CHAPTER 1

FUNDAMENTALS OF MANAGEMENT
Management Key Concepts
 Organizations: A group of people working together in a structured and
coordinated fashion to achieve a set of goals.
 Goal: A desired future condition that the organization seeks to achieve.
 Management: The process of using organizational resources to achieve the
organization’s goals by...
 Planning, Organizing, Leading, and Controlling

Fig1.1 Management in Organization

Meanings of management
Management - A set of activities (including planning and decision making, organizing,
leading, and controlling) directed at an organization’s resources (human, financial,
physical, and information) with the aim of achieving organizational goals in an
efficient and effective manner.
 It is the process of setting and achieving organizational objectives (goal) by
using the five basic managerial functions by acquiring and utilizing human,
financial and other resources.
 It is the process of attaining organizational goals in an effective and efficient
manner through the five basic managerial functions such as planning,
organizing, staffing, leading and controlling.

Introduction to Management 1
  Management is the process of working with and through others.

Organizational Performance
Measures how efficiently and effectively managers use resources to satisfy
customers and achieve goals.

Efficiency: A measure of how well resources are used to achieve a goal. It is

getting high out put or the same amount of output at the same amount of input
or lower input, respectively.
 Maximizing the organization’s productivity by wise utilization of
scarce resources.
 It is spending less & acquiring more by minimizing cost
 it is concerned with cost reduction
 it is doing things right
 Usually, managers must try to minimize the input of resources
to attain the same goal.
 Technical efficiency = Output quality / Input quantity

Effectiveness: A measure of the appropriateness of the goals chosen (are these

the right goals?), and the degree to which they are achieved.
 it is providing the right product for the right person or customer
 it is doing the right things at reasonable cost (efficiently)
 Determine the success of the organization b/c it is doing the right
things
 Organizations are more effective when managers choose the
correct goals and then achieve them.

 Effectiveness = Enterprise objectives/Input Quantity"

Who are managers?

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  Manager - someone whose primary responsibility is to carry out the
management process.
 Specifically, a manager is someone who plans, makes decisions, organizes,
leads, and controls human, financial, physical, and information resources.
 Managers are those who are responsible for achieving the organizational goals
in an effective and efficient manner through proper scarce resource utilization
 A good manager is the one who feel sense of responsibility, belongingness,
accountability…
 Who take initiative (innovator) for new things or discovery?
 Who effectively & efficiently brings factors of production together

Fig 1.2 Becoming a manager

Significance of management
 management is significant because the coordination of resources is impossible with
out management
 It affects the establishment and re-establishment of many economic social and
political goals of the country
 The success or failure of the organization mostly depends on the management system
 B/c it is the wise utilization of scarce resources for unlimited human wants.
To accomplish Objectives, while in actuality the members might be working in opposite
direction, to prevent this from occurring and to ensure coordination of work to
accomplish the objectives, management is needed. As 'a brain' of an organization
therefore, management gives direction for all other parts of organization.

1.3 Managerial Functions

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Managers create and maintain an internal environment, commonly called the
organization, so that others can work efficiently in it. A manager's job consists of
planning, organizing, directing, and controlling the resources of the organization. These
resources include people, jobs or positions, technology, facilities and equipment,
materials and supplies, information, and money. Managers work in a dynamic
environment and must anticipate and adapt to challenges.

The job of every manager involves what is known as the functions of management:
planning, organizing, directing, and controlling. These functions are goal-directed,
interrelated and interdependent. Planning involves devising a systematic process for
attaining the goals of the organization. It prepares the organization for the future.
Organizing involves arranging the necessary resources to carry out the plan. It is the
process of creating structure, establishing relationships, and allocating resources to
accomplish the goals of the organization. Directing involves the guiding, leading, and
overseeing of employees to achieve organizational goals. Controlling involves verifying
that actual performance matches the plan. If performance results do not match the plan,
corrective action is taken.

Fig 1.3 Functions of Management

Management Process
Managers are persons who are responsible for supervising the use of organizational
resources to achieve its goals, to do this manager at all levels in any organization perform
five basic functions:
 Planning  Directing/Leading
 Organizing  Controlling
 Staffing
Fig 1.4 Management Process

1. Planning
Planning is the process used by managers to identify and select appropriate goals
and courses of action for an organization.
3 steps to good planning:
Introduction to Management 4
 1. Which goals should be pursued?
2. How should the goal be attained?
3. How should resources be allocated?
Is the first function that all managers engage in because it lays the ground work
for all other functions.
Is the process that managers use to identify and select appropriate goals and
alternative ways of attaining them.
The planning function determines how effective and efficient the organization is
and determines the strategy of the organization.
2. Organizing
Is the process of delegating and coordination tasks and recourses to achieve
objectives.
Includes the process of identifying tasks to be accomplished.
Includes grouping of similar tasks together to create departments.
Is process of delegating authority to the job holder and making the workers
responsible and accountable for the results of their work.
In organizing, managers create the structure of working relationships between
organizational members that best allows them to work together and achieve
goals.
Staffing
Is initially the process of recruiting potential candidates for the job, reviewing
the applicant's documents and trying to match the job demand with candidates'
abilities?
Involves acquiring, developing and maintaining human resource which is needed
to attain objectives set in planning.

3Directing/leading
In leading, managers determine direction, state a clear vision for employees to
follow, and help employees understand the role the play in attaining goals.
Involves influencing and motivation employees in one or another ways to make
them implement their job assignments willingly.
Aims at getting the members of the organization to move in the direction that
will achieve its objectives.
4. Controlling:
In controlling, managers evaluate how well the organization is achieving its goals and
takes corrective action to improve performance.
Controlling managerial functions involves:
1. Setting of standard against which work progress is measured.
2. Comparing actual performance against the standard.
3. identifying and initially examining causes of deviations between the standard and
the actual performance
4. Taking corrective actions to eliminate causes of unfavorable deviations.
Generally, these five functions of management are inseparable and often performed
continuously as an interactive process. However, the planning function is considered as
Introduction to Management 5
primary function and the base for other functions by setting objectives up on which other
functions depend all the above functions are performed by all types of managers but
with different degree of considerations.
1.4 Levels of management and types of manager
Levels are Hierarchical arrangement of managerial positions in an organization.
The extent to which managers perform the functions of management - planning,
organizing, directing, and controlling - varies by level in the management hierarchy. The
term supervisor could be applied at all management levels of the organization to those
who direct the work of others. In common usage, however, the title tends to be used only
in the first level of the management hierarchy. If an organization were divided into top,
middle, and lower managerial levels, the term generally applies to the lower level.
The levels can be expressed by using pyramid shaped arrangement of an organizational
management structure.

Fig1.5 Levels of Management

Levels of management

1. Top level management (top Managers)

Top level management consists of highest rank managers of an organization with
different titles such as CEO, president, vice president; Top managers are responsible for
managing the entire organization or major parts of it. They develop and define the
organization's purpose, objectives, strategies and long term plans. Besides this they deal
with external bodies such as government. And Responsible for the performance of all
departments and have cross-departmental responsibility. They establish organizational
goals and monitor middle managers.

2. Middle level management (middle Managers)

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Middle level management consists of managers below rank of vice president but above
supervisory managers. Supervise first-line managers and they are also responsible to find
the best way to use departmental resources to achieve goals. Most common example is
Branch mangers.
The major functions of middle level management are:
 Acting as intermediary between top management and operating level
management.
 Translating long term plans to top management into medium range plans.
 Developing specific targets in their areas of responsibility
 Coordinating inputs, productivity and outputs of operating level managements.
 Achieving objectives set by top level management.

3. Operating(first level)management (first line Managers)

These are types of managers whose subordinates are non management workers or
operating employees. They are responsible for day-to-day operation. They supervise the
people performing the activities required to make the good or service the typical titles in
this level are: office manager, crew leaders' supervisor etc...........
The major functions of operating level management are:

 Planning daily and weekly activities and accomplishment based on the monthly,
quarterly, and yearly plans.
 Assigning operating employees to specific tasks.
 Issuing instructions at the work place, following up, motivating and evaluating
workers and reporting to their superiors.

To sum up, Supervisors are managers whose major functions emphasize directing and
controlling the work of employees in order to achieve the team goals. They are the only
level of management managing non-managers. Thus, most of the supervisor's time is
allocated to the functions of directing and controlling. In contrast, top managers spend
most of their time on the functions of planning and organizing. The top manager
determines the mission and sets the goals for the organization. His or her primary
function is long-range planning. Top management is accountable for the overall
management of the organization. Middle management implements top management
goals. Supervisors direct the actual work of the organization at the operating level

1.5 Managerial Roles and skills.

A. Managerial Roles
Role is an organized set of behaviors.
There are about 10 roles identified that managers undertake to accomplish management
functions (planning, Organizing, leading, and controlling). These ten roles are classified
in to three major categories:
I. Interpersonal role
II. Informational role
III. Decisional role
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To meet the many demands of performing their functions, managers assume multiple
roles. A role is an organized set of behaviors. Henry Mintzberg has identified ten roles
common to the work of all managers. The ten roles are divided into three groups:
interpersonal, informational, and decisional. The informational roles link all managerial
work together. The interpersonal roles ensure that information is provided. The decisional
roles make significant use of the information. The performance of managerial roles and
the requirements of these roles can be played at different times by the same manager and
to different degrees depending on the level and function of management. The ten roles
are described individually, but they form an integrated whole.

Fig 1.6 Managerial Roles

I. Interpersonal role
When managers play interpersonal roles, they use their human and communication
management skills as they perform the necessary management function.
It includes:
 Figure head role
 leader role
 liaison role
Figure head role Managers represent the organization or department in ceremonial
and symbolic activities. In the figurehead role, the manager represents the organization in
all matters of formality. The top level manager represents the company legally and
socially to those outside of the organization.
It is the most basic and the simplest of all managerial roles
Leader role_ Managers are assumed as leaders when they influence, initiate and
motivate the subordinates so that the subordinates achieve organizational goals. This is at
Introduction to Management 8
the heart of the manager-subordinate relationship and managerial power and pervasive
where subordinates are involved even where perhaps the relationship is not directly
interpersonal. The manager

 Defines the structures and environments within which sub-ordinates work

and are motivated.
 Oversees and questions activities to keep them alert.
 Selects, encourages, promotes and disciplines.
 Tries to balance subordinate and organizational needs for efficient
operations.

Liaison role- the liaison role refers to dealing with people out side the organization, such
as clients, government officials, customers, and suppliers, it also refers to dealing with
mangers in other departments, staff specialists, and other departments' employees in
liaison role manager seeks support from people who can affect the department's and
organization's success.
II. Informational role
When managers play informational roles they build net works of contacts for sharing
information with others. It includes:
 Monitor role
 Disseminator role
 Spokesperson role

Monitor role Managers play monitor role when they read and talk to others to receive
information. It involves seeking out, receiving and screening information. It also
involves scanning of the environment.

Disseminator role: - in this role managers share information with subordinates and
other members of the organization that is managers play disseminator role when they
send information to others with in the organization. - The manager brings external views
into his/her organization and facilitates internal information flows between subordinates
(factual or value-based).

The preferences of significant people are received and assimilated. The manager
interprets/disseminates information to subordinates e.g. policies, rules, regulations.
Values are also disseminated via conversations laced with imperatives and signs/icons
about what is regarded as important or what 'we believe in'.

There is a dilemma of delegation. Only the manager has the data for many decisions and
often in the wrong form (verbal/memory vs. paper). Sharing is time-consuming and
difficult. He/she and staff may be already overloaded. Communication consumes time.
The adage 'if you want to get things done, (it is best to do it yourself' comes to mind.
Why might this be a driver of managerial behavior (reluctance or constraints on the
ability to delegate)?

Introduction to Management 9
Spokesperson role: - managers play spokesperson role when they provide information to
people out side the organization. - the manager informs and lobbies others (external to
his/her own organizational group). Key influencers and stakeholders are kept informed of
performances, plans & policies. For outsiders, the manager is an expert in the field in
which his/her organisation operates.
III. Decisional role
When managers play decisional role they use their conceptual and decision-making
management skills.
It consists;
 Entrepreneur role
 Disturbance handler role
 Resource allocator role
 Negotiator role.
Entrepreneur Role: - Is the role of managers which focuses on innovation and initiation
of improvements by managers. It may include such activities as initiating new projects,
launch survey, test new markets etc..

Disturbance handler role: - managers play this role when dealing with problems and
changes beyond their immediate control and when they take corrective actions during
disputes or crisis situation. And it Is a generalist role i.e. taking charge when the
organization hits an iceberg unexpectedly and where there is no clear programmed
response. Disturbances may arise from staff, resources, threats or because others
make mistakes or innovation has unexpected consequences. The role involves stepping in
to calm matters, evaluate, re-allocate, support - removing the thorn -buying time.

Resource allocator role:- managers play recourse allocator role when they schedule,
request authorization and perform budgeting and programming activities. A manager
determines who in the work unit gets what recourses money, facilities, equipment and
access to manager. The manager oversees allocation of all resources (£, staff, reputation).
This involves:
1. Scheduling own time 3. Authorizing actions
2. Programming work
With an eye to the diary (scheduling) the manager implicitly sets organizational
priorities. Time and access involve opportunity costs. What fails to reach him/her, fails to
get support. The managerial task is to ensure the basic work system is in place and to
program staff overloads - what to do, by whom, what processing structures will be used.
Authorizing major decisions before implementation is a control over resource allocation.
This enables coordinative interventions e.g. authorization within a policy or budgeting
process in comparison to ad-hoc interventions. With limited time, complex issues and
staff proposals that cannot be dismissed lightly, the manager may decide on the proposer
rather than proposal. To help evaluation processes, managers develop models and plans
in their heads (they construe the relationships and signifiers in the situation). These
models/constructions encompass rules, imperatives, criteria and preferences to evaluate
proposals against. Loose, flexible and implicit plans are up-dated with new information.

Introduction to Management 10
Negotiator role- is role in which managers’ work with suppliers, distributor, and labor
unions to reach on agreements a bout the quality and price of inputs, technical and human
resource, work with other organizations to establish agreements to pool recourses to work
on joint projects.
N.B: Negotiations are an integral part of managers' job. It takes charge over important
negotiating activities with other organizations. The spokesman, figurehead and resource
allocator roles demand this.
B. Managerial Skills.
 Skill is ability to do something expertly and well.
Managerial skills are enhanced through formal training, reading, and practice.
There are three principal skills that managers get through experience an education.
These are:
 Conceptual skills
 Human skills
 Technical skills.
1. Conceptual skills
 Conceptual skill involves the ability to view the organization as a whole
and recognize its relationships to large environment or business world.
 Are ability (or mental capacity) to conceive and manipulate ideas and
abstract relation-ships.
 the ability to analyze and diagnose a situation and find the cause and effect
 are more needed by top-level managers
2. Human skills
 Human skills include the ability to understand, alter, lead, and control
the behavior of other individuals or/and groups. Human skills focus on
working with people.
 The ability to understand, alter, lead, and control people’s behavior
 Are needed uniformly at three levels of management. That is the need
for human skills at three levels of management remains fairly constant.
3. Technical skills
 The job-specific knowledge required to perform a task. Common
examples include marketing, accounting, and manufacturing.
 Are greatly needed by first line managers.
A manager's level in the organization determines the relative importance of possessing
technical, human, and conceptual skills. Top level managers need conceptual skills in
order to view the organization as a whole. Conceptual skills are used in planning and
dealing with ideas and abstractions. Supervisors need technical skills to manage their area
of specialty. All levels of management need human skills in order to interact and
communicate with other people successfully. All managers need technical, human and
conceptual skills. However, the need for these skills varies with the level of
management. Thus, technical skill deals with things, human skill concerns people, and
conceptual skill has to do with ideas.

Introduction to Management 11
Fig1.7 Skill Type Needed by Management Levels
Universality of management
Although the problems, other organizational constraints and nature of different
organizations vary widely, the functions performed by each manager are nearly the
functions performed by each manager are nearly the same. This means to successfully
attain the objectives of any organization, managers must plan, organize, staff, lead and
control. These are the basic managerial functions. Management is said to have universal
application because:
 Management is important for any organization or entity regardless of
objective(s) for which it is established to reach the stated goals or
objectives.
 Any person who holds managerial position in an organization performs
the five functions of management. That is first level, middle level, and
top level managers perform the functions.
Is Management an art, a science or a profession?
Basically management is an art, a science as well as a profession.
Management is an art as it requires the use of behavioral and judgmental skills that
cannot the quantified the way scientific information in field of chemistry, biology and
physics can be. Issues can be resolved using instinct and experience.
Requires use of: Conceptual, Communication, Interpersonal, andTime-Management
skills.

Management is science, in that it requires the use of Technical, Diagnostic, Decision-

Making skills, logics and analyses. And In addition it uses computers and quantitative
formulas to problems on hand. Problems can be solved using systematic methods.
Management is a profession because to say a given field is a profession it must fulfill the
following criteria.
 Specialized knowledge  Social responsibility
 Competent application  Self control
 Community application
So, management is a profession because it fulfils the above criteria.

Introduction to Management 12