

that the managers apply the scientific management
principles in planning the tasks and the workers apply
the principles while performing these tasks.
SCIENTIFIC MANAGEMENT
THEORY
Taylor’s work combined with the research of Frank
and Lillian Gilbreth developed the Time and Motion
Study.

- A technique wherein a job is divided into component

parts and the time consumed in performing each
task is measured.
SCIENTIFIC MANAGEMENT
THEORY
Henry Ford
established the
Ford Motor
Company

Sold the first

commercially
available
automobile
SCIENTIFIC MANAGEMENT
THEORY
Henry Ford’s improvement of Assembly Line. He installed
a moving assembly line where workers could concentrate on
one task such as the installation of a specific automobile
part. From 13 hours of assembly time, it was reduced to 1
½ hours.
Downside –
1. work became routinary which led to boredom
2. money became the sole incentive for workers, ignoring
other aspects of worker welfare.
3. workers felt that the piece-rate technique, where they
were paid only for the unit they produced regarding of time.
 ADMINISTRATIVE MANAGEMENT
THEORY
Administrative management focuses
on the overall management of an
organization, emphasizing the role
of managers as administrators of
the organization.

Henri Fayol was a French

Industrialist
ADMINISTRATIVE MANAGEMENT
THEORY
14 Principles of Management according to Fayol:
1. Division of Work into specialized tasks, with
specific duties and responsibilities given to
individuals.
2. Authority of managers to delegate work and tasks to
the employees. The employers, in turn, are expected
to comply and exercise their tasks responsibly.
3. Discipline where expectations should be clearly set
and violators of rules be punished.
ADMINISTRATIVE MANAGEMENT
THEORY
4. Unity of command where an employee should only
report to one supervisor.
5. Unity of direction which means that the efforts of
the employees are guided toward the attainment of
organizational objectives.
6. Predominance of the general interest of the
organization over the individual interests of
employees.
7. Renumeration of the efforts of the employees which
should be systematically rewarded in line with the
organization’s vision and mission.
ADMINISTRATIVE MANAGEMENT
THEORY
8. Centralization where the roles of all employees are
clarified, with emphasis on the distinction between
superior and subordinates.
9. Scalar chain which means that communication
should e open within the chain of command.
10. Order where the organization of jobs and materials
must be done in an orderly fashion.
11. Equity which means that fairness and order must be
practiced to maintain employee commitment
ADMINISTRATIVE MANAGEMENT
THEORY
12. Stability and tenure of personnel to actively
promote employee loyalty to the organization.

13. Initiative to encourage employees to act on their own

in support of the organization’s objectives.

14. Esprit de corps to promote team work and the unity

of interest between the employees and the
management.
 ADMINISTRATIVE MANAGEMENT
THEORY
Maximilian Karl Emil Weber, a
German sociologist, philosopher
Bureaucracy as an important
aspect of modern society for
people to adopt more rational and
law-based view on leadership.
Bureaucratic structures allow
specialization of skills and enable
workers with different skills, traits
and goals work together to
perform a common task. MAX WEBER
1864-1920
ADMINISTRATIVE MANAGEMENT
THEORY
Chester Barnard, former president of New Jersey Bell
Telephone Co., identified the functions of senior
executive :
1. to formulate the organization’s mission;
2. to hire key employees, and
3. to maintain organizational communication

Mary Parker Follet wrote Dynamic Organization,

recognized the human element in management and
emphasized collaboration and mutual cooperation in
seeking solutions to the problem.
HUMAN RELATIONS THEORY
Australian psychologist
Studied Hawthorne Works factory
workers of the Western Electronic
Company. He introduced set
number of work hours,
implementation of break times,
improvement of lighting in work
areas, and close supervision by
managers.
ELTON MAYO Resulted in increased satisfaction
1880-1949
among workers = increased
overall productivity
 HUMAN RELATIONS THEORY
Individual behaviour is
primarily influenced by certain
needs.

Developed Maslow’s
Hierarchy of Needs

Essential needs of workers

being met in the workplace to
ABRAHAM MASLOW
guarantee maximum 1908-1970
performance.
QUANTITATIVE MANAGEMENT
THEORY
QUANTITATIVE MANAGEMENT uses
quantitative approaches such as statistical analyses and
computer simulations to arrive at a management
decision. It has 2 branches

1. Management Science – uses mathematics in

problem solving and decision making.

2. Operations Management – seeks to apply ideas and

models from management science to the actual
workplace in dealing with managerial situations.
SYSTEMS THEORY
System Theory explains how interrelated parts operate
together to achieve a common purpose. It defines an
organization a system composed of 4 elements:
1. Inputs (material/human resources)
2. Transformation processes (technology/managerial
operations)
3. Outputs (products/services)
4. Feedback (reaction from the environment)
SYSTEMS THEORY
Open system – refers to an organization that interacts
closely with its environment and is fully aware of what
is going on in the environment as well as the changes it
experiences.

Close system – does not interact with its environment

and pays little attention to changes in its surroundings.
 Contingency theory
Each organization has unique
characteristics and confronted by
varied problems and challenges,
thus, universal theories can be
applied to everyone.
Contingency model states that the
personality of the leader
determines how well he or she
addresses situations in the FRED FIEDLER
workplace. 1922-2017
 Quality management theory
Conducted his work in post-war
Japan as he helped Japanese
industries improve production.
Statistical Process Control (SPC)
Emphasizes consistency in an
organization and minimal to no
errors or defects in production to
ensure quality products and
services = high customer WILLIAM EDWARDS
satisfaction and increased DEMING
revenue.
Quality management theory
The Japanese concept of kaizen, introduced in 1986, focuses
on the continuous improvement of people, processes, and
products.

Kaizen is a Japanese word which means “change for the

better,” and requires the implementation of gradual changes
in an industry or organization over a certain period. In the
implementation of changes all employees are involved,
from the top management down to the office personnel,
factory workers, janitorial staff, and even external
stakeholders.