Mekelle University

EiT-M (School of Mechanical and Industrial Engineering)

Introduction to Principles of Management

(IEng2024)

Chapter One
Introduction to Management

Aregawi B.
 Outline

 Definition of Management

 Characteristics of

Management

 Nature of Management
 Definition of Management

o Management is a universal process in all

organized social and economic activities
that’s not merely restricted to factory, shop
or office.
o It is an operative force in all complex
organizations trying to achieve some stated
objectives.
 Cont.…
Management is a technique of extracting work from
others in an integrated and coordinated manner for
realizing the specific objectives through productive
use of resources.
 Management could be defined as “a distinct ongoing
process of allocating inputs of an organization
(human and economic resources) by typical
managerial functions (planning, organizing,
directing and controlling) for the purpose of
achieving stated objectives (goods and services )
desired by its customers (environment).
Activity #1
Your Reflection on:
a. Own life management
b. Industrial management
c. Family management
Definition of Management
The more descriptive definition of management is; management is the process
of getting things done, effectively and efficiently, through and with other
people.

Efficiency
 doing the thing right for the first time.
 refers to the relationship between inputs and outputs.
 seeks to minimize resource costs.
Effectiveness
 doing the right things.
 goal attainment even it takes some unnecessary resources.
 A firm is ineffective if its goals do not provide a sustained
competitive advantage.
Characteristics of Management
Management is a distinct activity having the following salient features:
1. Economic Resource: Management is one of the factors of
production together with land, labor, material and capital that do
not ensure production by themselves so they require the catalyst of
management to produce goods and services required by the
society. Thus, management is an essential ingredient of an
organization.
2. Goal Oriented: Management is a purposeful activity. It coordinates
the efforts of workers to achieve the goals of the organization. The
success of management is measured by the extent to which the
organizational goals are achieved. It is imperative that the
organizational goals must be well-defined and properly understood
by the management at various levels.
Characteristics of Management
3. Distinct Process: Management is a distinct process consisting of
such functions as
 planning,
 organizing,
 staffing,
 directing and controlling.

4. Integrative Force: The essence of management is integration of

human and other resources to achieve the desired objectives.
Managers apply knowledge, experience and management principles
for getting the results from the workers by the use of non-human
resources.
Managers also seek to harmonize the individuals' goals with the
organizational goals for the smooth working of the organization.
Characteristics of Management
5. system of Authority: Management as a team of managers
represents a system of authority, a hierarchy of command and
control, Managers at different levels possess varying degree
of authority.
6. Multi-disciplinary Subject: Management has grown as a field
of study taking the help of so many other disciplines such as
engineering, anthropology, sociology and psychology.
For instance, productivity orientation drew its inspiration from industrial
engineering and human relations orientation from psychology.
7. Universal Application: Management is universal in character.
The principles and techniques of management are equally
applicable in the fields of business, education, military,
government and hospital.
Characteristics of Management
8. Intangible Force: Management has been called an unseen force. Its
presence is evidenced by the result of its efforts – orderliness, informed
employees, buoyant spirit and adequate work output. Thus, feeling of
management is result-oriented.
9. Results through Others: The managers cannot do everything themselves.
They must have the necessary ability and skills to get work accomplished
through the efforts of others. They must motivate the subordinates for the
accomplishment of the tasks assigned to them.
10. A Science and an Art: Management has an organized body of knowledge
consisting of well defined concepts, principles and techniques which have
wide applications. So it is treated as a science.
The application of these concepts, principles and techniques requires
specialized knowledge and skills on the part of the manager. Since the
skills acquired by a manager are his personal possession, management is
viewed as an art.
Nature of Management
Management is a science as well as an art:
The early management was more of an art but now it has more proximity to
the principle of science. It is said that “management is the oldest of arts and
the youngest of sciences”.
Features that makes Features that makes
management an art. management an science.

 Creative  Systematic decision making

 Individual approach  Universal management
 Application and process
dedication  Situational output
 Initiative and  Universally accepted
 Intelligence management.
Nature of Management
Management is a profession:
 Management is gradually becoming a profession because there
are established principles of management which are being
applied in practice.
Management is a process:
 Management is a process, function or activity. This process
continues till the objectives set by administration are actually
achieved.
Management is a group activity:
 Management comes into existence only when there is an group
activity towards a common objective. Management is always
concerned with group efforts and not individual efforts.
Nature of Management
Management involves decision-making:
 Management implies making decisions regarding the
organization and operation of business in its different
dimensions.
Management implies good leadership:
 A manager must have the ability to lead and get the desired
course of action from the subordinates.
Nature of Management
Management is a system of authority:
 Authority means power to make others act in a predetermined
manner. Management formalizes a standard set of rules and
procedure to be followed by the subordinates and ensures their
compliance with the rules and regulations.
Management is dynamic and not static:
 The principles of management are dynamic and not static. It
has to adopt itself according to social changes.
Significance of Management

Management is essential wherever group efforts are

required to be directed towards achievement of common
goals.
The following points further highlight the significance of
management:
 Achievements of group goals - It brings
the human and material resources together and motivates the
people for the achievement of the goals of the organization.
 Optimum utilization of resources - The
available resources of production are put to use in such a way
that all sort of wastage and inefficiencies are reduced to a
minimum.
Significance of Management
 Minimization of cost - A study of the principles
of management helps in knowing certain techniques
used for reducing costs.
 Organization of Change and growth -
Changes in business environment create uncertainties
and risk and also produce opportunities for growth so,
management helps organization to change and adjust
itself in the ever changing environment.
 Efficient and smooth running of
business - Management ensures efficient and
smooth running of business, through better planning,
sound organization and effective control of the various
factors of production.
Significance of Management
 Higher profits - Management by decreasing
costs increases its profits and thus provides
opportunities for future growth and
development.
 Provide innovation - Management gives new
ideas, imagination and visions to an enterprise.
 Social benefits - It improves the standard of
living of the people through higher production
and more efficient use of scarce resources.
 Sound organization structure - Management
establishes proper organization structure and
avoids conflict between the superiors and
subordinates.
 Chapter-Two

Evolution of
Management Thoughts
Evolution of Management Thoughts
Ever since human beings started living together in groups,

techniques of organization and management were evolved.

The Egyptian pyramids, the Chinese Civil Service, the Roman

Catholic Church, the military organizations and the Great Wall of

China, for instance, are tangible evidence that projects of

tremendous scope, employing tens of thousands of people, were

undertaken well before the modern times.

Evolution of Management …
Regardless of what managers were called at that time, He / She
had to plan what was to be done, organize people and material to
do it, lead and direct the workers, and impose some controls to
ensure that everything was done as planned.

However, two pre- 20th century events played significant roles in

promoting the study of management.
 Adam Smith’s contribution in the field of management and the
influence of Industrial Revolution in management practice.
Adam Smith’s name is typically cited in field of economics for
his contribution to classical economic doctrine, but his
contribution in Wealth of Nations (1776) outlined the economic
advantage that organization and society can gain from the
division of labor.

Smith stated that division of labor increased productivity by

increasing each worker’s skill and dexterity, by saving time
lost in changing tasks, and by creating labor-saving
inventions and machinery.
Industrial Revolution
Industrialrevolution was a period of transition from manual
production methods to new manufacturing processes in the late 18th
century. .
The major contribution of the industrial revolution was the
substitution of machine power for human power, made it more
economical to manufacture goods in factories.
The advent of machine power, mass production, reduced
transportation costs, followed a rapid expansion of the railroads and
lack of governmental regulation also fostered the development of
big organization.
Then a formal theory to guide managers in running their
organization was needed.
Industrial Revolution

During industrial revolution, management was based on two

main propositions, which are:
Firstly, labour was perceived as a bunch of lethargic people who
work only when controlled and supervised.
Secondly, labour was the only factor that could bring reduction
in costs. Therefore, all the efforts were made to reduce labour
costs and increase production.
Characteristics of Industrial Revolution
 Specialization - each worker was allotted a particular job with the purpose of
achieving specialization that led to assembly line production.

 Standardization - identical products were produced in huge quantities led to the

same level of quality across organizations, which helped customers in acquiring the
same type of products from anywhere in the market.

 Synchronization - blending of all different elements at one place where all the parts
were assembled to produce the final output in the assembly line.

 Maximization - increasing the level of production by optimizing capital, time, and

labour.

 Centralization - All policy-related decisions were taken by the top management,

while operational decisions were decentralized.
Forces Behind Management Thoughts
The concept of management is not new and has emerged as a result of a complex evolutionary
process. It has been practiced for many years right from the time of the Sumerians, Babylonians,
and Romans.
 However, it gained importance during the industrial revolution era and was backed by many
forces.
Political Economic
Force Forces Force
Behind
Managemen
t Thoughts

Social
Force
Forces Behind Management Thoughts

1. Political Forces: Management thoughts have been shaped by the

political forces manifested through the administration of political
institutions and government agencies.

The important political forces includes the political assumptions

with respect to property rights, contractual rights, concepts of
justice, and attitudes towards governmental control versus laissez-
faire.

Political pressures also define the interrelated rights of consumers,

suppliers, labour, owners, creditors and different segments of
public.
Forces Behind Management Thoughts
2. Social Forces: These forces can be in the form of social norms
arising from the values and beliefs of people in a society. These
forces help in the formation of social contracts, wherein no
particular sets are mutually understood and people interact with each
other on the basis of these norms. Similarly, social contracts are also
formed between organizations and their labour, creditors, investors,
and customers.

These social contracts defined relationships, responsibilities and

liabilities that influence the development of management thoughts.
3. Economic Forces: These forces are responsible for the formation of base market

economy and other concepts, such as private ownership of property, economic

freedom, and competitive markets.

 These forces determine the scarcity, transformation and distribution of goods

and services in a society.

 Every social institution competes for a limited amount of human, financial,

physical and information resources.

 This competition over scarce resources allocates them to their most

profitable use and is the motivator of technological innovation by which

resource availability can be maximized.

 Approaches to Management
 The industrial revolution laid the foundation for various management
approaches.
 Each approach has attempted to explain the concept of management from
different aspects.
 The two most common approaches to management are listed in following
figure.

Classical Approach

Approaches to
Management

Modern Approach
Classical / Traditional Approach
The classical approach to management was
developed in the period between the 1880s to the
1920s. In this approach, it was recommended that
production can be increased by improving the
efficiency of an organization.
Thus, managers must focus on determining the best
ways to perform jobs.
 The main areas
of classical-
approach to
management
Scientific Management Approach
The scientific management approach was developed by Frederick Winslow

Taylor (1856-1915), who was an American engineer. Thus, scientific

management is also popular by the name of Taylorism.

He conducted a series of experiments in three organizations that greatly

influenced management thoughts.

He defined scientific management as,” Scientific management is concerned

with knowing exactly what you want men to do and then see in that they do it

in the best and cheapest way”.

Taylors contribution on Scientific Management Approach
Time and motion study - It is a technique of scientific management that was
developed to define employee productivity standards mostly appropriate for
repetitive jobs .

In this technique, a complex job is first divided into a series of simple tasks. After
that, the way these tasks are performed is observed to determine and eliminate waste
motions.

Differential piece rate plan - This plan was developed by Taylor on the assumption
that all the workers have different capabilities and must be paid accordingly. This
plan is also based on an assumption that the production system is based on piece
rates.

Workers who exceed the standard time are given higher piece rates as wages and
lower piece rates are given to those workers who do not meet the standard.
Taylors contribution on Scientific Management Approach

Supervision - Taylor suggested that work in an organization must

be planned and assigned to the workers by foremen on the basis
of workers’ specialty and supervise the performance of workers.

Scientific recruitment and training - Taylor laid emphasis on

training workers and developing their skills so that they can
efficiently perform more than one type of job.

Friendly cooperation between management and workers

–Taylor believed that both management and workers have one
common goal, i.e. increase in production. Therefore, both
management and workers must work together in harmony to
achieve the common goal.
Elements and Tools of Scientific Management
The features of various experiments conducted by Taylor are as
follows:

a). Separation of Planning and doing: Taylor emphasized the

separation of planning aspects from actual doing of the work. The
planning should be left to the supervisor and the workers should
emphasize on operational work.

b). Functional Foremanship: Separation of planning from doing

resulted into development of supervision system that could take
planning work adequately besides keeping supervision on workers.
Elements and Tools of Scientific Management
c). Job Analysis: It is undertaken to find out the best way of doing things (less
time and cost).

d). Standardization: Standardization should be maintained in respect of

instruments and tools, period of work, amount of work, working conditions,
cost of production etc.

e). Scientific Selection and Training of Workers: Taylor has suggested that the
workers should be selected on scientific basis taking into account their
education, work experience, aptitudes, physical strength etc.

f). Financial Incentives: Financial incentives can motivate workers to put in

their maximum efforts.
 Criticism of Scientific Management:
 Scientific management is production oriented as it concentrates too
much on the technical aspects of work and undermines the human
factors in industry. It resulted in monotony of job, loss of initiative,
over speeding workers, wage reductions etc.
 Training was haphazard at best, with only minimal use of basic
apprentice system.
 Tasks were accomplished by general rule of thumb without standard
times, methods or motion.
 Managers worked side-by-side with the workers, often ignoring such
basic managerial function of planning and organizing.
Administrative Approach to Management

The general administrative theory writer who developed general

theories of what managers do and what constitutes good management
practice is:
 Henri Fayol (France) who wrote Fourteen Principles of
Management: Fundamental or universal principles of
management practice

The advocates of administrative management approach or

management process school perceive management as a process
involving certain functions such as planning, organizing, directing
and controlling.
 Fayol’s principles of management
1. Division of work: Division of work or specialization alone can give
maximum productivity and efficiency.

2. Authority and Responsibility: The right to give order is called authority.

The obligation to accomplish is called responsibility. Authority and
Responsibility are the two sides of the management coin. They are
complementary and mutually interdependent.

3. Discipline: The objectives, rules and regulations, the policies and

procedures must be honored by each member of an organization. There
must be clear and fair agreement on the rules and objectives, on the
policies and procedures.
Fayol’s principles of management
4. Unity of Command: In order to avoid any possible confusion and conflict, each
member of an organization must receive orders and instructions only from one
superior (boss).

5. Unity of Direction: All members of an organization must work together to

accomplish common objectives.

6. Emphasis on Subordination of Personal Interest to General or Common Interest:

This is also called principle of co-operation. General or common interest must
be supreme in any joint enterprise.

7. Remuneration: Fair pay with non-financial rewards can act as the best incentive
or motivator for good performance. Exploitation of employees in any manner
must be eliminated.
Fayol’s principles of management
8. Centralization: There must be a good balance between
centralization and decentralization of authority and power.

9. Scalar Chain: The unity of command brings about a chain or

hierarchy of command linking all members of the organization
from the top to the bottom. Scalar denotes steps.

10. Order: Order or system alone can create a sound organization and
efficient management.

11. Equity: An organization consists of a group of people involved in

joint effort. Without equity (justice), we cannot have sustained
and adequate joint collaboration.
Fayol’s principles of management
12. Stability of Tenure: A person needs time to adjust himself with the
new work and demonstrate efficiency in due course. Hence,
employees and managers must have job security.

13. Esprit of Co-operation: Union is strength & unity demands co-

operation. Pride, loyalty & sense of belonging are responsible for
good performance.

14. Initiative: Creative thinking and capacity to take initiative can give
us sound managerial planning and execution of predetermined
plans.
 Criticism of Fayol’s work
o He did not pay adequate attention to workers.
o The fundamentalists considered their principles to be universal
in nature. But many of the principles have failed to deliver the
desired results in certain situations.
o There is a vagueness and superficiality about some of his terms
and definition.
o His theory is said to be too formal. There is no single
classification of managerial functions acceptable to all the
functional theorists. There is also lack of unanimity about the
various terms such as management, administration etc.
Dissimilarity between contribution of Taylor and Fayol
Basis of Taylor Fayol
comparison
1. Perspective Shop floor level or the job of a Top Management
supervisor

2. Focus Improving productivity Improving overall

through work simplification administration through
and standardization general principles

3. Personality Scientists Practitioner

4. Results Scientific observation and Universal truths
measurement developed from personal
experiences

5. Major Science of industrial A systematic theory of

contribution management management
Bureaucracy

Max Weber (1864-1920), a German sociologist contributed his

views on bureaucracy to the management thought.

The main characteristics of Bureaucratic Management are:

 Rules—formal guidelines for the behavior of employees on the
job,
 Impersonality—employees are evaluated according to rules
and objective data
 Division of Labor—splitting work into specialized positions.
Bureaucracy
It was Weber’s contention that there are three types of legitimate
authority which are as follows:

1. Rational-legal authority: Obedience is owed to a legally

established position or rank within the hierarchy of a business,
military unit, government, and so on.

2. Traditional authority: People obey a person because he

belongs to certain class or occupies a position traditionally
recognized as possessing authority, such as a real family.

3. Charismatic authority: Obedience is based on the followers’

belief that a person has some special power or appeal.
Bureaucracy
Weber’s theory ‘bureaucracy’ recognizes rational-legal authority as the
most important type in organizations. Under traditional authority, leaders
are not chosen for their competence, a charismatic authority is too
emotional and irrational.

A bureaucratic organization which is based on rational-legal authority

displays the following features:

a). Division of Work: There is a high degree of division of work at both the
operative and administrative levels. This leads to specialization of work.

b). Rules & Regulations: rules, regulations & procedures are laid down by
the top administration
Bureaucracy

c). Hierarchy of Positions: There is a hierarchy of authority in the

organization. Each lower position is under the control of a higher one.
The bureaucratic structure is hierarchical in nature. It is like a pyramid
in which quantity of authority increases as one move up the ladder in
the organization.

d). Impersonal Conduct: There is impersonality of relationships

among the organizational members. The decisions are entirely guided
by rules and regulations.
Bureaucracy

e). Staffing: The personnel are employed by a contractual relationship

between the employee and employer. The tenure of service is

governed by the rules and regulations of the organization.

f). Technical Competence: The bureaucrats are neither elected nor

inherited, but they are appointed through selection, and the basis of

selection is their technical competence

g). Official Records: The administration of a bureaucratic organization

is supported by an efficient system of record-keeping.

 Main Features Classical Approach
 It laid emphasis on division of labour and specialization, structure,
scalar and functional processes and span of control.
 Management is viewed as a systematic network (process) of
interrelated functions. The nature and content of these functions, the
mechanics by which each function is performed and the
interrelationship between these function is the core of the classical
approach.
 It ignored the impact of external environment on the working of the
organization. Thus, it treated organization as closed system.
 Main Features Classical Approach
 On the basis of experience of practicing managers, principles are
developed.
 Functions, principles and skills of management are considered
universal. They can be applied in different situations.
 The integration of the organization is achieved through the authority
and control of the central mechanism.
 Formal education and training is emphasized for developing
managerial skills in would be managers
Merits of Classical Approach
 The classical approach offers a convenient framework for the
education and training of managers.
 It focuses attention on what managers actually do.
 This approach highlights the universal nature of
management.
 It provides scientific basis for management practice.
 It provides a starting point for researchers to verify the
validity and to improve the applicability of management
knowledge.
Shortcomings of Classical Approach
 The classical writers ignored the social, psychological and
motivational aspect of human behavior.
 Classical theory viewed organization as closed system i.e. having no
interaction with environment.
 There is positive danger in relying too much on past experiences
because a principle or technique found effective in the past may not
fit a situation of the future.
 The classical principles are mostly based on the personal experience
and limited observations of the practitioners.
Neo-classical / Modern Theory to Management
 The modern approach to management was given in the 1950s. The
approach focused mainly on employee satisfaction. According to this
approach, employees do not necessarily work for money and they like
to receive affection and respect of co-workers, which further increases
their productivity. This helps an employee to contribute more towards
the success of an organization.
 But the classical writers were neglected the human relations aspect.
 The neo-classicists focused on the human aspect of industry. They
modified the classical theory by emphasizing the fact that organization
is a social system and the human factor is the most important element.
Human Relation Approach to Management
The criticism of the Scientific and Administrative Management as
advocated by Taylor and Fayol, respectively, gave birth to Human
Relation Approach.
 The human relations approach is concerned with recognition of the
importance of human element in organizations.
 It revealed the importance of social and psychological factors in
determining worker’s productivity and satisfaction.
 It is instrumental in creating a new image of man and the work place.
The basic propositions
 The business organization is a social system.
 The employees not only have economic needs but also
psychological needs and social needs, which are required to be
served properly to motivate them.
 Employees prefer self-control and self-direction.
 Employee oriented democratic participative style of
management is more effective than mechanistic task oriented
management style.
 The informal group should be recognized and officially
supported.
However, this approach also did not go without criticism. It was
criticized that the approach laid heavy emphasis on the human side as
against the organizational needs.
Social System Approach to Management
It is developed during social science era, is closely related to Human
Relation Approach.
 Organization is a social system, a system of cultural relationships.
 Relationships exist among the external as well as internal
environment of the organization.
 Cooperation among group members is necessary for the
achievement of organizational objectives.
 For effective management, efforts should be made for establishing
harmony between the goals of the organization and the various
groups therein.
Decision Theory Approach to Management
Decision Theory is the product of management science era. The

decision theorists emphasize on rational approach to decisions, i.e.

selecting from possible alternatives a course of action or an idea.

Major contribution in this approach has come from Simon.

The manager is a decision maker and the organization is a decision

making unit. Therefore, the major problem of managing is to make

rational decision.
The main features
 Management is essentially decision-making. The members of the
organization are decision makers and problem solvers.
 Organization can be treated as a combination of various decision
centers. The level and importance of organizational members are
determined on the basis of importance of decisions which they make.
 All factors affecting decision making are subject matter of the study
of management. Thus, it covers the entire range of human activities in
organization as well as the macro conditions within which the
organization works.
Management Science Approach to Management

# Management science is an approach to management that applies

mathematical analysis to decision making.
# It involves the use of highly sophisticated techniques, statistical
tools and complex models.
# The primary focus of this approach is the mathematical model.
# The management science approach found its origins during World
War II, when highly technical military/production problems
become far too complex for traditional management methodology.
The major features of this approach are:
 Management is regarded as the problem-solving mechanism
with the help of mathematical tools and techniques.
 Management problems can be described in terms of
mathematical symbols and data. Thus every managerial activity
can be quantified.
 This approach covers decision making, system analysis and
some aspect of human behavior.
 Operations research, mathematical tools, simulation, model
etc., are the basic methodologies to solve managerial problems.
 Human Behavioral Approach to Management
 Human Behavioral approach is a modified version of Human
Relation approach. It is devoid of any emotional content, which is
the core of Human Relation Approach.
 Here the attention is directed towards the human aspects of
management. The neglect of human factor and the over emphasis on
machines and materials led to the development of this approach.
 The Behavioral approach emphasizes synchronization of group goals
within the broader framework of management. It does not consider
the goals of the different groups as conflicting with others.
Many conclusions of the contributions made by behaviorists can presented as
follows:

o People do not dislike work. If they have helped to establish objectives, they want
to achieve them. In fact, job itself is a source of motivation and satisfaction to
employees.
o Most people can exercise a great deal of self-direction and self-control than are
required in their current job.
o The manager’s basic job is to use the untapped human potential in the service
organization.
o The managers should create a healthy environment wherein all the subordinates
contribute to the best of their capacity. The environment should provide healthy,
safe, comfortable and convenient place to work.
o Work satisfaction may improve as a by product of subordinates making use of
their potential.
͏ Merits of Behavioral Approach
 It generated an awareness of the overwhelming role of the
human element in organizations.
 It recognizes the quality of leadership as a critical factor
in management success.
 It recognizes the role of individual psychology and group
behavior in organizational effectiveness.

͏ Shortcomings of Behavioral Approach

 This approach neglects the economic dimension of work
satisfaction. It is group oriented and anti-individualistic.
Distinction between Human Relations and Behavioral Approach

Human Relations Approach Behavioral Sciences Approach

It laid emphasis on individual, his needs and It stressed upon groups and group behavior.
behavior.

It focused on inter-personal r/ships It focused on group relationships.

It was based on the Hawthorne Experiments and It refined the Human Relations approach
so its scope is limited. and has a wide scope. It is much more
systematic study of human behavior in
organization.

It was pioneered by Elton Mayo and its It was pioneered by Feith Davis, Rensis
associates. Likert and others.

It laid emphasis on informal groups’ motivation, The behaviorists studied group dynamics,
job satisfaction and morale. informal organization leadership. Motivation and
participative management.
Quantitative Approach to Management
 It emphasizes that the organization or decision making is a logical
process and it can be expressed in terms of mathematical symbols
and relationships, which can be used to solve corporate problems and
conduct corporate affairs.
 The Quantitative School quantifies the problem; generate solution,
tests the solution for their optimality and then it recommends. The
decisions are optimum and perfect as distinguished from the human
behavioral approach, in which decisions are ‘satisfying’.
 This approach is devoid of any personal bias, emotions, sentiments,
and intuitiveness.
This logical and systematic approach to problem solving, is the scientific method for attacking
problems. This approach follows a generally recognized and ordered series of steps which is
shown in figure below.

Fig. decision model

The main postulates of the quantitative approach are as follows:
 Management is a series of decision making. The job of a manager is
to secure the best solution out of a series of interrelated variables.
 These variables can be presented in the form of a mathematical
model. It consists of a set of functional equation which set out the
quantitative interrelationship of the variable.
 If the model is properly formulated and the equations are correctly
solved, one can secure the best solution to the model.
 Organizations exist for the achievement of specific and measurable

economic goals.

 In order to achieve these goals, optimal decisions must be made

through scientific formal reasoning backed by quantification.

 Decision making models should be evaluated in the light of set

criteria like cost reduction, return on investment, meeting time

schedules etc.

 The quality of management is judged by the quality of decisions

made in diverse situations.

Difference between quantitative approach and scientific approach

Quantitative Approach Scientific Management

It makes use of mathematics It makes use of scientific
and statistical techniques in approach in management
management
It focuses on finding right It focuses in improving
answers to managerial efficiency of men and machine
problems (decision making) (one best way of doing things)

Operation research it the main Time and motion studies are the
technique main techniques

It id developed by W.C. A movement launched by F. W.

Churchman Taylor and his associates

Application of economic models Application of experiments and

researches
7. System Approach to Management
 The system approach is based on the generalization that an
organization is a system and its components are inter-related and
inter-dependent.
 “A system is composed of related and dependent elements which,
when in interactions, form a unitary whole.
 On other words, a system may be defined as an organized and
purposeful entity of inter-related, inter-dependent and inter-acting
elements. It is a goal oriented organism that is composed of parts
interrelated in such a way that the total system is greater than the
sum of its parts.
The basic postulates of the system approach are as follows:
֎ An organization is a system consisting of several
subsystems. For example, in a business enterprise
production, sales and other departments are the subsystem
֎ The position and function of each subsystem can be
analyzed only in relation to other subsystem and to the
organization as a whole rather than in isolation.
֎ An organization is a dynamic system because it is
responsive or sensitive to its environment. It is vulnerable
to changes in its environment.
8. Contingency (situational) Approach
Management is situational and lies in identifying the important variables
in a situation. The basic theme of contingency approach is that
organizations have to cope with different situations in different ways.

There cannot be particular management action which will be suitable for

all situations. The management must keep the functioning of an
organization in harmony with the needs of its members and the external
forces.

Contingency views are ultimately directed towards suggesting

organizational designs and managerial actions most appropriate for
specific situations”.
The main features of contingency approach are:
 Management is entirely situational. The application and effectiveness of any

techniques is contingent on the situation.

 Management action is contingent on certain action outside the system or subsystem

as the case may be.

 Management should, therefore, match or fit its approach to the requirements of the

particular situation. To be effective management policies and practices must

respond to environmental changes.

 Organizational action should be based on the behavior of action outside the system

so that organization should be integrated with the environment.

 Management should understand that there is no one hard way to manage. They must

not consider management principles and techniques universal.

System approach vs. Contingency approach
The End
Quiz #1
Explain the two events played significant
roles in promoting the study of
management.
Quiz #1
Write the difference between Classical and Neo-
Classical approaches to the study of management.
(5pts)
Quiz #2
List and explain the three forces that support for
emerging the management thought in practice. (5
pts)