MG8591-

PRINCIPLES OF
MANAGEMENT

1–1
 UNIT

1
OVERVIEW OF
MANAGEMENT

1–2
What Is Management?
• Managerial Concerns
 Efficiency
 “Doing things right”
– Getting the most output for
the least inputs
 Effectiveness
 “Doing the right things”
– Attaining organizational goals

1–3
What Is Management?

• Management involves coordinating and overseeing the

work activities of others so that their activities are
completed efficiently and effectively.

1–4
Exhibit 1–3 Effectiveness and Efficiency in
Management

1–5
Who Are Managers?
• Manager
 Someone who coordinates and oversees the work of other
people so that organizational goals can be accomplished.

1–6
Classifying Managers
• First-line Managers
 Individuals who manage the work of non-managerial employees.
• Middle Managers
 Individuals who manage the work of first-line managers.
• Top Managers
 Individuals who are responsible for making organization-wide
decisions and establishing plans and goals that affect the
entire organization.

1–7
Managerial Levels

1–8
What Managers Do?
•Three Approaches
Functions they perform.
Roles they play.
Skills they need.

1–9
Functions of Management
Planning

Defining goals, establishing strategies

to achieve goals, developing plans to
integrate and coordinate activities.
Organizing

Arranging and structuring

work to accomplish
organizational goals.
Leading
Involves motivating subordinates,
influencing individuals or teams as
they work, selecting the most effective
communication channels
Controlling

Monitoring,
comparing, and
correcting work.
What Managers Do (Mintzberg)

•Actions
thoughtful thinking
practical doing

1–15
 Management Roles
Interpersonal roles

Leader
Figurehead

Negotiator Managerial Monitor

Resource roles
Allocator
Disturbance
handler Spokesperson
Entrepreneur Informational roles
Decisional roles
Interpersonal Roles

• Roles that involve interacting with other people inside and

outside the organization

• Interpersonal roles:
 Figureheads: Greet visitors, Represent the company at
community events

 Leader: Influence, motivate, and direct others as well as

strategize, plan, organize, control, and develop
Informational Roles

•Collecting, Processing
•Roles: Monitor, and
spokesperson
 Decisional Roles
• Whereas interpersonal roles deal with people and informational roles
deal with knowledge, decisional roles deal with action

• Decisional roles:
 Entrepreneur: Managers must make sure their organizations innovate,
change, develop, and adopt
 Disturbance handler: Addressing unanticipated problems as they arise
and resolving them.
 Resource allocator: How best to allocate resources
 Negotiator: Negotiation is continual for managers
•interpersonal roles deal with people

•informational roles deal with knowledge,

•decisional roles deal with action

1–20
1–21
What Is An Organization?
• An Organization Defined
 A deliberate arrangement of people to accomplish some specific
purpose (that individuals independently could not accomplish
alone).
• Common Characteristics of Organizations
 Have a distinct purpose (goal)
 Composed of people
 Have a deliberate structure

1–22
Exhibit 1–9 Characteristics of Organizations

1–23
What Managers Do?
• Skills Managers Need
Technical skills
 Knowledge and proficiency in a specific field
Human skills
 The ability to work well with other people
Conceptual skills
 The ability to think and conceptualize about abstract and
complex situations concerning the organization

1–24
Skills Needed at Different Management Levels

1–25
How The Manager’s Job Is Changing

• The Increasing Importance of Customers

 Customers: the reason that organizations exist
 Managing customer relationships is the responsibility of all managers and
employees.
 Consistent high quality customer service is essential for survival.

• Innovation
 Doing things differently, and taking risks
 Managers should encourage employees to be aware of and
act on opportunities for innovation.

1–26
Why Study Management?
• The Value of Studying Management
 The universality of management
 Good management is needed in all organizations.

 The reality of work

 Employees either manage or are managed.

 Rewards and challenges of being a manager

 Management offers challenging, exciting and creative opportunities for
meaningful and fulfilling work.
 Successful managers receive significant monetary rewards for their efforts.

1–27
Universal Need for Management

1–28
1–29
1–30
Principles of Scientific Management
• Replacing Rule of Thumb with science
• Harmony, not discord
• Co-operation, not individualism
• Maximum output, in place of restricted output
• The development of each man to his greatest
efficiency.

1–31
Management
as
or
???
Management as an Art
• Art refers to creative skills and talent which
people require to conduct certain activities
effectively.

• Art is an Inborn talent. However it can be

refined through Learning and Practice.
Management is an Art due to the following
reasons:
1. Intelligence 2. Initiative

3. Innovative
4. Individual Approach

5. Application & Dedication

6. Result Oriented
 Comparison :
Management as

As An art As a Science

• Based on Practice and • Based on Experimentation.

creativity.
• It is a systematized body of
• It is a theoretical body of knowledge.
knowledge.
• Has Universal Application.
• Has Personalized Application.
II. Modern Operational Management Theory
14 Principles of Henri Fayol
 DIVISION OF WORK OR SPECIALIZATION
 AUTHORITY AND RESPONSIBILITY
 DISCIPLINE
 UNITY OF COMMAND
 UNITY OF DIRECTION
 SUBORDINATION OF INDIVIDUAL TO GENERAL
 REMUNERATION
 CENTRALIZATION
 LINE OF COMMAND/SCALAR CHAIN
 ORDER
 EQUITY
 STABILITY OF TENURE
 INITIATIVE
 ESPRIT DE CORPS
 1. DIVISION OF WORK or SPECIALIZATION

Division of work makes a man specialist. The reason is that

division of work helps to specialize in an activity which increases the
output with perfection. It also avoids wastage of time. Division can be
applied to both technical and managerial kind of work.
 Authority & Responsibility.

 Managers must be able to give orders. Authority

gives them this right. Note that responsibility arises
wherever authority is exercised.
 Discipline.
 Employees must obey and respect the rules that govern the
organization.
 Unity of command.

 Every employee should receive orders from only one

superior.
 Unity of direction.

 Each group of
organizational activities
that have the same
objective should be
directed by one manager
using one plan.
Subordination of individual
• The individual should
subordinate self-
interest to the general
good. It is incumbent
upon management to
reduce conflict between
the individual and the
general well being
wherever possible.
 Remuneration

 Workers must be paid a fair wage

for their services.
 Means the wages and salaries paid to
employee. It should be fair & must be
paid on time.
 It satisfy both employee & employer
 It should be decided on-Work allotted.
 cost of living.
  CENTRALIZATION

 Fayol thought centralization of authority to be desirable,

at least for overall control. Certainly, both formulation of
policy and the generation of basic rules and procedures
ought to be centralized
 Scalar chain

 The line of authority from

top management to the lowest
ranks represents the scalar
chain. Communications
should follow this chain.
 Order

 People and materials should

be in the right place at the
right time.
 Equity

 Managers should be kind

and fair to their
subordinates.
 Stability of tenure of personnel

 High employee turnover is inefficient. Management should

provide orderly personnel planning and ensure that
replacements are available to fill vacancies.
Initiative.


The power of

thinking out,
proposing and
executing.
Management
should encourage
employees to
originate and carry
out plans.
 Esprit de corps

 It means that create a team

spirit or union is strength.
 Developed an atmosphere of
mutual trust and
understanding.
 Create a sense of belonging
employees
 It bring a loyalty, dedication
and commitment to the group.
Behavioral theory
Organizational Behavior
• Human behavior in organizations is complex.
• The field of organizational behavior draws from a broad,
interdisciplinary base of psychology, sociology,
anthropology, economics, and medicine.
• There are two theories on how employees behave:

2 - 54
Behavioral Theory on How Employees
Behave Toward Work

Theory X Assumptions:
Employees dislike work.
Employees are irresponsible.
Employees lack ambition.
Employees resist change.
Another Theory on How Employees
Behave
Theory Y Assumptions:
Employees are willing to work.
Employees are self directed.
They accept responsibility.
Employees are creative.
They are self-controlled.
Difference between
Administration and
Management

1–57
 Objectives
Management Administration
• Stated as broad strategic • Stated in general terms
aims and reviewed or changed
infrequently
 Success Criteria
Management Administration
• Performance mostly • Mistake avoiding
measurable • Performance difficult to
measure
 Ressource Use
Management Administration
• Primary task • Secondary task
 Decision Making
Management Administration
• Many decisions • Few decisions
• Decisions affect few • Decisions affect many
• Decisions must be made • Decisions take time to be
quickly made
 BUSINESS
ORGANIZATION
 BUSINESS
•A business (also called a company,
enterprise or firm) is alegally recognized
organization designed toprovide goods and/
or services to consumers.

1–63
Forms of Business Organization

• sole proprietorship or sole trader

• partnership
• corporation
• share of stock
• board of directors
• dividends

Slide 64
Sole Proprietorship/ sole trader

It is a type of business entity which is owned

and run by one individual
Advantages of a Sole Proprietorship

• Easy to get established

• Full control over all business decisions
• Owners keep all profit
• Flexibility
 Disadvantages of Sole proprietorships

• It can be difficult to raise money for the

business.
• Responsible for every aspect of the business
• Unlimited liability
– Personally liable for business debts
• Limited skills and knowledge
Partnership
a business owned by two or more people
Disadvantages of a partnership:

Responsibilities, profits, and losses are shared

can be held liable for errors of partners
unlimited liability for business expenses
responsible for all money or services owned.
business income is taxed as personal income
Advantages of a partnership :

easy to establish
multiple sources of capital
risks are spread among partners

Slide 70
Corporation

a business that has the legal rights of a person

but is independent of its owners
 Organization & the
environmental factors

1–72
External and Internal Environment

1–73
The External Environment

3–74
 Internal & External Environment classification:
Internal Environment
1.Resources
2.Capabilities
3.Culture
External Environment:
1.specific environment
a. Customers b. Suppliers
c. Competitors d. Pressure Groups
2. General Environment
a. Economic conditions b. Political/Legal Conditions
c. Socio-cultural Conditions d. Demographic Conditions
e. Technological Conditions f. Global conditions
 External environment
 External environment refers to force and
institutions outside organization that potentially
affect an organizations performance

 General and Specific Environment

 External environment- Specific
Environment
 Specific Environment that is directly relevant to
achievement of an org’s goal
 Customers,competitors,suppliers,pressure groups

 Economic conditions,political/legal conditions,

socio cultural conditions, demographic conditions,
technological and Global conditions
Specific Environment
Customers

Customers:customers who absorbs organizational

outputs
They represent potential uncertainty to an
organization,Their taste can change,they can
become dissatisfied with organization’s product
or service
Specific Environment Competitors:

 Competitors: Organizations cannot afford to

ignore its competitors.
Managers must be prepared to respond
to competitors policies regarding pricing new
products,services offered and other incentives it
is giving to customers
 Specific Environment-Suppliers
 Suppliers:Any party that provides input for the
business. E.g financial institutions are provider of
money, colleges are suppliers of human resources
 Managers need to have steady and and reliable flow
of inputs to meet the goals
Specific Environment- Pressure
groups
 Pressure groups: Managers must recognize the
special interest groups that attempt to influence
organization
General Environment Economic
conditions:
 Economic conditions: It includes the impact of
economic factors like Interest rates, changes in
disposable income and the stage of general
business cycle
 e.g : when consumer’s incomes fall their
confidence about job security declines,they will
postpone purchasing any thing that is not
necessary
General Environment Political/legal
conditions:
 Political/legal conditions: Federal,state and
local government influence what org can and
cannot do
 Managers must adapt their practices to the
changing expectations of the society and their
life style
General Environment Demographic
Conditions:
 Demographic Conditions: Trends in the
physical characteristics of population such as
gender,age,level of education,income,
geographical location
 Technological:It is changing the ways the org
are operating,so businesses must address this
issue and its impact on performance of org.
General Environment- Socio-
cultural Conditions
 Managers must adapt their practices to
the changing expectations of the
society in which they operate.

85
General Environment- Technological
Conditions
 The whole area of technology is radically
changing the fundamental ways that
organizations are structured and the way that
managers manage.

86
General Environment- Global
conditions
 Globalization is one of the major factors
affecting managers and organizations

87
TRENDS AND CHALLENGES OF
MANAGEMENT IN GLOBAL
SCENARIO

88
 Workforce diversity
 Changing employee expectation
 International environment
 Building organizational capabilities
 Job design & organizational structure
 Changing psycho-social system
 Technological advance
 Management of human relations
 Changes in legal environment
 Expanding globalisation
89
1.Workforce diversity
Changing the Way You Do Business

 It refers to the way in which people in a

workplace are similar & different from one
another. in addition to the characteristics
protected by law, other similarities &
differences commonly cited include background,
education, language skills, personality & work
role.

90
Advantages of Workforce diversity
 IMPROVE DECISION MAKING
 IMPROVE TEAM PERFORMANCE
 BETTER CONSUMER SERVICES
 ENHANCE COMMUNICATION SKILLS
 CREATIVITY & INNOVATION

91
2.Changing employee expectation

 The managers has then to redraw new methods

of motivation such as job design.
 Ex: motivation of workers to deliver their
contribution towards the accomplishment of
organizational goals.

92
 3.INTERNATIONAL ENVIRONMENT

The Environment which

includes all the factors
and forces which are
external to the Business
organization such as
economic, socio-cultural,
legal demographic etc.
are known as
International
environment.
93
 In simple word International Environment
means the growth and expansion of business to
a larger
extent.
i.e. global all over the world.

94
4. Building organizational
capabilities
 To acquire new skills, knowledge & to evaluate
environmental changes to evaluate business
strategies.

95
5. Job design & organizational
structure
 Design with foreign concepts ex: quality circle,
TQM etc
i. Task Approach
ii. People Approach

96
6.Changing Psycho-Social System
 Management designed to perform its work
function.
 But in future Human Participation will be
required.

97
7.Technological Advance
 New jobs will be created and many old jobs
will become redundant

98
8.Management of human relations
 New generation of workforce comprising
educated will ask for higher degree of
participation.

99
9.CHANGING IN LEGAL
ENVIRONMENT
 Increases changes in legal environment
necessary adjustments have to be made.

100
10. Expanding Globalisation

101
Strategies for
International
Business

102
International Management
 Focuses on the operations of international firms
in host countries.
 International businesses engage in transactional
across national boundaries.

103
Multinational Corporation (MNC)
 Multinational Corporations have their
headquarters in one country but operate in
many countries.

104
Orientations
 Ethnocentric Orientation – The style of the foreign
operations is based on that of the parent company.
 Polycentric Orientation – The foreign subsidiaries are given
a great deal of managerial freedom.
 Regiocentric Orientation – The foreign operations are staffed
on a regional basis.
 Geocentric Orientation – The entire organization is viewed as
an interdependent system operating in many countries.

105
Strategies
 Multinational corporations must give weightage
to two important factors
The need to make optimum economic
decisions on a global basis
Responsive to host country differences

106
In order to fulfil the above two criteria the MNCs
may opt for any of the four strategy
Worldwide integration / Globalisation
Strategy
National responsiveness strategy
Regional responsiveness strategy
Multifocal strategy

107
Forms of International Business
Exportation – Exportation of goods and services from
parent country to host country.
Licensing agreement – Licensing agreement for
producing goods in another country.
Management contracts – The company can
engage in management contracts for
operating in foreign companies.
Joint Venture and Strategic Alliances
o One form of interaction is a joint venture with the firm
in the host country.
1–108
Wholly Owned Subsidiaries
o A wholly owned subsidiary is an operation on foreign
soil that is totally owned and controlled by a company
with headquarters outside the host country.
o In wholly owned subsidiary, the production
facilities are totally owned by one company.

1–109
Challenges of Management in Global
Scenario
Language barriers
Selling and Marketing in foreign markets
Attitudes of host governments
Communication and coordination between
subsidiaries
 UNIT

2
PLANNING

1–111
What is Planning?
• Deciding in advance what to do, how to do it ,
when to do it and who has to do it.
• Planning is the pre-selection of objectives and
outlines the action before starting any business.
• Planning is decision making in advance.
• Choosing the alternatives and making the decision
is called planning.

112
Nature of Planning
• Goal oriented: Every plan must contribute in some positive way
towards the accomplishment of objectives.
• Primacy of Planning: Planning is the first of the managerial
functions
• Efficiency, Economy and Accuracy
• Co-ordination
• Limiting Factors: money, manpower etc
• Flexibility
• Planning is an intellectual process: The quality of planning
will vary according to the quality of the mind of the manager.

113
Importance of Planning
• Provides direction
• Leads to economical utilization of resources
• Reduces the risks
• Facilitates decision making
• Encourages Innovation & Creativity
• Improves morale
• Facilitates control
Planning Process
(or)
Steps in Planning

1–115
 Steps in planning
Being Aware of opportunities
Market, competition, Customers, Strengths Weakness

Establishing objectives
Where we want to be, what to achieve and when

Developing premises
In what environment ( I & E), scenarios

Determining alternative courses

How many and which are most promising

Evaluating alternative courses

In the light of objectives

Selecting a course

Formulating derivative plans

Quantifying plans by budgeting

1. Being aware of opportunities
• All managers should take look at future opportunities and
see them clearly and completely.
• They should know their strengths and weakness,
understand what problems they wish to solve and why,
and know what they expect to gain.
• Setting realistic objectives depends on
(i) About market
(ii) About expected competition
(iii) What customers wants
2. SETTING OBJECTIVES
• The second step in planning is to establish or set
objectives
• Objectives specify the expected results and indicate the
end points of
(i) What is to be done
(ii) Where the primary emphasis is to be placed
(iii) What is to be accomplished by the
strategies, policies, procedures, rules, budgets and
programs.

1–118
3. DEVELOPING PREMISES
• It is important for all the managers involved
in planning to agree on the premises.
• Forecasting is important in premising: What
kind of markets will be there? What
volume of sales? What prices? What products?
What technical developments? What cost? Etc

1–119
4. INDENTIFYING ALTERNATIVE COURSES OF
ACTION

•to search and examined alternative courses

of actions.
•The planner must usually make
preliminary examination alternative courses
to accomplish the goal.

1–120
5. EVALUATING ALTERNATIVE COURSES
• After determining alternative courses and
examining their strong and weak points, the next
step is to evaluate the alternatives.

1–121
6.SELECTING A COURSE
• Selecting an alternative is the real point of
decision making. This is the point at which the
plan is adopted.
• the manager has to decide one best alternative or several
alternative courses of action.

1–122
7.FORMULATING DERIVATIVE PLANS
•The seventh step in planning is formulating
derivative plans.
•When a decision is made next step is to
formulate a supporting plan, such as to buy
equipment, materials, hire and train workers
and develop a new product.

1–123
8. Quantifying Plans by Budgeting
• the final step in planning is to quantify them by
converting them into budgets.
• The overall budgets of an enterprise represent the sum
total of income and expenses with resulting profit.

1–124
 Types of Plans
• Long range Vs Short range

• Strategic Vs Operational

• Corporate Vs Functional

• Proactive Vs Reactive

• Standing Vs Single Use

125
 Long range Vs Short range
Long range plan Point of Short range plan
distinction
Covers many years & Meaning Covers less than one year
affects many departments and is more specific &
of an organization detail
5 yrs or more Time Up to one year

Mission ,long term goals Deals with Current operations of

and strategies organization
Top management Prepared Lower level executives
by

126
 Strategic Vs Operational
Strategic Plan Point of Operational Plan
distinction
5 years or more Time Under one year
horizon
Adapt to external Purpose Implement internal goals
environment based on
internal strengths
Top management Level Middle & lower level
involved

Primarily judgmental Basis for Exact data & Standards

planning used

127
 Corporate Vs Functional
• Corporate Plan:
– A comprehensive plan that outlines the broad
objectives of a company as a whole and develops
plans to achieve those objectives
– Focus on organizational performance

• Functional Plan:
– Is unit planning and deals with different
departments.
– Focus on departmental performance
 Proactive Vs Reactive
• Proactive Planning:
–Managers challenge the future, anticipating
future contingencies
• Reactive Planning:
–Organizations react to events as and when
they arise

129
 Standing Vs Single Use

• Standing Plans • Single Use plans

– Developed for – Developed to carry
activities that recur out a course of action
regularly over a that is not likely to
be repeated in future
period of time
• Ex:
• Ex:
– Programmes, Schedules,
– Objectives, Policies, Projects, Budgets
Procedures, Methods,
Rules
130
Types of Plans – Key Point
•Strategic Plans
Apply to the entire organization.
•Operational Plans
Specify the details of how the overall goals are
to be achieved.

7–131
Types of Plans – Key Point
• Long-Term Plans
Plans with time frames extending 5 years
• Short-Term Plans
Plans with time frames of one year or less
• Specific Plans
Plans that are clearly defined and leave no room for
interpretation
• Directional Plans
Flexible plans that set out general guidelines and
provide focus,
7–132
Types of Plans – Key Point
•Single-Use Plan
one-time plan specifically designed to
meet the need of a unique situation.
•Standing Plans
Ongoing plans that provide guidance for
activities performed repeatedly.

7–133
TYPES OF PLANS/ Hierarchy of Plans
 Mission or purposes
 Objectives or goals
 Strategies
 Policies
 Procedures
 Rules
 Programs
 Budgets
Mission or purpose
The basic purpose or function or
tasks of an enterprise or agency
or any part of it

Objectives or goals
The end towards which activity
is aimed
Strategies
The determination of the basic long term
objectives of an enterprise and the adoption of
courses of action and allocation of resources
necessary to achieve these goals

Policies
General statements or understanding that
guide or channel thinking in decision
making
1–136
Procedures
Plans that establish a required
method of handling future activities

Rules
Rules spell out specific required
actions or non actions allowing no
discretion
Programs
A complex of goals, policies, procedures, rules,
task assignments, steps to be taken, resources to
be employed, an other elements necessary to
carry out a given course of action

Budgets
A statement of expected results expressed in
numerical terms

1–138
Cascading of Objectives
Management by Objectives
(MBO)

1–140
Management by Objectives (MBO)
• Is a method whereby managers and employees
define goals for every department, project, and
person and use them to monitor subsequent
performance.

4 major activities:
1. Set goals
2.Develop action plans
3.Review progress
4.Appraise overall performance
 Step 1: Set Goals Step 2: Develop Action Plans
• Corporate Strategic Goals Action Plans
• Departmental Goals
• Individual Goals

Review Progress

Step 3:
Review
Take Corrective Progress
Action
Appraise
Performance

Step 4: Appraise Overall

Performance
 Benefits of MBO Problems with MBO
1. Improvement of management 1. Danger of inflexibility

2. Performance can be 2. An environment of poor

improved at all company employer-employee relations
levels. reduces MBO effectiveness.
3. Employees are motivated. 3. Strategic goals may be
displaced by operational goals.
4. Departmental and individual 4. Mechanistic organizations and
goals are aligned with values that discourage
company goals. participation can harm the
MBO process.
5. Too much paperwork saps
MBO energy.
Strategic Management
The set of managerial decisions and actions that
determines the long-run performance of an
organization.

144
Strategic management process
a six-step process that encompasses strategic
planning, implementation, and evaluation.

1–145
FORMATION OF CONSIDERATION
MISSION & SWOT ANALYSIS OF STRATEGIC
OBJECTIVES ALTERNATIVES

EVALUATION IMPLEMENTATION CHOICE OF

AND CONTROL STRATEGY

STRATEGIC MANAGEMENT PROCESS

1.Mission and Goals
• Mission
 a statement of the purpose of an
organization
• Major goals
 the foundation for further planning
• Secondary goals
 Are objectives to be attained that lead to superior performance.
2.SWOT(Identifying Organizational
Opportunities)

Strengths Weaknesses

Opportunities Threats

a. External Analysis
b. Internal Analysis
a. External Analysis
• Identify strategic opportunities and threats in the
operating environment.

Immediate (Industry)

Macroenvironment National

1-149
b. Internal Analysis
• Identify strengths
 Quality and quantity of resources available
 Distinctive competencies
• Identify weaknesses
 Inadequate resources
 Managerial and
organizational deficiencies

1-150
Step 4: Formulating strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors
Match organizational strengths to environmental
opportunities
Correct weaknesses and guard against threats

8–151
• Step 5: Implementing strategies
Implementation: effectively fitting organizational
structure and activities to the environment.
The environment dictates the chosen strategy; effective
strategy implementation requires an organizational
structure matched to its requirements.
• Step 6: Evaluating results
How effective have strategies been?
What adjustments, if any, are necessary?

8–152
Strategic Managers for All Levels

1-153
 LEVELS OF STRATEGIC MANAGEMENT

 Corporate-Level Managers
 Oversee development of strategies for whole organization
 CEO is principle general manager who consults with other senior
executives

 Business-Level Managers
 Responsible for business unit that provides product/service to
particular market

 Functional-Managers
 Supervise particular function/operation (e.g. marketing,
operations, accounting, human resources)
Types of Organizational Strategies

8–155
1.Corporate Strategies
• Corporate Strategies
 Top management’s overall plan for the entire organization and
its strategic business units

• Types of Corporate Strategies

 Growth: expansion into new products and markets
 Stability: maintenance of the status quo
 Renewal: examination of organizational weaknesses that are
leading to performance declines

8–156
a. Growth Strategy
 Seeking to increase the organization’s business by expansion
into new products and markets.

• Types of Growth Strategies

 Concentration
 Vertical integration
 Horizontal integration
 Diversification

8–157
a. i. Concentration
 Focusing on a primary line of business.

a. ii. Vertical Integration

attempting to gain control of inputs (become a self-
supplier).
attempting to gain control of output through control of
the distribution channel or provide customer service activities
(eliminating intermediaries).

8–158
iii. Horizontal Integration
 Combining operations with another competitor in the same
industry to increase competitive strengths and lower competition
among industry rivals.
iv. Diversification
 Expanding by combining with firms in different, but related to
field of operation

8–159
The BCG Matrix

8–160
• Renewal Strategies(re-establish)
 Developing strategies to counter organization weaknesses that
are leading to performance declines.

8–161
2.Competitive Strategies

• Competitive Strategy
 A strategy focused on how an organization will compete in
each of its SBUs (strategic business units).

8–162
DECISION MAKING
PROCESS

1–163
 Decisions and Decision Making

• Decision = choice made from available alternatives

• Decision Making = process of identifying problems

and opportunities and resolving them

164
Six Steps in Decision Making

Figure 7.4
Decision Making Steps

Step 1. Recognize Need for a Decision

Managers must first realize that a decision must be made.
Step 2. Generate Alternatives
Managers must develop feasible alternative courses of action.
If good alternatives are missed, the resulting decision is
poor.
It is hard to develop creative alternatives, so managers
need to look for new ideas.
Step 3. Evaluate Alternatives
 What are the advantages and disadvantages of each
alternative?
 Managers should specify criteria, then evaluate.
Step 4. Choose Among Alternatives
 Rank the various alternatives and make a decision
Step 5. Implement Chosen Alternative
 Managers must now carry out the alternative.

Step 6. Learn From Feedback

 Managers should consider what went right and wrong with
the decision and learn for the future.
 Without feedback, managers do not learn from experience
and will repeat the same mistake over.
CASE Study: Which is Best Cool
Drink

1–170
Step 1: Identifying the problem
Step 2: Identification of decision criteria

1) Brand
2)Taste
3)Color
4)Packaging
5)Price
Step 3: Allocation of weights to criteria
Criteria Abhi Bj Amit Too Total
Brand 9 10 10 8 37
Taste 10 8 10 10 38
Color 6 5 7 6 24
Packaging 9 8 6 5 28
Price 8 9 9 8 34

Criteria Weight
Taste 10
Brand 9
Price 8
Packaging 6
Color 4
Step 4: Development of alternatives
• Coca Cola
• Sprite
• Pepsi
• Fanta (orange)
• Lipton (ice tea)
• Tipco (fruit juice)
• Ichitan (green tea)
Step 5: Analyzing alternatives

Drink Taste Brand Price Packaging Color

Coca Cola 10 10 7 6 7
Sprite 8 9 8 7 6
Pepsi 9 10 6 8 6
Fanta (Orange) 6 7 8 8 10
Lipton (Ice Tea) 10 9 8 5 5
Tipco (Fuit Juice) 10 9 7 8 8
Ichitan (Green
Tea) 10 8 8 6 5
 Step 6: Selecting an alternative
Criteria*Weight

Drink Taste Brand Price Packaging Color Total

Coca Cola 100 90 56 36 28 310
Sprite 80 81 64 42 24 291
Pepsi 90 90 48 48 24 300
Fanta
(Orange) 60 63 64 48 40 275
Lipton (Ice
Tea) 100 81 64 30 20 295
Tipco (Fuit
Juice) 100 81 56 48 32 317

Ichitan
(Green Tea) 100 72 64 36 20 292
Step 7: Implementing the decision
Step 8: Evaluating the decision’s
effectiveness
1–179
Decision Making Process
A) Define the Problem
B) Consider Your Value:
C) List Your Options
D) Weigh the Consequences:
E) Decide and Act
It is also a powerful strategic planning tool used to
evaluate a project in business venture or in an organization
or individual requiring a decision in pursuit of an objective
CASE STUDY
• How to choose a education after +2
 FACTORS
•Marks
•Interest
•Economy
•Job opportunities
•Family Background
•No of years(3,4,5)
THREE FRIENDS
•Palani, Mani and Arun studying in a same
school
•They are average students
•Let us take a decision on their future education.
PALANI
• Likes adventure and sports
• Hails from poor family
• He had two elder brother who works in their
home town
MANI
• Mother and Father are teachers
• They desire to make his son to acquire higher
degree
• Mani is interested in vehicles and machines
ARUN

• Hails from an average family

• He is good in maths.
• He had a younger sister and it is his responsibility to
educate him.
DECIDE

•Take a decision on
all three friends by
considering the
factors and situation
given above
CASE STUDY
•TRAIN TRACK AND CHILDREN
WHAT TO DECIDE
• A group of children were playing near 2 railway tracks, one
still in use while the other disused. Only one child played
on the disused track, the rest on the operation track
WHAT TO DECIDE
• The train came and you were just beside the track
interchange.
• It was not possible to stop the train but you could
make the train change its course to the disused
track and save most of the kids
WHAT TO DECIDE
•However, that would also mean the
lone child playing in the disused track
would be sacrificed. Or would you
rather let the train go way.
Let us take a pause to think what kind
of decision we would make
WHAT TO DECIDE

•Analyze the
situation
•Thick and reflect
•Decide
•Now go ahead
WHAT TO DECIDE
Most people might choose to divert the course
of the train, and sacrifice only one child.
To save most of the children at the expense
of only one child was rational decision most
people would make morally and emotionally
WHAT TO DECIDE
•But, have you ever thought that the child
choosing to play on the disused track had in
fact made the right decision to play at a
safe place.
•Nevertheless, he had to be sacrificed
because of his ignorant friends who choose
to play in the used track which is dangerous.
WHAT TO DECIDE
• This kind of dilemma happens around us everyday.
In the office community, in politics and especially
in a democratic society the minority is often
sacrificed for the interest of the majority. No
matter how foolish or ignorant the majority are and
how farsighted and knowledgeable the minority are.
WHAT TO DECIDE
•The child who choose not to play
with the rest on the operational
track was side lined. And in the
case he was sacrificed, no one
would shed a tear for him
WHAT TO DECIDE
• To make the proper decision is not try to change
the course of the train because the kids playing on
the operational track should have known very well
that track was still in use and that they should have
run away if they heard train sirens.
WHAT TO DECIDE
•If the train was diverted, that lone
child would definitely die because he
never thought the train could make over
to that track.
•Notably that track was not in use
probably because it was not safe.
WHAT TO DECIDE
•If the train was diverted to the unused track,
we would put the lives of all passengers on
board at stake. And in your attempt to save
a few kids by sacrificing one child, you
might end up sacrificing hundreds of people
to save these few kids
WHAT TO DECIDE
•While we are all aware that life is full of
tough decisions that need to be made, we
may not realize that hasty decisions may not
always be the right one.
•Remember that What’s right is not always
popular and what’s popular isn’t always
right.
CASE STUDY: Buying a CAR

1–207
BUYING A CAR
•Price
•Model
•Options
•Style
•Fuel Efficiency

1–208
CASE STUDY: Buy a MOBILE

1–209
LAPTOP

1–211
Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3

6–212
Evaluation of Laptop Alternatives Against Weighted Criteria

6–213
 Decision-Making Approach
• Rationality
• Bounded Rationality
• Intuition

Types of Problems and Decisions

• Well-structured Decision
- programmed • Choose best
• Poorly structured Decision-Making alternative
- nonprogrammed - maximizing
Process - satisficing
• Implementing
• Evaluating
Decision-Making Conditions
• Certainty
Decision Maker Style
• Risk
• Directive
• Uncertainty
• Analytic
• Conceptual
• Behavioral
Types of Decisions

Programmed decision:
 A decision that is fairly structured or
recurs (occur again)with some
frequency (or both).
Non-programmed decision:
 A decision that is relatively
unstructured and occurs much less often
than a PROGRAMMED DECISION.
Rational Decision Making(logical)

1–216
1.Recognize the need for a decision
• Manager recognize the need for a decision in the
form of a problem or opportunity.

1–217
2.Definition of the problem
• A problem is the gap between present and the
desired state of affairs on the subject matter of the
decision.

1–218
3.Search and develop alternatives
• The alternative course of action can be developed by
collecting more information, thinking creatively,
consulting experts and undertaking research.

1–219
4.Evaluate Alternatives
• After identifying alternative courses of action, they
must be compared and evaluated. This step determines
the relative cost of each alternative.

1–220
5.Implement chose alternative
• The decision taken by the management will not serve the
purpose if it is not executed properly.

1–221
6.Learn from feedback
• Feedback is important because decision making is a
continuous and never ending process
• Feedback information is very much useful in taking the
corrective measures and in taking right decisions in the
future

1–222
Decision-Making Conditions

The decision
maker faces
conditions of:

Certainty Risk Uncertainty

Level of ambiguity and chances of making a bad decision

Lower Moderate Higher

1.Certainty:
A condition in which the
decision maker knows with
reasonable certainty what the
alternatives are and what
conditions are associated with
each alternative.
2. Risk:
A condition in which the
availability of each alternative
and its potential payoffs and
costs are all associated with
probability estimates.
9 - 224
3.Uncertainty
• A condition in which the
decision maker does not
know all the alternatives,
the risks associated with
each, or the likely
consequences of each
alternative.

9 - 225
 UNIT-3
ORGANIZING

1–226
What Is Organizing?
• Deciding how best to group
organizational activities and
resources.
•Organizing: the process by
which managers establish
working relationships among
employees to achieve goals.

11 - 227
 NATURE OF ORGANIZING:

1. Group of Persons
2. Common Objectives
5. Communication
3. Division of Work
6. Central Authority
4. Co-ordination
7. Rules & Regulations
8. Environment
Common Objectives: Every organization has a
common objectives. The common goal is the basis of
cooperation among the members.

Group of Persons: An organization is a group of

people working together for the achievement of
common objectives.
Division of Work: total task is divided into the members of the
group. Division of work is necessary not only because one
individual cannot do all the work but specialization results in
efficiency and effectiveness.

Co-ordination: The members of an organization are willing to

help each other for the achievement of desired goals.
Communication: People who form an organization
communicates with each other in order to integrate or
coordinate there efforts. People can perform together
efficiently.

Authority: In an organization, there is a central directing

authority which controls the concerted efforts of the group.
The chain of authority- responsibility relationships is known
as the chain of command.
Rules and Regulations: For the orderly and systematic
working of the members, rules and regulations are laid down
and enforced by the central authority.

Environment:
Economic,social,political and legal factors.
 PURPOSE / IMPORTANCE OF organizing:
Facilitates Administration: Achievement of the objectives of an
enterprise by providing a framework of coordination and control.
Individual goals can be coordinated towards group goals. A
properly balanced organization facilitated both management and
operation of the enterprise.

Encourages Growth & Diversification: It has enabled

organizations to grow and expand to giant sizes. It provides
flexibility for growth without losing control over various activities.
Optimum Use of New Technology: Optimum use of technology
permits optimum utilisation of human resources. Sound
organization ensures that every individual is placed on the job
for which one is best suited.

Stimulates Innovation & Creativity: It stimulates creative

thinking and initiative on the part of employees. It provides
recognition for the professional and the specialist in terms of
their achievement.
Encourages Good Human Relations: The assignment of right
jobs to right person improves job satisfaction and inter-personal
relations. Well-defined jobs and clear lines of authority and
responsibility ensure good human relations.

Ensures Continuity of Enterprise: It provides scope for the

training and development of future management.

Coordination: Division of labor, better utility of technology and

human talent helps to improve the efficiency and quality of
work.
 PROCESS:

IDENTIFICATION GROUPING OF
OF ACTIVITIES ACTIVITIES

2.

1. 3.

4.

ASSIGNMENT OF DELEGATION OF
DUTIES AUTHORITY
 Process of organizing:
1. Identification of Activities: First step is to determine the
tasks that must be performed to achieve the established
objectives. Activities and jobs are building blocks of any
organization. The activities to be performed depends upon
the objectives, nature & size of the enterprise.

2. Grouping of Activities: The various activities are the grouped

into departments or divisions according to similarity and
common purpose.
It may be grouped on various basis i.e. functions
products, territories, customers etc depending on
requirements.
3. Assignment of Duties: The assignments of activities creates
responsibility and ensures certainty of work performance. The
process should be carried down to the lowest levels.

4. Delegation of Authority: Every individual is given the

authority required to carry out the responsibility assigned to
him. Every individual must know to who are his subordinates.
 Organizational Structure
It is a framework within which an Organization
arranges it’s lines of authorities and
communications and allocates rights and duties.
 Formal and Informal Organization

Formal structure is defined as the relationships

among organizational resources as outlined by
management.

Informal structure is defined as the patterns of

relationships that develop because of the
informal activities of organization members.

9
1–242
 DEPARTMENTATION
The basis by which jobs are grouped together.
Forms (or) Types
• Departmentation by Function
• Departmentation by Geography
• Departmentation by Customer Group
• Departmentation by Product
• Departmentation by Process

1–243
 Functional/Divisional Structures
• A division is a collection of functions working
together to produce a product.

–Product structure: divisions created according to the type

of product or service.
–Geographic structure: divisions based on the area of a
country or world served.
–Market structure: divisions based on the types of
customers served.
Product Structure
 Geographic Organization
• Geographic Organization – The categorization of organizational
units by geography.

• Advantages :

 Allows for the use of local employees or salespeople.

• Disadvantages :

• Having multiple locations can be costly.

Geographic Structure
 Customer Organization
• Customer Organization – The categorization of organizational units by customers served.

• Advantages :
 Allows employees to identify with a particular customer type.

• Disadvantages :
• Possible duplication of facilities and equipment.
Market Structure
 Hybrid Organization
• Hybrid Organization – An organizational structure that uses
multiple types of departmentalization within the organization.

• A small organization may have no organization at first. As it

grows, it may organize first on one basis, then another, and
then another.

• Hybrid organizations share the same advantages and

disadvantages as the organization types being used within it.
 Line Authority
• An organizational structure in which authority originates at the
top and moves downward in a line
• It is the simplest organizational structure.
Advantages :
• It is a clear authority structure that promotes rapid decision
making.
Disadvantages :
• May force managers to perform too broad a range of duties.
• May cause the organization to become too dependent on key
employees who are capable of performing multiple duties.
Line VS Staff

1–258
 Matrix Structure
• Matrix Structure – A hybrid organizational structure in which individuals from
different functional areas are assigned to work on a specific project or task.

• Advantages :

• Employees are challenged constantly, interdepartmental cooperation

develops along with expanded managerial talent.

• Disadvantages:

• A role conflict can develop if the authority of the project manager is not
clearly delineated form that of a functional managers.
 Matrix Organization
Functional Control

Project A

Project-
based Project B
Control
Project C

Engineering Production Logistics Design

 Team Organization
Functional Control
Team Leader

Member A

Member B

Member C

Member D

Engineering Production Logistics Design

 Span of Control
The number of subordinates a manager can efficiently and effectively
direct

Concept
Wider spans of management increase organizational efficiency

Narrow Span Drawbacks

• Expense of additional layers of management
• Increased complexity of vertical communication
• Encouragement of overly tight supervision and
discouragement of employee autonomy
Contrasting Spans of Control
 Determination of Span of Control
• Direct single relationship

A SUPERVISOR

B C SUBORDINATES
• Direct group relationship
A

B C

• Cross relationship 1–265

 Factors that Determine an Effective Span
• Capacity of supervisor
• Capacity of subordinates.
• Nature of Work
• Type of Technology
• Delegation of Authority
• Clarity of plans
• Communication Techniques
• Using of objective standards
• Geographical closeness of employees
• Direction and Coordination

1–266
 Tall Structure
• Large, complex organizations often require a taller
hierarchy.
• In its simplest form, a tall structure results in
one long chain of command similar to the military.
 Flat Organizational Structure
• Flat structures have fewer management levels,
with each level controlling a broad area or group.
• Flat organizations focus on empowering
employees rather than adhering to the chain of
command.
 Centralization & Decentralization
Centralization
The degree to which decision making is concentrated at a single
point in the organization.

Decentralization
The degree to which decision making is spread
throughout the organization.
CENTRALIZATION

1–272
1–273
1–274
Advantages & Disadvantages Centralization

ADVANTAGES: DISADVANTAGES:
• Provide Power • less motivated
• Minimal extensive • Neglected functions for
controlling procedures and mid. Level
practices
• Minimize duplication of
function

1–275
Advantages & Disadvantages Decentralization

ADVANTAGES: DISADVANTAGES:
• Quicker Decisions • Loss of Control
• Motivation of Local • Duplication of Services
Managers
• Reduces workload

1–276
Delegation of
Authority
1–277
Delegation of Authority (Distributing Authority)

• Authority:
 Power that has been
legitimized by the
organization.
• Delegation:
 The process by which
managers assign a portion
of their total workload to
others.

11 - 278
 PROCESS OF DELEGATION

Define
Determining the MOTIVATION to
RESPONSIBILITY and
GOAL AUTHORITY
subordinates

Holding TRAINING to Establishing

ACCOUNTABILITY subordinates CONTROL
IMPORTANCE OF DELEGATION

Relief to top managers.

Development of managers.
Development of subordinates.
Better decision-making.
Specialization.
Job satisfaction.
 BARRIERS TO DELEGATION
Insecurity.
Lack of confidence in subordinates.
Fear of making mistakes.
Lack of initiative.
Absence of access to various resources.
WAYS TO OVERCOME BARRIERS
TO DELEGATION
Develop confidence
Communication.
Motivation.
Choose the right person for the right job.
Freedom to subordinates.
Clarity of task.
Matching the jobs with abilities of subordinates.
STAFFING
 Job Analysis
Human Resource Planning
Tasks Responsibilities Duties Recruitment
Selection
Training and
Development
Job Descriptions
Performance Appraisal

Job Compensation and Benefits

Analysis Job Specifications Safety and Health
Employee and Labor
Relations
Legal Considerations
Job Analysis for Teams
Knowledge Skills Abilities
284
 "Staffing means filling and
keeping filled, positions in
the organisation structure."

Harold Koontz
 Importance Of
Staffing Function
IMPORTANCE OF STAFFING

FILLING ORGANISATIONAL POSITIONS: Concerned with

filling of good systematic staffing.

DEVELOPING COMPETENCIES:
Right job according to right person.

RETAINING PERSONNEL:
Continuing them in the organization.
Staffing ELEMENTS
ELEMENTS OF STAFFING

Manpower planning
Job analysis
Recruitment and selection
Training and Development
Performance appraisal
SCOPE OF STAFFING

Hiring
Remuneration
Motivation
Employee maintenance
Human relations
MANPOWER PLANNING
“ Manpower planning is the process by which an organization
ensures that it has the right number and the kind of people, at
the right place, at the right time, capable of effectively and
efficiently completing those tasks that will help the organization
achieve its overall objectives”.
Features of manpower planning :
 To ensure right people at right place at
right time.
 To ensure future needs of manpower in
the light of organizational planning and
structure.
 Making the current manpower inventory
suitable for future managerial positions.
 Importance of manpower planning
 DEFINING FUTURE PERSONNEL NEED.
(Basis of recruiting and developing personnel)

COPING WITH CHANGES.

(Future changes can be cope up with
effective planning)

PROVIDING BASE FOR DEVELOPING TALENTS.

(Setting up the priorities before recruiting)

INCREASING INVESTMENT IN HUMAN RESOURCES.

(Provides the way for effective utilization of
talents)
Job analysis
“Job analysis is the process of studying and collecting
information relating to the operations and responsibilities
of a specific job. The immediate products of this analysis
are job descriptions and job specifications”.
Recruitment
Process of locating, identifying,
and attracting capable candidates
Can be for current or future needs
Critical activity for some
corporations.
What sources do we use for
recruitment
selection

Selection is the process of differentiating

between applicants
in order to identify and hire those with a
greater likelihood
of success in a job.
Sources of Recruitment
School
Placement Employee
Referrals

Internal
Searches Recruitment Voluntary
Sources Applicants

Employment
Agencies Advertisements
 Difference : Recruitment & selection

RECRUITMENT SELECTION

 To attract maximum number To choose best out of the

of candidates. available candidates.

 It creates application pool It is a rejection process

as large as possible. where few are selected.

 Techniques are not very Highly specialized techniques

intensive. are required.

 Outcome is application Outcome is the candidate who

pool. is offered job.
Recruitment & selection process
RECRUITMENT SELECTION
Advertisement Screening of
applications
Employment agencies Selection tests
On campus recruitment Interview
Deputation Checking of
references
Employee recommendations Physical examination
Labor unions Approval by
authority
Gate hiring Placement
Training & development
TRAINING :
“Training is a short term process utilizing a systematic and organized
procedure by which non managerial personnel learn technical knowledge
and skills for a definite purpose.

 DEVELOPMENT:
“Development is a long term educational process utilizing a
systematic and organized procedure by which managerial
personnel learn conceptual and theoretical knowledge for
general purpose”.
Role of training & development
 INCREASE IN EFFICIENCY

 INCREASE IN MORALE OF EMPLOYEES

 BETTER HUMAN RELATIONS

 REDUCED SUPERVISION

 INCREASED ORGANIZATIONAL VIABILITY &

FLEXIBILITY
Performance appraisal

 Major key to managing itself

 Basis of determining who is promotable to higher position
 Determines strengths and weaknesses of a manager
 Measures performance in accomplishing goals and plans
 Integral part of organization
 Recognize legitimate desire of employees for progress
 Essential for effective management
Appraisal Methods
Graphic Rating Scale
Critical Incidence method
BARS
Self Appraisal
180 Degree Appraisal
360 Degree Appraisal
Management by Objective
Balance Score Card
Conclusion
Staffing is the most vital asset with an organization,
without which it cannot move ahead in the competitive
world. It can be equated with HR management as both
have same sort of objectives. Staffing is an open system
approach. It is carried out within the enterprise but is
also linked to external environment.
 UNIT

4
DIRECTING
1–305
 Directing
• Involves motivating subordinates, influencing
individuals or teams as they work, selecting the
most effective communication channels or dealing in
any way with employee behavior issues.

1–306
www.ReadySetPresent.com

Page 307
Creativity - Defined

Creativity is the development of ideas about

products, practices, services, or procedures
that are novel and potentially useful to the
organization
What Is Creativity?
Creativity Needs:
 Skill: Learned capacity or talent to
carry out pre-determined results.

 Talent: Natural endowments of a person.

 Personality: Patterns of relatively

enduring characteristics of human
behavior.
Intellectual Skills:
Humans have intellectual skills that allow them
to have creativity . . .

Choosing Translating
Predicting Recalling
Interpreting Manipulating
 Choosing: To select from a number of
possibilities and pick by preference.

 Predicting: To state, tell about, or make

something known in advance, on the basis
of special knowledge.

 Interpreting: To explain and understand

the meaning of something and to conceive
the significance of it.
 Translating: To transform something from
one state to another.

 Recalling: To remember and bring back to

mind a previous subject or situation.

 Manipulating: To handle, manage, or use

(sometimes with skill) an object in a
process or performance.
Use Your Own Process:
With these skills we are able to . . .
 select knowledge and use it toward a
specific goal.
 interpret communication and share it.
 remember previous knowledge and use it
skillfully.
Use 1 or more of the 6 intellectual skills
to come up with a creative idea
Creativity can come in different forms . . .

 Scientific: inventions or medical cures.

 Artistic/Musical: beautiful paintings,

sculptures, or songs.

 Creative Writing: novels, short stories,

and poems.
 Innovation - Defined
Innovation is the implementation of new
ideas at the individual, group or
organizational level
ELEMENTS OF DIRECTION

Communication
Leading
Motivation
Supervision
Coordination
COMMUNICATION
 Communication and Management

• Communication
– The sharing of information between two or more
individuals or groups to reach a common
understanding.

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 Communication and Management

• Importance of Good Communication

– Increased efficiency in new technologies
– Improved quality of products and services
– Increased responsiveness to customers
– More innovation through communication
 The Communication Process

• Phases of the Communication Process:

– Transmission phase in which information is shared
by two or more people.
– Feedback phase in which a common
understanding is assured.

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The Communication Process
Most Common Way to Communicate
 The Communication Process

• Sender – person wishing to share information

with some other person
• Message – what information to communicate
• Encoding – sender translates the message into
symbols or language
• Noise – refers to anything that hampers any
stage of the communication process
 The Communication Process

• Receiver – person or group for which the

message is intended
• Medium – pathway through which an encoded
message is transmitted to a receiver
• Decoding - critical point where the receiver
interprets and tries to make sense of the
message
 Verbal & Nonverbal Communication

• Verbal Communication
– The encoding of messages into words, either written
or spoken
• Nonverbal
– The encoding of messages by means of facial
expressions, body language.

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 Communication Media

• Face-to-Face
– Has highest
information richness.
– Can take advantage of
verbal and nonverbal
signals.

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 Communication Media

• Spoken Communication Electronically

Transmitted
– Has the second highest information richness.
– Telephone conversations are information rich with
tone of voice, sender’s emphasis, and quick
feedback, but provide no visual nonverbal cues.

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 Communication Media

• Personally Addressed Written Communication

– Has a lower richness
– Personal addressing helps ensure receiver actually
reads the message—personal letters and e-mail are
common forms.

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 E-Mail Dos and Don’ts

• E-mail allows telecommuting employees to work from

home and keep in contact.

– Pay attention to spelling and treat the message like a

written letter.

16-329
 Communication Media

• Impersonal Written Communication

– Has the lowest information richness.
– Good for messages to many receivers where little or
feedback is expected (e.g., newsletters, reports)

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Communication Networks in
Groups and Teams

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 Communication
Networks in
Groups and Teams

16-332
 Technological Advances in Communication

• Internet
– Global system of computer networks that is easy to
join and is used by employees to communicate inside
and outside their companies
• World Wide Web (WWW)
– “Business district” with multimedia capabilities

16-333
 Technological Advances in Communication

• Intranets
– A company-wide system of computer networks for
information sharing by employees inside the firm.
• Advantages of intranets
– Can be used for a number of different purposes by
people who may have little expertise in computer
software and programming

16-334
 Technological Advances in Communication

• Groupware
– Computer software that enables members of groups
and teams to share information with each other and
improve communication.

16-335
 New Technologies
for Communication

Informational databases
Electronic mail systems
Voice mail systems
Fax machine systems
Cellular phone systems
 Barriers to Effective Communication

– Messages that are unclear, incomplete, difficult to

understand
– Messages with no provision for feedback
– Messages that are misunderstood
– Messages delivered through automated systems that lack
the human element

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 Movie Example: The Terminal

Is there communication
between Viktor and
Frank?
Why or why not?

16-338
FOUR BASIC DIRECTIONS
Downward Communication

Travels from superior to subordinates.

 To give specific task directives about job

instruction

 Togive information about organization

procedures and practices
 To tell subordinates about their performance

 To provide ideological-type information to

facilitate the goals
Upward Communication

Travels from subordinate to superior. The

most common purpose of this communication is
to provide feedback on how well things are
going.
It provides also the middle level managers the
opportunity to represent their subordinates to
the upper level managers.
Lateral Communication

Takes place between people in the same level

of the management hierarchy. The most
common reason for this communication flow is
to provide coordination and teamwork
Diagonal Communication

Occurs between people who are neither in the

same department nor in the same level of
management hierarchy. In this case, someone
communicate either downward or upward with
someone in another functional area.
OVERCOMING BARRIERS TO
COMMUNICATION
 Use feedback to facilitate understanding and
increase the potential for appropriate action

 Repeat message in order to provide assurance

that they are properly received
 Use multiple channels so that the accuracy of
the information may be enhanced

 Use simplified language that are easily

understandable and which eliminates the
possibility of people getting mixed-up with
meanings
MOTIVATION
“Motivation is the work a manager
performs to inspired, encourage, people
to take required action”
 Need Theory
People are motivated to obtain outcomes at work to
satisfy their needs.
1)Managers must determine what needs worker wants
satisfied.
2)Ensure that a person receives the outcomes when
performing well.
◦ Several needs theories exist.
Maslow’s Hierarchy of Needs.
Alderfer’s ERG.
 Maslow’s Hierarchy of Needs
Need Level Description Examples
Self- Realize one’s Use abilities
Actualization full potential to the fullest

Feel good Promotions

Esteem
about oneself & recognition

Social Interpersonal
Belongingness
interaction, love relations, parties

Job security,
Safety Security, stability
health insurance

Food, water, Basic pay level

Physiological
shelter to buy items

Lower level needs must be satisfied before higher needs are addressed.
 Alderfer’s ERG
Need Level Description Examples

Self-development, Worker continually

Highest

Growth
creative work improves skills

Interpersonal Good relations,

Relatedness
relations, feelings feedback

Food, water, Basic pay level

Lowest

Existence
shelter to buy items

After lower level needs satisfied, person seeks higher needs. When
unable to satisfy higher needs, lower needs motivation is raised.
 Maslow’s Hierarchy of Needs

SA
Esteem
er
ord
st
he

Love (Social)
hig
to
st
we
Lo

Safety & Security

Physiological
 Motivational Theories X & Y

SA Theory Y - a set of
assumptions of how to
Esteem manage individuals
motivated by higher order
Love (Social) needs
Theory X - a set of
Safety & Security assumptions of how to
manage individuals
Physiological motivated by lower order
needs
 Alderfer’s ERG Theory

SA Growth
Esteem

Love (Social)
Relatedness
Safety & Security
Existence
Physiological
 Herzberg’s Two-Factor Theory

Hygiene Factor - work condition related to dissatisfaction

caused by discomfort or pain
 maintenance factor

 contributes to employee’s feeling not dissatisfied

 contributes to absence of complaints

Motivation Factor - work condition related to the

satisfaction of the need for psychological growth
 job enrichment

 leads to superior performance & effort

Nature and Characteristics Motivation

 Isan internal feeling

 Motivation is related to needs
 Motivation lead to goal oriented behaviour
 Motivation can be positive or negative
Importance of Motivation

1.Puts human resources into action

Every concern requires physical, financial and

human resources to accomplish the goals.
2. Improves level of efficiency of employees

The level of a subordinate or an employee

does not only depend upon his qualifications
and abilities.
3. Leads to achievement of organizational goals

The goals of an enterprise can be achieved

4. Builds friendly relationship

Motivation is an important factor which

brings employees satisfaction.
Organizational
Culture

1–361
Definition
• The general pattern of behaviour, shared beliefs and
values that organization members have in
common.

1–362
ELEMENTS
six elements are:

Stories: The past events and people talked

about inside and outside the company.
Rituals and Routines: The daily behavior
and actions of people that signal acceptable
behavior.

1–3
63
Symbols: The visual representations of the
company including logos
Organizational Structure: This includes both
the structure defined by the
organization chart, and the unwritten lines
of power.
Control Systems: The ways that the
organization is controlled.
Power Structures: involve one or two key
senior executives, a whole group of executives,
or even a department
1–3
64
MANAGING CULTURAL
DIVERSITY
 Setting a good example
 Communicate in writing
 Training programs
 Recognize individual differences
 Differences in cultural background
 Flexible work environment
 Continuous monitoring

1–3
65
LEADERSHIP
Leadership Is…

- Process of directing the behaviour of others

toward the accomplishments of objectives.

- Is one of the important parts of direction.

LEADING IN TIMES OF CRISIS

 Stay calm
 Be visible
 Put people before business
 Tell the truth
 Know when to get back to business
Leadership
Theories

1–3
69
Behavioral Theories (LEADERSHIP
STYLES)
1.Autocratic Leadership

Under the autocratic leadership style, all decision-

making powers are centralized in the leader, as with
dictators.
The autocratic management has been successful as it
provides strong motivation to the manager. It permits
quick decision-making.
2.Participative Leadership

consists of the leader sharing the decision-

making abilities with group members by
promoting the interests of the group members
and by practicing social equality.
3.Free- rein Leadership

A person may be in a leadership position

without providing leadership, leaving the group
to fend for itself. Subordinates are given a
free hand in deciding their own policies and
methods.
4.Toxic leadership

A toxic leader is someone who has

responsibility over a group of people or an
organization.
Importance of Leadership
 Initiates action- Leader is a person who
starts the work by communicating the policies
and plans to the subordinates from where the
work actually starts.

 Motivation- He motivates the employees with

economic and non-economic rewards and
thereby gets the work from the subordinates.
 Providing guidance- Guidance here means
instructing the subordinates the way they
have to perform their work effectively and
efficiently.

 Creatingconfidence- Confidence is an
important factor which can be achieved
through expressing the work efforts to the
subordinates,
 Buildingmorale- Morale denotes willing co-
operation of the employees towards their
work and getting them into confidence and
winning their trust.

 Buildswork environment- An efficient work

environment helps in sound and stable growth.
He should treat employees on humanitarian
terms.
 Co-ordination- This synchronization can be
achieved through proper and effective co-
ordination which should be primary motive of
a leader.
 UNIT-5
CONTROLLING

1–379
Controlling
Process
 The Purpose of Control

Adapt to Limit the

environmental change accumulation of error

Control helps
the organization

Cope with organizational

Minimize costs
complexity

20 - 381
 Levels of Control
• Operational control:
 Focuses on the processes used to transform resources into
products or services.
• Financial control:
 Concerned with financial resources.
• Structural control:
 How the elements of structure are serving the intended
purposes.
• Strategic control:
 How effective are the functional strategies helping the
organization meet its goals.

20 - 382
Levels of Control

20 - 383
Who Is Responsible for Control?

• Control rests with all

managers.
• Large corporations have a
controller.
• What does a controller
do?
 Helps line managers with
their control activities.

20 - 384
Process of
controlling
1–385
Steps in the Control Process
• Establish standards.
• Measure performance.
• Compare performance against standards.
• Determine need for corrective action.
• The sub-steps:
Maintain status quo.
Correct deviation.
Change standards.

20 - 386
Steps in the Control Process

20 - 387
1. Establishing Standards
Measurable or tangible(Output Standards)
• Standards can be measured and expressed quantitatively are
called as measurable standards. They can be in form of cost,
output, expenditure, time, profit, etc.
Non-measurable or intangible(Input Standards)
• There are standards which cannot be measured quantitatively.
For example- performance of a manager, deviation of
workers, their attitudes towards a concern. These are called
as intangible standards.
2. Measuring Actual Performance
• Measurements must be accurate enough to spot deviations
or variances between what really occurs and what is most
desired.

• Without measurement, effective control is not possible.

3.Comparing Actual with Standard
• Deviation is as the gap between actual performance and
the planned targets.

• For example, if stationery charges increase by a

minor 5 to 10%, it can be called as a minor
deviation.
• On the other hand, if monthly production
decreases continuously, it is called as major
deviation.
Acceptable Range of Deviation
4.Correction of Deviation

• Taking any action necessary to correct or improve things.

There are two types of exceptions:

Problems - below standard
Opportunities - above standard
Types of Control
BUDGETARY CONTROL
The establishment of budgets, relating the
responsibilities of executives to the requirements
of a policy

1–395
Salient features:
a. Objectives: Determining the objectives
b. Activities: Determining the variety of activities
c. Plans: Drawing up a plan
d. Performance Evaluation: Laying out a system of
comparison of actual performance
e. Control Action: Ensuring that when the plans
are not achieved, corrective actions are taken

1–396
CLASSIFICATION OF BUDGETS

1–397
• Long Term Budget: prepared for periods longer than a
year ex: R&D Budget
• Short Term Budget: less than year
ex:cash budget
• Basic Budget: remains unaltered
• Current Budget: related to the current conditions
• Fixed Budget: remain unchanged
• Flexible Budget: various budgets for different levels of
activity
• Functional Budget: the individual functions in an
organization
• Master Budget: Profit & Loss Account
1–398
BUDGETARY CONTROL
TECHNIQUES

1–399
1. Revenue and Expense Budgets:
• budgets spell out plans for revenues and operating
expenses in rupee terms.

1–400
2.Time, Space, Material, and Product
Budgets:
• Many budgets are better expressed in quantities rather
than in monetary(money) terms.

1–401
3. Capital Expenditure Budgets
• capital expenditures for plant, machinery, equipment,
inventories, and other items.

1–402
4. Cash Budgets
• cash budget is simply a forecast of cash receipts

1–403
5. Variable Budget
• analysis of expense items to determine how individual
costs should vary with volume of output

1–404
6. Zero Based Budget
• By starting the budget of each package from base zero,
budgeters calculate costs

1–405
NON-BUDGETARY CONTROL
TECHNIQUES
• many traditional control devices not connected with
budgets, although some may be related to, and used with,
budgetary controls.

1–406
i) Statistical data:
• Analysing the numerical data

1–407
 ii) Break- even point analysis

• chart depicts the relationship of sales and

expenses

1–408
iii) Operational audit:
• internal audit

1–409
iv) Personal observation
• one should never overlook the importance of control
through personal observation.

1–410
v) PERT(Program (or Project)
Evaluation and Review Technique):

• one should never overlook the importance of control

through personal observation.

1–411
vi) GANTT CHART:
• a type of bar chart that illustrates a project schedule
• Gantt charts illustrate the start and finish dates of the
terminal elements and summary elements of a project.
 PRODUCTIVITY

• Productivity refers to the ratio between the output from

production processes to its input.
Typical Productivity Calculations

a) Physical Productivity
This is a ratio of the amount of product to the
resources consumed.
b) Functional Productivity
This is a ratio of the amount of the functionality
delivered to the resources consumed
c) Economic Productivity
ratio of the value of the product produced to the cost of
the resources used to produce it.
COST CONTROL

• Cost control is the measure taken by management to

assure that the cost objectives set down in the planning
stage are attained
Steps involved in designing process of
cost control system:
• Establishing norms: To exercise cost control it is
essential to establish norms, targets or parameters
• Appraisal: The actual results are compared with the set
norms.
• Corrective measures: The variances are reviewed and
remedial measures or revision of
targets, norms, standards etc., as required are taken.
Advantages of cost control
• Better utilization of resources
• To prepare for meeting a future competitive position.
• Reasonable price for the customers
• Improves the image of company for long-term benefits.
• Improve the rate of return on investment.
 PURCHASE CONTROL
• Purchase control is an element of material control.
• The advantages derived from a good and adequate system of the
purchase control are as follows:
a) Continuous availability of materials
b) Purchasing of right quantity
c) Economy in purchasing
d) Works as information centre
e) Development of business relationship
f) Finding of alternative source of supply
g) Fixing responsibilities
 MAINTENANCE CONTROL
• Maintenance department has to excercise effective cost control, to
carry out the maintenance functions in a pre-specified budget
• First line supervisors must be apprised of the cost information of
the various materials
• A monthly review of the budget provisions and expenditures
actually incurred in respect of each center/shop
• The total expenditure to be incurred can be uniformly spread over
the year
• The controllable elements of cost such as manpower cost and
material cost can be discussed
 QUALITY
CONTROL
• Quality control refers to the technical process that
gathers, examines, analyze & report the progress of the
project & conformance with the performance requirements
steps involved in quality control process are
1) Determine what parameter is to be controlled.
2) Establish its criticality
3) Establish a specification for the parameter to be
controlled
4) Produce plans for control
5) Organize resources to implement the plans
6) Install a sensor at an appropriate point
7) Collect and transmit data to a place for analysis
8) Verify the results and diagnose the cause of variance.
9) Propose remedies and decide on the action
10) Take the agreed action and check that the variance
Advantages and disadvantages
• Advantages include better products and services
• Disadvantages include needing more man power/
operations to maintain quality control
 PLANNING
OPERATIONS
• An operational planning is a subset of strategic work
plan. It describes short-term ways of achieving
milestones and explains how, or what portion of, a
strategic plan will be put into operation during a given
operational period, in the case of commercial application
 Like a strategic plan, an operational plan addresses
four questions:
• Where are we now?
• Where do we want to be?
• How do we get there?
• How do we measure our progress?
Operational plans should contain:
• clear objectives
• activities to be delivered
• quality standards
• desired outcomes
• staffing and resource requirements
• implementation timetables
• a process for monitoring progress.
References
• www.slideshare.net
• www.docstoc.com
• www.slideworld.com
• www.nptel.ac.in
• www.scribd.com
• http://opencourses.emu.edu.tr/
• http://engineeringppt.blogspot.in/
• http://www.pptsearchengine.net/
• www.4shared.com
• www.eazynotes.com
Book References & PPT materials

1. Stephen P. Robbins and Mary Coulter,

'Management', Prentice Hall of India.
2. Charles W L Hill, Steven L McShane, 'Principles of
Management', Mcgraw Hill Education
3.Hellriegel, Slocum & Jackson, ' Management - A
Competency Based Approach

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