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Principles of

Management
Foundation of Business and
Management Dynamics
Midterm Coverage

Topics
Planning
Types of Plans
Decision Making

Organizing
Organizational Chart
Human Resource Management

PLANNING

PLANNING

Planning is the analysis of relevant


information from the present and the past
and the assessment of probable future
developments so that a course of action
may be determined that enables the
organization to meet its stated objectives.
Planning addresses prospective changes
in business objectives and the forces
affecting the company.

Its purpose is to coordinate the activities


of sub-units and members within the
organizations environment.
It results in a more effective and efficient
action because the best ways for doing
things are identified and it anticipates
possible problems and difficulties in
pursuing a course of action.
Planning allows a manager to act with
initiative and to create situations to the
organizations advantages.
It brings rationally and order to the
organization.

Reasons why there should be


planning:
Increases the chances of success by
focusing on results, not activities.
Forces analytical thinking and evolution of
alternatives, thus improving decision.
Establishes a framework for decision making
consistent with top managements
objectives.
Orients people to action, instead of reaction.
Modifies style from day-to-day managing to
future- focused managing.

Reasons why there should be


planning:
Helps avoid crises management and
provides decision making flexibility
Increases employees involvement
and improve communication.
Enables us to make most effective
and economical use of manpower,
equipment, facilities and money.

Reasons why there should be


planning:
Identifies areas of greatest
opportunity and defines the desirable
results that have greatest probability
of being achieved.
Make possible to let subordinates
know what is required of them and to
give them on opportunity to
participate in the decision that are
made.

ESSENTIAL STEP OF PLANNING

1. Statement of objectives
2. Statement of problem
3. Designation of planning authority
4. Collection and Interpretation of
data.
5. Formulation and testing of tentative
plan
6. Statement of final plan.

GENERAL APPROACHES TO
FORMAL PLANNING
Bottom-up approach. Formulation of plan is
initiated by various units or divisions of an
organization and then passed upward for
aggregation at the corporate level.
Top-down approach. Initiative is taken by
the upper level executives of the
organization, who formulates a unified,
coordinated plan, usually with the advice of
lower-level manager.

GENERAL APPROACHES TO
FORMAL PLANNING
Interactive approach. In this approach, a
compromise between the bottom-up and the
top-down methods, corporate executives and
lower-level managers develop plan in
consultation with each other, making a
knowledge of specific situation.
Dual approach. Plan is independently
formulated both at the corporate and
business levels. All units form plans to suit
their particular situation and these plans are
regularly viewed by corporate management.

Good plans have these characteristics:


Make the plan easy to understand. It
should be clearly illustrated and should
provide pertinent examples
Feature full coverage of all needed
activities required to attain objectives.
Reduce the plan to a simple series of
actions
Keep the planned efforts on schedule,
assigning time periods gives vitality and
practical meaning to a plan.
Keep the plan flexible to permit

Good plans have these characteristics:


Insure acceptance of the plan by all
concerned or affected by it. Point
advantages to each of the adopters.
Fulfill a recognized need which is within
the capability of the management team.
Show clearly the respective responsibility
and authority required for each group or
individual, as well as the relationships
among participants in the plan.

FACTORS AFFECTING PLANNING

Conditions
Time factor
Resources available
Skills and attitudes of management
Political, social and environmental
conditions.
Physical facilities
Collection and analysis of data

CLASSIFICATION AND TYPES OF PLANS

Plans classified according to time


or duration
Long range planning
Intermediate range planning
Short- range planning

CLASSIFICATION AND TYPES OF PLANS

Plans classified according to


business function or use
Sales plan
Production plan
Financial plan
Operation plan
Marketing plan
HR plan

CLASSIFICATION AND TYPES OF PLANS

assification of plan according to scope

Objective or
goal
Policies
Procedures
Rules
Programs

Forecast
Strategies
Budget
Schedules
Projects

CLASSIFICATION AND TYPES OF PLANS

Classification of plan according to


frequency of use
Single use plan is developed to
carry out a course of action that is
not to be repeated in the future.
Standing plan used for activities
that recur regularly over a period of
time.

BUSINESS PLAN
is a written document that describes in
detail how a new business is going to
achieve its goals. It will lay out a written
plan from a marketing, financial and
operational viewpoint. Sometimes a
business plan is prepared for an
established business that is moving in a
new direction.
(www.investopedia.com)

Analysis of industry and


environment:
Assessment of macro
environment:

Technology.
Government.
Social structures and
population demographics.
Global economy.
Natural environment.

Analysis of industry and


environment:
Analysis of industry
environment:

Resource suppliers.
Competitors.
Customers.

Steps In Business Planning


1. Evaluate your personal resources and
interests and the resources of the
community.
2. Analyze your market.
3. Choose a proper business location.
4. Prepare a financial plan.
5. Prepare a production plan
6. Prepare an organizational plan
7. Prepare a management plan
8. Prepare a marketing plan.

The Importance Of Business


Planning
Planning can eliminate business risks
Planning can minimize costs of
production
Planning can detect the weakness of
the business operations.

CONTINGENCY PLAN
plans formulated to address specific
possible future events that might
have a significant impact on the
organization.
Crisis Management Planning
Scenario Planning

STRATEGIC PLAN
a comprehensive action plan that
identifies long-term direction for an
organization and guides resource
utilization to accomplish
organizational goals with sustainable
competitive advantage.

Parts of the Strategic Plan

Company or corporate vision and


mission;
Values
Objectives or goal;
Strategies.

Vision
articulates a desired future state; it
describes, often in bold, evocative, and
succinct terms, what the management of
an organization would like to achieve.
Good vision statements are meant to
stretch a company by articulating some
ambitious but attainable future state that
will help to energize and motivate
employees at all levels in the organization
and unite them in a common purpose.

A good vision can help employees make


sense out of the organizations strategy.
The vision tells them what the strategy is
meant to achieve.
A good vision can also generate strategies
by communicating to employees what the
ultimate goal of a strategy should be and
motivating them to search for and
formulate strategies that help to attain
that goal

Mission
refers to the strategic statements
that identify why an organization
exists, its philosophy of
management, and its purpose as
distinguished from other similar
organizations in terms of products,
services, and markets.

Values
- are the philosophical priorities to which
managers are committed.
Values outline how managers and
employees should conduct themselves,
how they should do business, and what
kind of enterprise they should build to help
the organization attain its mission and
vision.
Given that they help shape behavior within
an organization, values can help to
determine an organizations culture.

Objectives
- a specific result that a person or system
aims to achieve within a time frame and
with available resources.
In general, objectives are more specific
and easier to measure than goals.
Objectives are basic tools that underlie
all planning and strategic activities,
They serve as the basis for creating
policy and evaluating performance.

Goal
a desired future state that an
organization attempts to realize. the
purpose of goals is to specify exactly
what must be done so the company
can attain its mission and vision.

DECISION- MAKING

DECISION- MAKING

Decision-making may be defined as the


process of defining problem and
identifying and choosing alternative
courses of action in a manner appropriate
to the demands of the situation.
The manager must adapt a certain
procedure deigned to determine the best
option available to solve problems.
Decision- making is regarded as the
heart of all the management functions.


Decision- Making as a Management Responsibility

Decision must be made at various


levels in the workplace. They are also
made at the various stages in the
management process.
Decision- making is responsibility of
the manager. It is understandable for
managers to make wrong decisions at
times. The wise manager will correct
them as soon as they are identified.


Decision- Making as a Management Responsibility

Management must strive to learn


how to choose a decision option as
correctly as possible. Since they have
that power to decide, they are
responsible for whatever outcomes
their decisions bring.

The Decision - Making Process

1.
2.
3.
4.
5.
6.
7.
8.

Diagnosing the problem;


Analyzing the environment;
Articulating the problem or opportunity;
Developing viable alternatives;
Evaluating the alternatives;
Making a choice;
Implementing the decision; and
Evaluating and adapting the decision
results.

ORGANIZING

ORGANIZING

Organizing is deciding how best group


organizational activities and resources.
Basic organizing elements that manager
must address are: designing jobs; grouping
jobs; establishing reporting relationships
between jobs; distributing authority among
jobs; coordinating activities between jobs;
and differentiating among jobs.

According to Edgar Schien, a


prominent organizational
psychologist, all organizations
share four characteristics
Coordination of efforts
Common goal or purpose
Division of labor
Hierarchy of authority

Benefits of Organizing

Division of work that avoids


duplication, conflict, and misuse of
resources, both material and human.
Clarity of individual performance
expectations and specialized tasks.
A logical flow of work activities that
can be comfortably performed by
individuals or groups.

Benefits of Organizing

Established channels of
communication that enhance
decision making and control.
Coordinating mechanisms that
ensure harmony among organization
members engaged in diversified
activities.
Focused efforts that relate to
objectives logically and efficiently.
Appropriate authority structures with
accountability to enhance planning

DECISIONAL ROLES OF MANAGERS

1. Entrepreneur. Some managers do


not start their own firms, but
complex organization, they act as
entrepreneurs by discovering new
ways to use resources and
technology.
2. Disturbance handler. Managers are
resolving problems, which is their
most stressful and challenging role.

DECISIONAL ROLES OF MANAGERS

3. Resource allocator. This requires


careful proportioning of scarce
resources such as time, money,
material or manpower to accomplish
all that is expected.
4. Negotiator. Negotiating extends to
internal and external managerial
activities such as negotiating
materials or supplies process and
terms, wages and conditions of

The Activities of Real Manager

THE MANAGEMENT HIERARCHY

Management Classification
Top management. Most companies
appoint one person as the CEO. Top
management also includes a few highly
selected executive who share the huge
work load for the CEO, the corporate
treasurer, the chief financial officer (CEO),
and few other specialists. In big
companies, it may include executive vice
presidents or division presidents who are
responsible for strategic decisions. These
people are responsible for the overall
direction of the firm and its relations with
its various policies.

Management Classification
Middle management. This has wide
variety of positions in many strata
like plant managers, accounting
managers, public relations officers,
department heads, or regional sales
managers. They supervise sub-units
of an organization or they may direct
the activities of other managers.
They are involved in specific
operations within the organization.

Management Classification
Supervisory management. They are
called first-line managers or
supervisors. They are the operational,
non-management personnel. They
may be the supervisors who spend
most of their time with employees.
Their duties consists technical control
of operations, direct to
communication with employees, and
resolution of immediate problems
associated with specific tasks.

FUNCTIONAL AND GENERAL MANAGERS

Functional Management a horizontal


division of management which is
based on expertise and specialization
Line managers - are concerned with
primary organizational activities such
as marketing and production.
Departments are in-turn defined
according to functional line duties
such as production control, receiving,
sales, shipping and customer service.

FUNCTIONAL AND GENERAL MANAGERS

General managers - usually oversee


collective operations that include
several functional managers. These
generalists are plant managers, also
top management group. They need
different skills. Those who specialize
in functional areas tend to focus their
energy on technical aspects of their
jobs.

Managerial Skills

MANAGEMENT STYLES

Autocratic Style - characterized by


the manager making all decisions
and issuing orders for the completion
of work without the input of
subordinates. Managers ask their
subordinates for suggestions prior to
making decisions but retain final
decision-making power.

MANAGEMENT STYLES

Free-rein style - is characterized by


the manager allowing subordinates
to make most decisions. Managers
serve as advisers.

NATURE OF ORGANIZATION STRUCTURE

Organization structure is the formal


pattern of interactions and
coordination designed by
management to link the tasks of
individuals and groups in achieving
organizational goals. They are
typically created by management for
specific purpose.

Organization structure elements


are:

The assignment of tasks and


responsibilities that define the job
of individuals and units.
The clustering of individual
positions into units and of units
into departments and larger units
to form an organizations
hierarchy.

Organization structure elements


are:
The various mechanisms required
to facilitate vertical (to-to-bottom)
coordination, such as the number
of individuals reporting to any
given managerial position and the
degree of delegation of authority.
The various mechanisms needed
to foster horizontal (across
departments) coordination, such as
task forces and interdepartmental

Organizational Design is the process


of developing an organization structure.
Organization chart - aids in visualizing
the structure.
Chain of Command - the unbroken line
of authority that ultimately links and
individual with the top organizational
position through a managerial position
at each successive layer in between.

JOB DESIGN
- the specification of task activities
associated with a particular job
Importance of Job Design:
Task activities need to be grouped in
reasonably logical ways;
The way the jobs are configured, or
designed, has the important influence
on employee motivation to perform
well.

Approaches to Job design:

Job simplification is the process


of designing jobs so that job
holders have only a small
number of narrow activities to
perform.

Job rotation is the practice of shifting


workers through a set of jobs in a
planned sequence. It has the
advantage of cross-training workers,
so that there is a maximum flexibility
in job assignments. It alleviates
monotony and boredom.

Job enlargement is the allocation of a wider variety of similar


tasks to a job in order to make it more challenging. It is the
process of upgrading the job task mix in order to increase
significantly the potential for growth, achievement,
responsibility and recognition. It broadens the job score, the
number of different tasks as employee performs in a
particular job.

DIVISION OF WORK

The fundamental force in


industrialization that describes how
organizational work is to be
accomplished.
This involves designing tasks and
clarifying performance expectations.
Organizations divide their labor into
specialized tasks to improve
productivity.

Specialization - is the planned division of


work into individual tasks that can be
repeated efficiently.
Work Simplification - the process of
planning the works and breaking it down to
most common elements
Standardization - is the process of making
work uniform through repeated use of similar
methods, machines, and materials to achieve
similar and predictable results over time.

HORIZONTAL AND VERTICAL JOB


SPECIALIZATION
Horizontal job specialization is the result of
dividing complicated tasks into simpler jobs or
operations, reducing the scope of tasks.
Vertical job specialization results from delegating
responsibilities for tasks and decisions to
subordinates. Depth of job becomes narrower as
subordinates assume decision-making burden
previously shouldered by the superior. There is a
downward re-assignment of tasks and authority.

SPAN OF CONTROL

Span of control is the number of persons


who report to a supervisor.
it is influential in determining the
complexity of individual managers jobs
the span of control determines the shape,
or configuration of the organization; the
fewer the number of people reporting to a
supervisor, the larger the number of
managers required.

SPAN OF CONTROL

Span of control is the number of persons


who report to a supervisor.
it is influential in determining the
complexity of individual managers jobs
the span of control determines the shape,
or configuration of the organization; the
fewer the number of people reporting to a
supervisor, the larger the number of
managers required.

Narrow Span of Control

Wide Span of Control

BUREAUCRATIC STRUCTURES
Bureaucracy - is a form of
organization in which activities are
rationally defined, division of work is
unambiguous, and managerial
authority is explicitly vested in
individuals according to skills and
responsibilities prescribed by the
organizations.

Five characteristics of modern bureaucracies are:

1. Fixed and official jurisdictions of


authority
2. Firmly established rational chain of
command
3. Quantified and thoroughly
documented information
4. Supposition of expertise
5. Management is technically scientific.

FORMAL ORGANIZATIONS VS. INFORMAL


ORGANIZATIONS

Formal organizations begins with the


preplanned patterns of authority and
influence- the planned authority of
superior over subordinates. It is the
allocation of functions among
departments and the policies,
standards, procedures that help
define the scope of each persons
activities.

FORMAL ORGANIZATIONS VS. INFORMAL


ORGANIZATIONS

Informal organizations are concerned with


the employees sense of belonging to an
organization or with their alienation from
the purposes of that organization. They
are shadow organizations that evolve
though personal interactions, sentiments
and social activities of individuals. They
are not written down, they do not have job
titles or formal descriptions of authority,
yet they are more influential structures.

DEPARTMENTALIZATION

Departmentalization is the horizontal


grouping of work activities based on
expertise, products, markets,
customers, or projects to enhance
planning, leading and controlling.
It is the clustering of individuals into
units and of units into departments
and larger units in order to facilitate
achieving organizational goals.

Four approaches to
departmentalization
Functional organization

Four approaches to
departmentalization
Product Organization

Four approaches to
departmentalization
Geographical organization

Four approaches to
departmentalization
Customer organization

TYPES OF FORMAL ORGANIZATION


Line organization

TYPES OF FORMAL ORGANIZATION


Line and staff organization

TYPES OF FORMAL ORGANIZATION


Functional organization

DELEGATION

This involves the partial distribution


of authority to subordinates for
making decisions or performing
tasks.

Reasons for delegating authority

Managerial overload
Need for expertise
Proximity of tasks
Behavioral needs

HUMAN RESOURCE MANAGEMENT

HUMAN RESOURCE MANAGEMENT

Focuses on the recruitment of,


management of, and provides
direction for the people who work in
the organization.
It refers to activities undertaken to
attract, develop, and maintain an
effective workforce within an
organization. This consists of three
parts.

HUMAN RESOURCE MANAGEMENT

Compensation, hiring, safety and wellness,


benefits, and all that encompasses
employee administration fall under HRM.
All managers are human resource
managers, expected to pay attention to
the development and satisfaction of
subordinates. They may use surveys,
career planning, performance appraisal,
and compensation to encourage lifelong
commitment to the company.

HUMAN RESOURCE MANAGEMENT

Employees are viewed as assets,


giving company a competitive
assets.
Human resource management is
a matching process, integrating
the organizations goals with
employees needs.

HUMAN RESOURCE
PLANNING
- this consists of forecasting future
needs for employees in different
jobs, forecasting the availability of
such employees, and then taking
steps to match supply and demand.
It includes the set of organizational
activities directed at attracting,
developing, and maintaining
effective workforce. Systematic
planning of this type results in

STAFFING
includes the set of activities aimed at
attracting and selecting individuals
for positions in a way that will
facilitate the achievement of
organizational goals.

Recruitment
- is the process of finding and
attempting to attract job candidates
who are capable of effectively filling
job vacancies.
Internal recruitment
External recruitment

Selection
is the process of choosing the best
among applicants, through series of
written examinations, interviews,
medical examination and training. In
the selection process, employees are
attempting to determine the skills,
abilities and other attributes needed
to perform a particular job

JOB ANALYSIS
- is a systematized procedure for
collecting and recording information
about job. Job analysis information is
used in many human resource
activities.
Parts of job analysis are job title, job
description and job specification.

HOW TO CONDUCT AN EFFECTIVE INTERVIEW

Before the Interview


1. Determining the job
requirements.
2. Prepare a written interview
guide.
3. Review the candidates
application form, resume or
bio-data.

HOW TO CONDUCT AN EFFECTIVE INTERVIEW

During the Interview


1. Establish rapport.
2. Avoid conveying the
response you seek.
3. Listen and take notes
4. Ask only job-relevant
questions.

HOW TO CONDUCT AN EFFECTIVE INTERVIEW

After the Interview


Write a short report right after
the interview, scoring the
candidate on the characteristics
required for functioning
effectively in the job. Note
summaries of responses,
document ratings, so that you

SELECTION DEVICES

Application form is a device


used for collecting information
about an applicants education,
previous job experience, and
other background
characteristics.

SELECTION DEVICES

An interview serves as two-way


communication channel that
allows both the organization and
the applicant to collect
information that would otherwise
be difficult to obtain.

SELECTION DEVICES

A written test designed to


measure a particular attitude such
as intelligence or aptitude is the
paper-and-pencil test or written
examination. The tests include
intelligence test, aptitude and
ability tests, and personality or
psychological tests and inventories.

SELECTION DEVICES

The assessment center was developed


by psychologist to select individuals with
high potential for managerial careers.
They present a series of managerial
situations to groups of applicants over,
say, a two-or-three day-period. Basket
simulation is one technique where the
applicant plays the role of a manger who
must decide how to respond to ten
memoranda in his in-basket within a
two-hour period. A panel observes
applicants decision, assess

TRAINING AND DEVELOPMENT

Training and development


represent planned effort by
organization to facilitate employees
learning of job-related behaviors.
Training usually refers to teaching
lower-level or technical employees
how to do their present jobs, whereas
development refers to teaching
managers and professionals the skills
needed for both present and future

Forms of Trainings

On-the-Job Training
Orientation training
Classroom training
Programmed and computerassisted instruction
Conferences and case
discussion groups

PERFORMANCE APPRAISAL

Performance appraisal is the process


of observing and evaluating an
employees performance, recording
the assessment, and providing
feedback to the employee.
Skillful managers give feedback and
recognition concerning the
acceptable elements of the
employees performance.

PERFORMANCE APPRAISAL

They also describe performance


areas that need improvement.
Performance appraisal can also
reward high performers through
merit pay, recognition, and other
rewards.

Performance Appraisal
Interview - is a formal
review of an employees
performance conducted
between the superior and the
subordinate.

Suggested steps to increase its


effectiveness are

Raters or supervisors should


be knowledgeable about the
subordinates job and
performance levels.
Raters should welcome
employee participation during
the interview rather than tell
and sell their views by
lecturing to subordinates.

Suggested steps to increase its


effectiveness are
A contingency approach to feedback
based on the characteristics of the
subordinates, the job, and his
performance level is useful. For
example, for non- routine jobs, high
performance need feedback that is
given at flexible time intervals and
focused on development. For routine
jobs, satisfactory performers need
non-frequent feedback focused on
deviations from acceptable
performance. Newer employees need

Suggested steps to increase its


effectiveness are
Training is needed to help
supervisors devise interview
strategies for different situations.
This includes observation and rating
of performance.

COMPENSATION

Compensation refers to all monetary


payments and all goods or
commodities used in lieu of money to
reward employees.
A compensation package may
include the basic pay, allowances,
benefits and incentives.
An effective approach is a merit pay
system rather than a system based
on seniority.

Wage vs. Salary


Wages are an employee
compensation based on the number
of hours worked or amount of output
produced.
Salary is employee compensation
calculated on a weekly, monthly, or
annual basis

Compensation policy is based


on five factors:
1.Salaries and wages paid by
other companies in the area
that compete for the same
personnel
2.governmental legislation
3.cost of living
4.the ability of the company to
pay;

Job evaluation
- is employed which involves
the process of determining
the value of jobs within an
organization through an
examination of job content.

Employee benefits
- are rewards provided indirectly to
employees, consisting primarily of services
like insurances, reimbursement of
employees expenses, such as tuition fee
costs, gasoline and transportation expenses.
These may also include employees rewards
such as pension plans, insurance, sick-leave
pay, and tuition reimbursement given at all
or part of the expense of the company.

EMPLOYEE MOVEMENT

Promotion - is an upward movement


in an organization to a position of
greater authority and responsibility
and a higher salary.
Promotions can be based on
performance, but companies with
labor unions prefer to base them on
seniority, the length of time an
employee has worked at the
company or in a particular job or

EMPLOYEE MOVEMENT

Transfer - is a horizontal
movement in an organization at
about the same wage and level.
This may involve shifting workers
into new, more interesting jobs
or into departments where
workers skills are required.

EMPLOYEE MOVEMENT

Separation - can be due


to resignation, retirement,
layoff or termination.

End of Midterm Coverage

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