Principles of Management

Text Book
Management:
A global and entrepreneurial perspective

Heinz Weihrich
Mark V Cannice
Harold Koontz 12th edition, McGraw Hill Slide Prepared By: Abdullah Al Yousuf Khan, Faculty, IUBAT
International University of Business Agriculture and Technology, Dhaka, Bangladesh

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After studying this chapter, youll be able to:

1. 2. 3. 4. 5. 6.
7. 8. 9. 10.
Explain the nature and purpose of management Understand that management applies to all kind of organisations Recognise that the aim of all managers is to create a surplus (profit) Identify latest information technology and globalisation Explain the concepts of productivity, effectiveness, and efficiency Describe the evolution of management and some recent contribution to management thought Describe various approaches to management, their contributions as well as limitations Show how the management process, operational process, approaches to management theory and science has a basic core of its own Realise that managing requires a system approach and that practice must always take into account SITUATIONS and CONTINGENCIES Define the mangerial functions of planning, organising, leading and controlling
Slide Prepared By: Abdullah Al Yousuf Khan, Faculty, IUBATInternational University of Business Agriculture and Technology, Dhaka, Bangladesh
Definition of Management: Its nature and purpose

Management is a process of designing and maintaining an
environment in which individuals, working together in groups, efficiently accomplish selected goals. Expended Definition: As managers, people carry out the managerial functions of planning, organising, leading and controlling. Management applies to any organisations. It applies to managers at all kind of organisational levels. The aim of all mangers is the same to create a surplus. Managing is concerned with productivity, which implies effectiveness and efficiency.
Definition of Management
All do manage organisations. Organisation can be defined as a group of People working together to create a surplus. In business organisations, this surplus is profit. Universities does create profit but generate and disseminate knowledge as well as provide service to the society.
The Functions of Management:
Planning
Organising Staffing
Leading
Controlling
PLANNING
Planning involves selecting goals and objectives and actions to achieve them, i.e. selecting future courses of actions from alternatives. To make any decision a systematic study, an analysis, or a proposal is needed, and that is planning.
ORGANISING
Organising is that part of management which involves establishing an intentional structure of roles for people to Fill in an organisation. It is intentional in the sense of Making sure that all the tasks necessary to accomplish goals are assigned and, it is hoped, assigned to people who can do them best. The purpose of organisation structure is to help create an environment for human performance. It is a management tool but may not be a easy task.
STAFFING
Staffing involves filling the positions in the organisation structure. This is done by identifying work-force requirements: inventorying the people available: and recruiting, selecting, placing, promoting, appraising, planning the careers of, compensating, and training/developing current employees so that tasks are accomplished effectively and efficiently.
LEADING
Leading is influencing people so that they will contribute to organisational and group goals: it has to do predominantly with the interpersonal aspect of managing. All managers would agree that they face most problems with people their desires and attitudes as well as their behaviour as individuals and in groups. And then effective managers also need to be effective leaders. Since leadership implies follower ship and people tend to follow those who offer means of satisfying their own needs, wishes, and desires, it is understandable that leading involves innovations, leadership styles and approaches, and communication.
CONTROLLING
Controlling is measuring and correcting individual and organisational performance to ensure that events conform to plans. It involves measuring performance against goals and plans, showing when deviations from standards exist, and helping to correct deviations from standards. In short, controlling facilitates the accomplishments of plans. Control activities generally relate to the measurement of achievement. Some means of controlling, like the budget for expenses, inspection records, and the record of labour hours lost, are generally familiar.
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Management as an essential for any organisation

Managers are held responsible for taking actions that will
enable individuals to make their best contributions group objectives. Management thus applies to small and large organisations, to profit and non-profit enterprise. To manufacturing as well as service industries. The term enterprise refers to a business, government agency, hospital, university and any other type of organisationbusiness or non business organisations. Effective management is the concern of the corporation president, the hospital administrator, the university president.
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Managerial functions at different organisation levels

Managers, administrators, executives and supervisors
are same in terms of taking responsibility. But situation can be different in various types of organisation. All managers carry out managerial functions. But time spent for each function may differ. Top level managers spend more time on planning and organising than do lower-level managers. Leading, on the other hand, takes a great deal of time for first-line supervisors.
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Managerial skills and the organisational hierarchy

Skills may differ at various levels in the organisational hierarchy Technical skills are of the greatest importance at the supervisory

level and human skills are helpful in the frequent interactions with the subordinates. Conceptual and design skills on the other hand, are not critical for lower-level supervisors. At the middle management level, the need for technical skills decreases, human skills are still essential, while conceptual skills gain in importance. At the top management level, conceptual and design abilities and human skills are especially valuable, but there is relatively little need for technical abilities. In large organisations, CEOs can utilise the technical abilities of their subordinates. In smaller firms, technical experience may still be quite important.
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Top Level Managers
Middle-level managers
L E A D I N G
First-level supervisors
O R G A N I S I N G
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The goals of all managers and organisations

The aim of the managers is simply to make profit
In many businesses- to increase shareholders value in the long term is more important
The aim of all managers should be to create a surplus, by establishing an environment in which people can accomplish group goals with the least amount of time, money, materials, and personal dissatisfaction.
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Characteristics of excellent and most admired companies
In the US, profitability is an important measure of company excellence. However, other criteria are also used that frequently coincide with financial performance Thomas Peters and Robert Waterman in their book, In Search of Excellence, identified 43 companies that they regarded as excellent. In choosing firms, they considered factors such as growth of assets and equity, average return on total capital, and similar measures.
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The authors identified eight characteristics of excellent These firms enterprises.

Were oriented toward action Learned about the needs of their customers Promoted managerial autonomy and entrepreneurship Achieved productivity by paying close attention to the needs of their people Were driven by a company philosophy often based on the values of their leaders Focused on the business they knew Had a simple organisational structure with a lean stuff Were centralised as well as decentralised, depending on appropriateness
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Criticism
Two years after In Search of Excellence published,
Business Week took a second look at the companies that the writers had considered excellent. Business Week survey revealed that at least 14 of the 43 companies did not measure up very well to several of the eight characteristics of excellence. 9 companies showed a great decline in earnings. The performance review of the firms indicated that success may be only transitory and that it demands continuing hard work to adopt to the changes in the environment
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Advances in technologies, trends in globalisation, and a focus entrepreneurship for adapting to change in the 21st century To be successful in business, companies must take advantage of the new information technology especially the internetglobalisation-and entrepreneurship
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Technology
Technology, and specially information technology (IT)
pervasive (allocable) impact on both organisations and individuals. The World Wide Web and the Internet connect people and organisations through a global network. Electronic commerce (e-commerce) is increasingly used for transactions between individuals and companies (B2C) as well as between business (B2B) Another trend is the use of m-commerce, that is, use of mobile or wireless commerce for buying and selling goods using for example mobile phones or personal digital assistance (PDA)
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For example, in Japan, NTT DoCoMo has developed an internet service called i-mode, which has already many million subscribers.
This services will increase as soon as thirdgeneration wireless technology making the speedy transmission of data possible (including video).
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Globalisation
The second major trend is globalisation Most major corporations has international presence The WTO, an umbrella organisation, was established in
1955 to govern international trade. Gains from globalisation not only benefit Western corporations but also result in higher incomes for people in other countries, such as China. Clearly, managers must develop an international perspective.
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Entrepreneurship
Entrepreneurship is seen by government as a means to increase employment and prosperity among their population, while organisationlarge or small find that entrepreneurial innovation and expansion into new markets are essential to their success and survival in increasingly competitive markets that linked globally through sophisticated and ever present communication technologies.
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Entrepreneurship
Entrepreneurship is a creative process that is centred in the notion of identifying market opportunities and unmet needs. It is building solutions that meet these needs and bring value to customers. Entrepreneurs build organisations that provide products that alleviate peoples pain (e.g. pharmaceutical companies) or provide the means for people to enhance their own lives through sophisticated telecommunications (e.g. information technology companies)
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Productivity, effectiveness, and efficiency

Definition of productivity; can be defined as the output-input ratio within the time period with due consideration for quality
Output
Productivity = ------------- (time/quality) Inputs
More output with same input Same output less input

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effectiveness, and efficiency

Effectiveness is the achievements of
objectives Efficiency is the achievement of the ends with the least amount of resources
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Management: science or art:

Managing is simply know-how.
It is- doing things in light of the realities of a situation
Managers can work better by using organised knowledge about management

It is this knowledge that constitute a science Thus, management as practice is an art; The organised knowledge underlying the practice may be referred to as science
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The evolution of management thought

Scientific management
Modern operational management theory Behavioural sciences System theory Modern management thought
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Scientific management;
Frederick W. Taylor; (1903) acknowledged as the father of scientific management. His primary concern was to raise productivity through greater efficiency in production and increased pay for workers, by applying the scientific method. His principles emphasise using science, creating group harmony and cooperation, achieving maximum output, and developing workers.
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Henry L. Gantt (1901)

Called for scientific selection of workers and harmonious cooperation between labour and management. Developed the Gantt chart
stressed the need for training.
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Frank and Lillian Gilberth (1900)

Frank is known primarily time and motion studies.
Lillian, an industrial psychologist, focused on
the human aspects of work and the understanding of workers personalities and needs.
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Modern operational management theory

Henri Fayol (1916) Referred to as the father of the modern management theory. Divided industrial activities into six groups:
Technical Commercial Financial Security Accounting and managerial
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Modern operational management theory

Recognised the need for teaching management.
Formulated 14 principles of management,
such as;
Authority and responsibility Unity of command
Scalar chain
Esprit de crops
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Behavioural science
Hugo Munsterbergh (1912)
Application of psychology in industry and
management.
Walter Dill Scott (1910, 1911)

Application of psychology in advertising,
marketing and personnel.
Max Webber (1946, 1947)

Theory of bureaucracy.
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Behavioural science
Vilfredo Pareto (1896-1917) Referred to as the father of the social systems approach to organisation and management Elton Mayo and F.J. Roethlisberger (1933) Famous studies at the Hawthorne plant of the Western Electric Company on the influence of social attitudes and relationships of work groups on performance
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Systems theory
Chester Barnard the functions of the managers (1938)
The task of managers is to maintain a system of
cooperative effort in formal organisation. Suggested a comprehensive social systems approach to managing.
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Modern management thought

Peter F. Drucker (1974)
Very profile writer on many general management
topics
W. Edwards Deming
Introduced quality control in Japan
Laurence Peter (1969)

Observed that eventually people get promoted to
a level where they are incompetent
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William Ouchi (1981)

Discussed selected Japanese managerial practices
adapted in the U.S. environment
Thomas Peters & Robert Waterman (1982)

Identified characteristics of components they
considered excellent.
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Patterns of management
The managerial roles approach
Henry Mintzberg of McGill University studied the
activities of five CEOs. Executive do not perform the classical management function Instead they do the following
Interpersonal roles
1.
The figurehead role (performing ceremonial and social duties as the organisations representative
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2. The leader role

3.
The liaison role
Informational roles
4. The recipient role ( receiving information about
the operation of an enterprise) 5. The disseminator role (passing information to subordinates) 6. The spokesperson role (transmitting information to those outside the organisation)
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Decision roles
The entrepreneurial role 8. The disturbance-handler role 9. The resource-allocator role 10. The negotiator role
7.
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Other managerial approaches

Empirical or case approach
Studies experience through cases, identifies success
and failure Limitations- situations are all different. No attempt to identify principles. Limited value for developing management theory Case situation
Failure
Success
Why?
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Text Book

A global and entrepreneurial perspective

International University of Business Agriculture and Technology, Dhaka, Bangladesh

After studying this chapter, youll be able to:

Definition of Management: Its nature and purpose

The Functions of Management:

Management as an essential for any organisation

Managerial functions at different organisation levels

Managerial skills and the organisational hierarchy

Top Level Managers

The goals of all managers and organisations

Characteristics of excellent and most admired companies

The authors identified eight characteristics of excellent These firms enterprises.

Productivity, effectiveness, and efficiency

Productivity = ------------- (time/quality) Inputs

More output with same input Same output less input

effectiveness, and efficiency

Management: science or art:

Managers can work better by using organised knowledge about management

The evolution of management thought

Henry L. Gantt (1901)

stressed the need for training.

Frank and Lillian Gilberth (1900)

Modern operational management theory

Modern operational management theory

Walter Dill Scott (1910, 1911)

marketing and personnel.

Max Webber (1946, 1947)

Modern management thought

Laurence Peter (1969)

a level where they are incompetent

William Ouchi (1981)

adapted in the U.S. environment

Thomas Peters & Robert Waterman (1982)

2. The leader role

The liaison role

Other managerial approaches

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