Essential Of Management

1. ESSENTIALS OF MANAGEMENT  The need / scope / meaning & definition / process of management / managerial hierarchy MANAGERIAL FUNCTIONS  Planning / Organizing…
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  • 1. ESSENTIALS OF MANAGEMENT  The need / scope / meaning & definition / process of management / managerial hierarchy MANAGERIAL FUNCTIONS  Planning / Organizing / Staffing / Directing / Controlling MANAGERIAL SKILLS  Technical / Conceptual / Human TYPES OF MANAGERS  Functional / Specialists / Generalists / Line & Staff managers DECISION MAKING ENVIRONMENT  Open & closed system / decision making under certainty, uncertainty & risk DECISION MAKING TYPES  Structured / unstructured decisions  Programmable / non-programmable  Classical & Administrative Models DECISION MAKING STYLES  Autocratic / Participative / Consultative Essentials of Management An International Perspective Harold Koontz & Heinz Weihrich Lesson 1 Characteristics of the term Organization:  Social unit with a purpose
  • 2. Characteristics of the term Management  Process of optimum utilization of the resources of the Organization to accomplish its goals Functions of Management  Planning  Organizing  Leading  Controlling  Coordination Characteristics of the term Productivity  A ratio of Output to Input  It can be improved by o Increasing output with same inputs o Decreasing inputs, but maintaining the same output Characteristics of the term Effectiveness:  Accomplishing of Objectives of the Organization Characteristics of the term Efficiency  How Objectives are accomplished.  Is determined by process  Measured against standard time / quantity Management: Science or Art  Practice is called Art
  • 3.  The Knowledge underlying the Practice is Science  Hence it is both: Science & Art Managerial Hierarchy  The levels of management in the organization  Levels are established to accomplish the organizational goals  As the size of the organization keeps on growing, it gives rise to levels, for all activities to accomplish the organization goals cannot be performed by a single person. Management Process  Process is defined as Value addition  Value addition takes place in core activities Scope of Management:  Scope includes functions, like marketing / operations / human resources / finance Characteristics of excellent enterprise:  Action oriented  Learned about the needs of the customers  Promoted managerial autonomy & entrepreneurship  Achieved productivity, by meetings the needs of its people  Value driven  Focused on business they knew best  Have flexible organization structure with lean staff
  • 4. Difference between Objectives, Goal & Target  All three are statements.  Objectives are open-ended system. Are set CEO & his team  Goals & Targets are closed ended system  Goals are long term, while Targets are short term. Objectives are converted into goals by the respective Unit Heads. Goals are converted into targets by Department Heads.  Goal is broken down into Targets  
  • 5. Lesson 2 Planning Characteristics of the term Planning:  Involves: o Selecting Objectives o Evolving Action Plan o To Accomplish them o It Requires  Decision-Making i.e. choosing from alternatives  It is Rational Approach to Accomplish Objectives  Implies Managerial Innovation  Bridges the gap from where we are to where we want to go  Planning & Control go hand in hand Types of Plan:  Objectives / Goals o Purpose for which the Organization exists  Strategies o A long term objective, which gives a competitive advantage to business  Policies o General statements / understanding that guides thinking in decision-making
  • 6.  Procedures o Plans that establish, a required method of handling future activities  Rules o Spells out specific required action or nonaction allowing no discretion  Programs o Consists of:  Goals / Policies / Procedures / Rules / Task assignment / Steps to be taken / resources to be employed o Necessary to carry out a given course of action o They are ordinarily supported by budget  Budgets o Statement of expected results expressed in numerical terms Steps in Planning:  Being aware of Opportunities o Doing SWOT Analysis  Establishing Objectives o Specifying expected results o Could be long / short term o Gives direction to plans  Developing Premises o Making assumptions about the environment in which the plan is to be carried out
  • 7.  Determining Alternative Courses o Brain storming ways of reaching the destinations  Evaluating Alternative Courses o Weighing each alternatives pluses & minuses  Selecting a Course o Zeroing down upon the alternative, which will be adopted  Formulating Derivative Plans o Listing the activities to be performed  Numberizing Plans by Budgeting o Estimate the income / expenditure for the entire activities to be performed Characteristics of the term Strategy:  Determining the long-term objectives of the Organization  Adoption of course of action  Allocation of resources to accomplish the long term objectives  It gives competitive advantage to business  It is based on strength of the Organization  It is based on assumptions  Strategies cannot be inconsistent with Value system of the Organization  Used only when there is competition
  • 8.  Strategies are of two kinds: o Corporate  Further classified into: • Growth o Internal  Through introduction of new product  Increasing market share  Marginal growth o External  Acquisition & Mergers  Breakthrough growth • Stability o Maintaining status quo. o Limited opportunities in environment • Turnaround o No growth o Issue of survival of business o Downsizing is the solution
  • 9. o Business Unit  Further classified into • Cost leadership o Organization attempts to increase efficiency / cut costs • Differentiation o Product / Services are differentiated o Creating a niche market o Can charge premium price • Focus o Markets are segmented o Only on one segment the organization focuses Premising & Forecasting  Forecasting is anticipating the future  Future is unknown  Hence forecasting is based on assumptions
  • 10. ORGANIZING  A single individual cannot accomplish organizational goals.  Employees have to cooperate with each other & work in team  For cooperating with each other, every employee must understand one’s role, & how it is interconnected  Designing & maintaining these systems of roles is basically the managerial function of organizing.  For organizational role to exist, & be meaningful, employees must know their objectives, & the activities they have to perform, & have the discretion of defining their roles  To perform the role effectively, needed resources should be provided, & authority with respect to resources & decision making should be highlighted  For the above to take place the organization needs a structure  Structure are department-wise  For every role, there is a level  The structure should be aligned with external environment
  • 11. STAFFING  Means Recruitment PLUS Selection  Sources of recruitment o Internal o External  Both the sources has its own advantages & disadvantages  In selection care should be seen to match the organization requirement with people requirement. That is matching the organization’s culture with that of the people’s nature.  The organization must understand the needs of its employee, & ensure that the needs are met. If needs are not met, then the employee will not be motivated to work towards the organization goal DIRECTING [LEADERSHIP  Leader is the person who influences others willingly & enthusiastically towards accomplishing long term organization goals.  Leadership is the style of leader  The leadership styles can be either: o Transactional
  • 12.  Through external motivation influence the followers o Transformation  Through internal motivation influence the followers CONTROLLING  It is measurement & correction of performance in order to make sure that enterprise objectives & plans devised to attain them are being accomplished  Planning & Controlling are closely related  The control process involves the following steps: o Establishing a standard o Measuring the performance against the standard o Correcting the variations  Control classified as: o Feedback  Given after the execution of the plan o Feed-forward  Taken before implementation of the plan MANAGERIAL SKILLS  A manager requires the following skills: o Technical  Knowledge about the job  The executives should have this skill
  • 13. o Conceptual  Capability to apply knowledge  The functional heads should have this skill o People  Understanding / predicting / motivating the people to perform  The leaders should have this skill TYPES OF MANAGERS  Functional o Has a competency in one of the aspects of management functions like HR / Finance / Marketing  Specialist o Has core competency in one of aspects of the functional management  Generalist o Has a competency in running a business  Line & Staff o Line manager is accountable for results. Example: Production / Marketing. o Their outcomes are measurable
  • 14. o Staff manager is accountable for quality & timely resources. Example: HR / Finance / Materials / Engineering DECISION MAKING ENVIRONMENT Open & closed system  In a system theory there is an active exchange between internal environment of the organization & external environment  All open system are input-throughput-output mechanisms. Systems take inputs from the inputs from environment in the form of energy, information, money, people, raw materials & so on. They do something to the inputs via throughput, conversion or transformation processes that changes the inputs & they export products to the environment in the form of outputs.  Each of these three system processes must work well if the system is to be effective & survive.  Every system is delineated by a boundary. What is inside a boundary is the system & what is outside is the boundary is the environment. Boundaries of open system are permeable, in that they permit exchange of information, resources & energy between system & environment
  • 15.  Open systems have purposes & goals. These purposes must align with purposes or needs in the environment. For example the organization’s purposes will be reflected in the outputs & if the environment does not want these outputs, the organization will cease to exist  The law of entropy states that al systems “run down” & disintegrates integrate unless they reverse the entropic process by importing more energy than they use. Organizations achieve negative entropy when they are able to exchange their outputs for enough inputs to keep the system from running down.  Information is important to systems in several ways. Feedback is information from the environment about system performance. System requires two types of feedback: positive & negative. Negative feedback is also known as deviation-correcting feedback  An open system achieves a steady state of against a disruptive force, either internal or external. The basic principle is the preservation of the character of the system.  Also a system tend to get more elaborated, differentiated, specialised & complex over time.; this process is called as “differentiation”. With increased differentiation, increased integration & coordination are necessary.
  • 16.  Another characteristic of the open system is equinfinality, the principle that there are multiple ways to arrive at a particular outcome or state.  Subsystems exist within larger systems. These subsystems can be arranged into a hierarchy of systems moving from less important to more important.  The characteristics of open systems explain many phenomena, we observe in organizations. o Why do organizations resist change?  A desire to preserve the character of the system: the steady state. o Why does plan “A” fail & fail again then succeed?  Equifinality o Why do organizations become increasingly bureaucratic & complex?  Differentiation, with its attendant integration & coordination. o Why does business go bankrupt?  Inability to create negative entropy. Decision making under
  • 17. o Certainty,  People are sure about what will happen when they make a decision.  The information available is reliable, & the cause & effect relationships are known. o Uncertainty  Information available is meagre.  Reliability of data is not certain.  Moreover one does not know the impact of different variables. o Risk  Information is incomplete.  To arrive at a decision, one may use an estimate of objective probability example: mathematical models.  Or use subjective probability, based on judgment & experience.  It is important to know the size & nature of the risk involved. DECISION MAKING TYPES  Structured / unstructured decisions o Problems are structured or unstructured
  • 18.  Structured problems are routine hence decision- making is simple. No discretion is necessary in decision making;  Unstructured problems are complex hence decision- making is more complex. All variables need to be considered. Senior management team makes this type of decisions.  Programmable / non-programmable o Programmed decision is applied to structured or routine problems. o Decision-making is by precedent. o Non-programmed decisions are used for unstructured, novel, & ill-defined situations of non-recurring nature. o Most decisions are neither completely programmed OR nor completely programmed; they are a combination of both.  Classical & Administrative Models o In administrating model, people attempting to reach the goal do so by having a clear understanding of alternatives courses by which goal can be reached under existing circumstances & limitations. They must have the information & the ability to analyze & evaluate the alternatives in light of the goal sought. They must have a desire to come to the best solution by selecting the alternative that most effectively satisfies goal achievement o In classical approach, it is difficult to rely on precedent to operate future. Moreover it is difficult to recognize all the
  • 19. alternatives that might be followed to reach a goal; this is particularly true when decision making involves opportunities to do something that have not been done before. In most cases not all alternatives can be analyzed. DECISION MAKING STYLES  Autocratic o Decision taken by seniors. Seniors say, & subordinate obey o No involvement of employees o Good strategy, if subordinates are not competent, or if the environment is highly competitive o Employees obey the order out of fear. o Employees will only do what they have been told.  Participative o Decision is taken by involving all the concerned employees. o The best alternative is selected.
  • 20. o Employees do not resist, for they have taken the decision in consensus  Consultative o The seniors invite suggestions from the subordinates, but there is no guarantee that the suggestion given by subordinates will be implemented. Decision Making Characteristics f the term Decision-Making:  Selection of a course of action  From among alternatives  It is the core of planning Rationality in decision-making  A decision to be effective has to be rational.  But decisions are pertaining to future, which is unpredictable
  • 21.  So selecting an alternative to reach the goal is difficult in terms of rationality  Moreover all alternatives cannot be analysed  So limitations of time / information / uncertainty limit rationality in decision-making  Rationality also get bound by likes & dislikes, playing it safe, or picking up a course of action that is satisfactory or good enough.  Hence best decision are taken within the limits of rationality & in the light of size & nature of risk involved. Development of alternatives & the limiting factor:  First step in decision making is developing alternatives  Ability to develop alternatives is as important as selecting alternatives  The constraint explained above limit the choice of selecting decision. One must be aware of these limiting factors. Evaluations of alternatives:  Once appropriate alternatives are found, the next step is evaluating them, & selecting the one that will best contribute to the goal.  Following factors should be considered in evaluating of alternatives o Quantitative / Qualitative factors:  In comparing alternatives sometimes numbers become easy [quantitative]
  • 22.  While comparing, we cannot also forget the qualitative aspects. Do not ignore the intangible factors. Try & give them quantitative dimension o Marginal analysis  It is a technique of comparing additional revenues arising from additional costs  If our objective is maximization of profits, then this factor cannot be ignored o Cost effective analysis  It seeks the best ratio of benefits. It is a variation of marginal analysis Selecting an alternative:  There are three approaches o Experience  Reliance on past experience. Carefully analyse the experience, rather than blindly following it.  But this should not be the exclusive method. o Experimentation  Taking risk, & seeing what happens.
  • 23.  But it is important to take calculated risk, & not blind risk o Research & analysis  Studying the cause & effect Types of Decisions:  Programmed o Decisions made by precedent o No choice. o Requires objective judgments o Made at lower level  Non-programmed o Requires subjective judgments o Made at senior level Decision making under Certainty, Uncertainty, & Risk taking  In certainty, outcome is predictable. Data are available. Cause & effect relationship is known  In uncertainty, outcome is unknown. Data is limited. No help from past experience  In risk, information is available, but it is incomplete. One estimates the probabilities of the outcome.
  • 24.  All decisions are combination of the above three types. The proportion may vary. Creativity & Innovation:  Creativity means the capability to develop new ideas. Gives breakthrough benefits  Innovation means continuous improvement in the same idea. It gives marginal benefits  The process of creativity as follows: o Unconscious scanning  Involves absorption of problem.  Problem is vague o Intuition  Thinking through problem  Based on gut level o Insight  Comes, when the thoughts are not focussed on problem. Comes as lightening. Lasts for a short period of time o Logical formulation  Insights need to be tested through logic & experiments. Brainstorming  A technique for facilitating creativity.  The purpose is to find out new & unusual solution to the problem.
  • 25.  Multiplication of ideas is sought  Rules of brainstorming are: o No ideas to be criticised. o The more radical ideas are, the better o The quantity of idea production is emphasised o The improvement of ideas by others is encouraged.  Acceptance of idea is greater; for it is contributed by the group Limitations of traditional group discussion:  Group members may pursue an idea to the exclusion of other alternatives  Fear of being ridiculed  Lower level of people may be inhibited in expressing their views  Pressure to conform  Need of getting along with others, than the need for exploring creative idea.  Pressure to take decision Characteristics of a creative manager:  Inquisitive  Not satisfied by status quo  They see themselves as different  Do not stick to norms
  • 26.  It is not a substitute for judgment THE NATURE OF ORGANIZING, ENTREPRENEURING, & RE- ENGINEERING ORGANIZATION:  A formalized, intentional structure of roles or positions
  • 27. Organizational Roles:  A role to be effective should have: o Verifiable goals o List of activities to be performed
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