Professional Documents
Culture Documents
Principles of Management
Principles of Management
Principles of Management
• Effective:
“Doing the right things”
Making the right decisions & successfully
implementing them.
Human resources
Financial resources
Physical resources
Information
planning:- setting organization’s goals
Implementation:
◦ organizing,
◦ directing,
◦ Coordinating
leading
Controlling:- control, assessment and
feedback
Group Activity
Goal-Oriented
System of authority and responsibility
Adopting situational approach
Coping with environment
Identifiable Functions in the Management
Process
1-9
Manager
Someone who coordinates and
overseas the work of other people so that
organizational goals can be accomplished
Classification of Managers:
Top Managers
Middle Managers
First-Line Managers
Top Level
Operating/front-line/supervisory
Day to day plans
Supervise, lead, control operating staff
Officers, Supervisors
Inter-personal Role
Figurehead, leader, liaison
Informational Role
Monitor, dissemination, spokesperson
Decisional Role
Entrepreneur, disturbance handler, resource
allocation, negotiator
1) Interpersonal Role :
Manager performs interpersonal role in order to coordinate
and interact with the organizational members.
Disseminator role
• The manager is also a disseminator of information,
transferring relevant information to the subordinates and keep
them informed of what is going on around the organization
and the precautions to be taken.
Spokesperson role:
• The spokesperson relay the information to the people outside
the unit or outside the organization
Entrepreneurship role: It is concerned with planning and
initiating change within the organization.
It includes:
A. General Environment
B. Task Environment
It is composed of set of forces that are outside the
organizations’ operating system. They are:
2. Technological Environment
4. Political-Legal Environment
– Government regulation of business and the relationship
between business and government
– Legal system define:
what an organization can or cannot do?
– Constitutions, political parties, government
5. International Environment
◦ The extent to which an organization is involved in or affected
by business in other countries
◦ It includes:
Competitors
Customers
Suppliers
Strategic Partners
Regulators
1. Competitors
– Competitions between substitute products
– E.g. Nike and Adidas
– Organizations may also compete for different kinds of
resources
2. Customers
– Whoever pays money to acquire an organization’s
products or services
– Customer satisfaction-huge impact-organization’s
success
3. Suppliers or Distributors
– provide necessary resources or a network to market or
other organizations
– Influence the course of action by price policies, discounts
for competitors, or a contract that binds them to one
singular competitor
4. Strategic partners:
An organization working together with one or more other
organizations in a joint venture or similar arrangement
Strategic partnerships help companies get from other
companies the expertise they lack.
Helps to spread risk and open new market opportunities.
5. Regulators:
A unit that has the potential to control, legislate, or
otherwise influence the organization’s policies and
practices
Regulatory agencies: An agency created by the government
to regulate business activities
Interest group: A group organized by its members to
attempt to influence business
The conditions and forces within an organizations
◦ Owners
◦ Board of Directors
◦ Employees
◦ Physical Work Environment
◦ The Organization’s Culture
1. Owners:
2. Board of Directors:
3. Employees:
1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interests to the general interest
7. Remuneration of personnel
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability and tenure of personnel
13. Initiative
14. Esprit de corps
Fayol’s principles are listed below:
Division of Work
Managers should divide work among individuals and groups. This
ensures that effort and attention will be focused on special
portions of the work. Output can increase if employees are
specialized. This is because they become increasingly skilled and
efficient in their fields.
Authority
Fayol defined authority as “the right to give orders and the power
to exact obedience.” The managers should have the power to give
orders. But they should also remember that with authority comes
responsibility.
Discipline
It is essential to maintain discipline. However, the methods for
doing this can vary. Successful company will need the common
effort of workers. You can apply penalties to inspire this common
effort.
Unity of Command
It is best if employees have only one direct supervisor.
Unity of Direction
Teams, which have the same goal, should work under one
manager’s direction. They should use one plan. This will
guarantee that the action is coordinated properly. Unity of
direction means the entire firm will move in the same
direction.
Subordination of Individual Interests to the General Interest
The interests of any one employee should never be given
more importance than the interest of the group. Even the
manager’s interest comes after the group.
Remuneration
Fair remuneration should be given to everyone. This ensures
employee satisfaction. Remuneration includes both financial and
non-financial compensation. There are many variables which
should be considered before deciding a worker’s rate of pay.
Some of the variables are:
Cost of living
Supply of qualified personnel
General business conditions
Success of the business
Centralization
Centralization refers to how involved employees are in the
decision-making process. Managers should aim for a suitable
balance. Fayol defined this as “lowering the importance of the
subordinate role.” Decentralization means to increase the
importance. The degree of centralization or decentralization a
firm should adopt depends on the specific organization.
Scalar Chain
Employees should know their position in the organization’s
hierarchy. Where they stand in the chain of command is
critical. Managers in hierarchies belong to a chain like
authority scale. Each manager has a certain amount of
authority. The President has the highest authority. The first-
line supervisor has the least authority. It is important for
lower level managers to inform upper-level managers about
their work activities. The existence of a scalar chain is
essential. It is necessary to adhere to it.
Order
The workplace should be clean and safe for all employees.
Everything should be in its place. All the people related to a
specific type of work should be treated as equally as possible.
This is good for efficiency and coordination.
Equity
Managers must always be fair to staff. They are expected to
maintain discipline when needed and act with kindness when
it seems right.
Stability of Tenure of Personnel
Managers must make an effort to reduce employee turnover.
They should give priority to Personnel planning. Recruitment
and Selection Costs are usually related to hiring new workers.
Increased product reject rates also cost a lot. Retaining
productive employees should be a high priority of
management.
Initiative
Employees should have the necessary level of freedom they
need to make and conduct plans. Management should
encourage worker initiative. New or extra work activity
undertaken through self-direction is an example.
Esprit de Corps
Organizations should always attempt to promote team spirit
and unity. Management should inspire harmony and general
good feelings among the workers.
Fayol’s 6 Functions of Management
Fayol also introduced 6 primary functions of management,
which complement the Principles. The functions are:
Forecasting
Planning
Organizing
Commanding
Coordinating
Controlling
The functions of management have been discussed in details
below:
FORECASTING
This involves examining the future and then making a plan of
action.
PLANNING
This function is about making plans of actions. It is the most
crucial part of the management. It requires active
participation of the entire organization. Planning should be
coordinated on different levels.
ORGANISING
This entails providing capital, personnel and raw materials for
running the business. You will also have to build a structure
to match the work. Organizational structure depends on the
size of the workforce.
COMMANDING
This is about optimizing return from all employees. A good
manager would communicate clearly and base his judgments
on regular audits. Clear knowledge of personnel helps creates
unity and loyalty. It reduces incompetence.
COORDINATING
This function means to unify and harmonize activities and
efforts. It helps maintain the balance between the activities of
the organization as in sales to production and procurement to
production. Fayol suggested that weekly conferences for
department heads will solve problems.
CONTROLLING
This is about monitoring organizational progress towards
goal attainment.
Max Weber theory:
Bureaucracy:
a formal system of organization and administration designed
to ensure efficiency and effectiveness.
Feedback
• Goal Oriented: A system theory is a goal directed.
Every system is purposeful.
Purposes of Goals:
◦ Provides guidance and a unified direction for people in the
organization
◦ Goal-setting practices strongly affect other aspects of
planning
◦ Goals can serve as a source of motivation for employees of
the organization.
◦ Goals provide an effective mechanism for evaluation and
control
Mgmt. Level Goals Time Frame
Top Strategic Long-term: more than 5 years
Note: Look at Page no. 209, figure 7.2, an example –Management by Griffin
A. On the basis of Level:
1. Strategic Plan
2. Tactical Plan
3. Operational Plan
1. Strategic Plan:
Set by top management
Focus on broad and general issues
Decision of resource allocation, priorities, action steps to
achieve strategic goal
President/CEO
2. Tactical Plan:
3. Operational Plan:
◦ Long-Range Plans
A Plan that covers many years, perhaps even decades;
common long range plans are for five years or more
◦ Intermediate Plans
A Plan that generally covers from one to five years
◦ Short-Range Plans
A plan that generally covers a span of one year or less
C. On the basis of Frequency:
1. Standing:
◦ for situation that are likely to recur and become routine
◦ Remain unchanged for longer period of time
◦ guide managers for decision making
◦ e.g. Policy, Procedure, Rule, etc.
2. Single-use plan:
◦ for unusual situation
◦ short-term
◦ remain valid until their purpose is accomplished after
that it is either discarded or revised.
◦ e.g. Program like seminar, speeches; Project, Budget
Establish goals
Identify premises
Identify alternatives
1. Environmental Scanning
◦ Study, research, analyze and evaluate information
from internal and external environments that have
potential impact on the organization
◦ The method or a technique of acquiring information
and analyzing the trends emerging in the environment
◦ Regular, irregular and continuous
Identifying potentially relevant
environmental changes
Intuitive Reasoning:
Estimate future on the basis of logic and idea without
considering the past events. Intellectual guess work.
Assumption of future without any bias.
Scenario Building:
Different probable events are estimated and their outcomes
are assumed.
Constructing time ordered sequence of events that have a
logical cause and effect relationship to one another.
Cross Impact Matrix:
Two conflicting trends are studied to find out their
impact on each other
Morphological Analysis:
All possible alternatives to achieve organizational goals
are studied and evaluated, especially for forecasting the
impact of technological changes
Survey Method:
Opinions are collected from customers, suppliers,
lenders, competitors etc. to forecast the future
Delphi Technique
It is one of the popular technique of environmental
scanning in which manager can collect opinions of the
various expert related to the concerned subject matters
that helps to estimate the future. It is the systematic
solicitation of expert opinion in varying stages using
feedback to develop new forecast.
Brainstorming:
Views, ideas, experience are shared and conclusion
about future assumptions are made through mutual
consent
2. SWOT ANALYSIS:
STRENGTHS:
◦ Resource, skill or other advantages related to
competitors
◦ Internal quality
◦ Eg: public image, experience, financial resource,
human resource, etc.
WEAKNESSES:
◦ Limitation or deficiency in resource, skills, capabilities
◦ Lack of facilities, resources, management capabilities,
etc.
OPPORTUNITES:
◦ Major favorable situation in the organization’s
environment
◦ E.g. new market reduction in competition, higher
economic growth
THREATS:
1. Types by nature
◦ Operating
◦ Administrative
◦ Strategic
Programmed:
◦ Structured, repetitive, routine
◦ Recurs with some frequency, day-to-day
◦ Automatic process
◦ Decision making rules and procedures are clearly
established and sources of information defined
◦ Basic operating systems and procedure, and
standard organizational transactions
◦ Mostly dealt by lower level managers
◦ Quick, minimum energy and resources required
Non-Programmed:
Strategic decisions:
◦ Special situation decisions
◦ Product diversification
◦ Investment and expansion
◦ External issues
Administrative decisions:
◦ Linking functions between operating and strategic
◦ Aimed at structuring the organization’s resources for
optimum performance
◦ Mostly middle level are involved in these kind of decisions
◦ Deal with issues like: rules, procedures, information flows,
reward system, etc.
Autocratic:
◦ Style I: makes decision himself/herself using own
information only
Consultative:
◦ Style III: share the problems with the subordinates
individually without bringing them together, collect their
ideas and suggestions and make decisions accordingly
Conditions of risk:
◦ Difficult to predict the outcomes with certainty
◦ Although manager has information, knows about the
alternatives and their outcomes of different alternatives can
be estimated, the element of risk is always involved in such
decision
Conditions of uncertainty
◦ Managers do not have enough information
◦ Cannot predict the future
◦ Risk is high
◦ Need to use their intuition, judgment, and
experience in making decisions under the
conditions of uncertainty
Decision making is tricky business, especially
when it comes to large groups.
There are several instances in professional as
well as personal life when decision-making
requires opinions and inputs from more than
one or two people.
This is where group decisions come into the
picture.
Group decision-making is a complex process,
which can be achieved by several methods.
Advantages Disadvantages
1. More information and knowledge 1. The process takes longer than indi-
are available. vidual decision making, so it is cost-
2. More alternatives are likely to be lier.
generated. 2. Compromise decisions resulting from
3. More acceptance of the final indecisiveness may emerge.
decision is likely. 3. One person may dominate the group.
4. Enhanced communication of the 4. Groupthink may occur.
decision may result.
5. Better decisions generally
emerge.
Interacting groups and teams
◦ Method of Idea generation to solve problems
◦ Members openly discuss, argue about, and agree on the
best alternative
Delphi group:
◦ a form of group decision making in which a group is used
to achieve a consensus of expert opinion
Nominal group:
◦ A structured technique used to generate creative and
innovative alternatives or idea
Firstly, Individuals work separately
Secondly, they work as an interacting group to evaluate and
choose the alternatives
1. Non-quantitative techniques:
◦ Factual information:
◦ Expert opinion:
Use the opinion of experts people
Called Delphi technique
2. Quantitative techniques:
◦ Probabilities and pay-offs:
Measure of the chance
Derived mathematically from reliable historical data
Pay-offs are calculated of each alternatives
◦ Linear programming:
Used to evaluate the results from several alternative
course of action
Used to find out the exact solution that will minimize
costs or maximize gains
Can be used for a product-mix problem, in which
company wants to produce the maximum profit from a
set of raw materials that can be combined in a number
of different ways to specify finished-product
specification.
◦ Queuing theory:
Waiting-line theory
Manage waiting lines
Tries to balance costs and customer waiting line
◦ Simulation:
Generate additional information about the problem
To determine the effects of decisions
Reduce the risk and expense of decision making by
using hypothetical or historical data
E.g. inventory simulation
◦ Game theory:
Plays a game with competitors and customers
is the study of people making independent choices
Formulation of strategy against the competition
Meaning, process and principles of organizing.
Organization Architecture: vertical differentiation –
tall versus flat hierarchies, horizontal differentiation
– functional structure, multidivisional structure,
geographic structure, and matrix structure.
Responsibility: establishing task and reporting
relationships, creating accountability.
Authority: line authority and staff authority.
Delegation of authority.
Centralization, Decentralization and Devolution:
meaning, reasons, advantages and disadvantages.
Emerging issues in organization design.
Staffing: concept and importance.
Organization Design is an overall set of
structural elements and the relationships
among those elements used to manage the
total organization.
We must note two point:
1. Organization are design and not left intact. It
keep on changing from time to time.
2. Organization for larger organization is
extremely complex.
Organizing is a process of arranging and allocating
work, authority and resources among an
organization’s members so that they can achieve
organizational goals.
-Stoner, Freeman and Gilbert.
It involves the assignment of function and the tasks
to group and to individual employee. It includes
delegation of authority to subordinate managers
and operating employee so that they can properly
carry out their duties.
Allocation of Hierarchy
resources
◦ Division of work: Dividing total workload of
organization into tasks & sub- task.
◦ Departmentation: Dividing task which are similar in
nature.
◦ Hierarchy: Establishing reporting relationships between
jobs.
◦ Coordination: Coordinating activities among jobs units
and other activities.
◦ Allocation of resources: Materials & equipments need
to be to allocated at the right place & time to produce
goods & services
• Divides work to be done into specific jobs and
departments.
• Assigns tasks and responsibilities associated with
individual jobs.
• Coordinates diverse organizational tasks.
• Clusters jobs into units.
• Establishes relationships among individuals, groups,
and departments.
• Establishes formal lines of authority.
• Allocates and deploys organizational resources.
Clarity About Objective
Division of Works
Unity of Command
Scalar Chain
Span Of Control
Departmentation
Decentralization
Separation of line and staff functions
Authority and Responsibility
Simplicity
Flexibility
Identify organizational goals and work activities.
Establish relationships.
Delegate authority.
Behavioral Approach
Behavioral Approach:
McGregor’s theory
Job Specialization:
◦ the degree to which the overall task of the
organization is broken down and dividend into
smaller component parts.
◦ Evolved from the concept of division of labor
Advantages:
1. Worker performing small, simple task will become very
proficient.
2. Transfer time between task decreases
3. The more narrowly defines the job is the easier it is to
develop specialized equipment to assist that jobs.
4. When an employee who perform a highly specialized task is
absent or reigns the manager can train other in a relatively
low cost.
Disadvantages:
1. The worker who perform highly specialized may become
bored and dissatisfied
2. It may increases absenteeism, the quality of work may
suffers.
3. It does not offer challenges and stimulation
1. Job Rotation: It involves systematic moving
employee from one job to another.
2. Job Enlargement: It involves giving employee
more tasks to perform.
3. Job Enrichment: It involves increases both
the number of task and the control the
worker has on the job.
4. Job characteristic model: It suggest that job
should be diagnosed and improved along
five core dimension taking into account both
the work system and employee preference.
The process of grouping jobs according to
some logical arrangement
Advantages:
1. It is best for organization with various type of
customer.
2. Manager can concentrate on identified and
potential customer.
3. It provide benefit of specialization.
4. Quick adaptation of environmental change
Disadvantages:
Advantages:
1. It helps to maintain regional activities effective.
2. It facilitate expansion of organization
3. It helps adjustment in the environment quickly
4. It will facilitate catering customer on the basis of
their needs, interest and taste
Disadvantages
Technology:
◦ Conversion processes used to transform inputs into
outputs
◦ As technology became more complex, the number of levels
of management increased
Environment:
Organization’s environment can affect how it should be
designed
Mechanistic organization:
◦ Found in stable environments
◦ Free from uncertainty
◦ Organizations structured their activities in rather predictable ways by
means of rules, specialized jobs and centralized authority
Organic organization:
◦ Found in unstable and unpredictable environments
◦ Very flexible and informal model of organization design, most often found
in unstable and unpredictable environments
Size:
total number of full-time or full time-equivalent employees
Characterized by higher levels of job specialization, more
standard operating procedures, more rules, more regulations
and a greater degree of decentralization
Line Authority:
Employee with line authority are called line manager
Also known as scalar type of structure
Each manager is given a complete charge of the work
assigned
Staff Authority:
Involves giving advice and counsel to line managers to
carry out their operations
Manager with staff authority is called staff manager
Used in larger organizations
Power:
Power is an attribute of an individual’s influence over other
individuals.
Power can be best utilized for control measure in the
organization so that its resources can be best utilized while
achieving goals.
Power can be from various sources which we use to influence
others in different situations:
◦ Legitimate Power
◦ Reward Power
◦ Coercion
◦ Expert Power
◦ Referent Power
Responsibility:
Responsibility is an obligation to the work that is assigned. A
manager is responsible for his or her department. Each staff
is responsible for doing his or her work effectively.
Everyone in the organization is responsible to his or her job.
The chief executive officer is responsible for overall
organization and its objectives. Similarly middle level and line
managers have responsibility for their departments and units
respectively.
Top level managers have more authority and responsibility
and lower level managers have less of them with more of
supervisory work.
It is the process by which managers assign a portion of their
total workload to others.
Characteristics of Delegation:
◦ it enables a manager to function independently
◦ The superior does not delegate the total authority
◦ A manager cannot delegate what he or she himself or
herself does not possess
◦ Delegation does not mean giving away authority
◦ The superior, who delegates the authority, cannot escape
responsibility
Problems in Delegation:
Manager
◦ Reluctant to delegate.
◦ Disorganization prevents planning work in advance.
◦ Subordinate’s success threatens superior’s advancement.
◦ Lack of trust in the subordinate to do well.
◦ Loss of control
◦ Fearing of losing importance
Subordinate
◦ Reluctant to accept delegation for fear of failure.
◦ Perceives no rewards for accepting additional responsibility.
◦ Prefers to avoid any risk and responsibility.
◦ Lack of motivation
◦ Incompetent subordinates
Tasks for effective delegation:
1. Leadership traits:
Known as Great-man theory of leadership
Assumed that “Leaders are born; not made”
Heredity was considered as the main determinant factor
Leadership qualities were considered as the function of
heredity
Analyzed the personal, psychological, and physical traits of
strong leaders
The trait approach assumed that some basic trait existed that
differentiated leaders from non-leaders.
Researchers thought that leadership traits might include:
◦ Intelligence, assertiveness, above-height, good vocabulary, attractiveness,
self-confidence, and others
Limitation:
◦ Their findings were inconsistent and inconclusive
◦ This theory could not answer many unexplained variables
associated with leadership
◦ The trait approach was all but neglected several decades ago
2. The leadership behavior approach:
The assumptions of the theorists was that:
The behavior of effective leaders would be different from the
behaviors of less effective leaders
The behavior of effective leaders would be the same across all
situations
These studies included:
◦ The Michigan Studies
◦ The Ohio State studies
◦ The leadership grid
a) Michigan Studies
◦ Researchers at the University of Michigan, led by Rensis
Likert
◦ Research identified two basic forms of leader behavior:
Job-centered leader behavior: pay close attention to
subordinates work, explain work procedures, and are keenly
interested in performance
Employee-centered leader behavior: are interested in developing a
cohesive work group and ensure that employees are satisfied with
their job. Their primary concern is the welfare of subordinates.
Assumed employee centered leader behavior tends to be more
effective.
◦ Consideration behavior:
The behavior of leaders who show concern for subordinates and
attempt to establish a warm, friendly, and supportive climate
◦ The 1,1 style: minimum concern for either people or production; known as
impoverished leadership or laissez-faire mgmt
◦ The 5,5 style: leader has moderate concern for both production and
people; known as middle-of-the-road or compromising leadership
The 9,9 style: leader shows high concern for both people and production;
also called team-based style or democratic mgmt; most effective leadership
style
Leadership grid is widely used today as a method to examine managerial or
leadership style
3. Situational Approach:
◦ Situational models assume that appropriate leader varies from
one situation to another
◦ There is no one best way to be a leader
◦ Effectiveness of any particular leader is dependent on the
situation
◦ Fiedler’s contingency model:
A theory of leadership that suggests that the appropriate style of
leadership varies with situational favorableness
Known as LPC (Least preferred coworker) measure
The measuring scale that asks leaders to describe the person with whom
he or she is able to work least well
Fiedler developed a questionnaire to measure the concept
Three situational criteria: leader-member relations, task
structure, and position power
◦ Leader-member relations: whether or not the subordinates trust or like
their leader
◦ Task structure: the extent to which the group’s tasks, goals, and
performance are clearly defined
◦ Position power: the extent to which the leader uses controls, rewards, and
punishments for subordinates
Position power Strong Weak Strong Weak Strong Weak Strong Weak
Favorableness
Most favorable Moderately favorable Most unfavorable
of Situation
Appropriate
Task-oriented Relationship-oriented Task-oriented
Leader Behavior
Path-Goal Theory:
A theory of leadership suggesting that the primary functions
of a leader are to make valued or desired rewards available in
the workplace and to clarify for the subordinate the kinds of
behavior that will lead to those rewards
Situational factors:
◦ Personal characteristics of subordinates and environmental characteristics
of the workplace
Motivation means to make an employee act in desired manner
or in the interest of the organization.
Motivation works best when individual needs are compatible
with organizational goals.
Theories of motivation:
Hygiene factor:
◦ Called Maintenance factors which maintains employees’ satisfaction
◦ Absence causes dissatisfaction
◦ Include: salary, job security, work conditions, status, interpersonal
relations, etc.
Motivating factors:
◦ Called motivators or satisfiers which satisfy the employee’s needs for self-
actualization
◦ Include: achievement, recognition, possibility of personal growth,
responsibility
Motivating factors are related to job satisfaction, whereas the
hygiene factors are related to job dissatisfaction
The first stage, they must make sure that the hygiene factors are not
lacking and second managers should ensure that the employees
have opportunity for achievement, recognition, etc.
Written Communication:
◦ Memos, letters, reports, notes, and other circumstances in
which the written word is used to transmit meaning
◦ better for complex and difficult subjects, facts and
opinions, better for keeping records of messages
exchanged, provide opportunity to refer back, can be
revised before transmitting, immediate feedback in not
available, never know if the message is ever read, time
consuming, reader are not helped by non-verbal clues
Non-verbal communication:
◦ Body language: gestures, postures, the nodding of our head,
blinking of our eyes, waving of our hands, shrugging of our
shoulders, etc.
◦ Paralanguage: pitch variation, speaking speed, pause, volume
variation, word stress
Physical barriers:
◦ Internal structure the organization & layout of office
machine & equipments also create barriers in the
transformation of information.
◦ Some common physical barriers involve physical distance,
hierarchy of structure, office design & noise.
Psychological barriers.
◦ Psychological barriers are generated due to human perception,
lack of skill & negative thinking of the top level of managers.
◦ Some common psychological barriers involve distrust of
communicator, superiority complex, individual perception,
premature evaluation & no attention.
Semantic barriers:
◦ Semantic barriers are created due to the use of difficult &
intensive language by the sender.
◦ Some common scientific barriers involve harsh language,
vague language, misleading translation & technical language.
Technological barriers
◦ These barriers are formed due to defect in technology used &
overload in information.
◦ Some common technological barriers involve mechanical
barriers, loss of transmission, information overload &
insufficient time allowed.
Group:
◦ Two or more interacting and interdependent individuals
who come together to achieve specific goals.
◦ Formal groups
Work groups defined by the organization’s structure
that have designated work assignments and tasks.
Appropriate behaviors are defined by and directed toward
organizational goals.
◦ Informal groups
Groups that are independently formed to meet the
social needs of their members.
Forming:
◦ knowing each other, try to find out each other attitudes, backgrounds, and
personalities
Storming:
◦ critical phase, conflicts and differences of opinion emerge among
members
◦ Members debate on the purpose of the group, group norms, and group
goals
◦ Conflict over leadership issues
Norming:
◦ Vital stage of group formation
◦ The members sit together and try to develop group system, rules, norms
and standards of their behavior
◦ Norms, tasks and roles are assigned to individual members
◦ In this phase, group members agree on their shared goals and group
norms
Performing:
◦ Group becomes functional, members begins to perform
their assigned tasks
◦ This is the last stage for permanent groups
Adjourning:
◦ For temporary groups, this stage becomes relevant
◦ Group prepares for its termination
Importance of Groups:
◦ provide satisfaction to members
◦ problem solvers
◦ better decisions than individuals
◦ good for implementing decisions
◦ effectively control their members
◦ contribute to the development of members’ personality
Problem solving teams:
◦ Formed for the specific purpose of solving problems
◦ Do not have the authority to implement any new ideas
Self managed work teams:
◦ Fully autonomous and they have authority to implement
new ideas and solutions.
◦ They have full responsibility for the outcomes
Cross functional teams:
◦ Employees from different departments are grouped
together to perform a certain task
Virtual teams:
◦ The members of these teams make contacts with each
other’s through online like internet, intranet or emails.
◦ Don’t have face to face contact but can work together
A conflict is a process that begins when one party perceives
that another party has negatively affected its interests.
A conflict is a disagreement among two or more individuals,
groups or organizations.
Nature of conflicts:
Conflict is a disagreement between two or more individuals,
groups, or organizations
Conflict can be mild or very strong
It can be for shorter period or can continue for longer period
Conflict is not always harmful, certain kind of conflict, if
managed well, can be helpful for effective performance
Managers need to manage conflict before it becomes
dysfunctional
Causes of Conflict:
Limited resources
Communication problems
Lack of job clarity
Personality clashes
Goal differences
Complex and dynamic environment
Status and role inconsistencies
Types of Conflict:
Intrapersonal conflict (conflict within individual)
Interpersonal conflict (conflict between individual)
Intra team conflict (within a team)
Inter team conflict (between two or more teams)
Managing Conflicts in organization:
Stimulating conflicts:
◦ Hire outsiders to shake things up, change establish procedures
Controlling conflicts:
◦ Expand resource base, enhance coordination of interdependence, set
subordinate goals and match personalities and work habits of employee
Financial Budget
Tools and Technique of Control
Approaches to Budgeting
◦ Zero Base Budgeting
◦ Programme Budgeting
◦ Performance Budgeting
◦ Compromise Budgeting
Tools and Technique of Control
2. Financial Statement
Balance sheet
Profit and loss Statement
Fund flows and Cash Flows
Financial Ratios
3. Financial Audits
Evaluation of organizations books of account and
financial statements
Internal Audit
External Audit
Management Audit
Data are raw figures and facts reflecting a single aspect of
reality
Information is the meaningful presentation of data through
analysis and interpretation
Some information are used immediately, some are stored for
late use and some information are discarded when
unnecessary
This process of collecting data in raw form and converting it
into meaningful information and disseminating to concerned
departments or managers is called information system
Managers need information for each and every decision they
make from purchasing the raw materials, quality control of
the products and services, managing human activities to
major decisions
Information is needed for both operational control to
managerial and strategic control
Gathers data, organizes and summarizes it in a form valuable
to managers, and provides those managers the information
they need to make decisions
MIS provides required information to each level of
management at the right time and in the right form
Supports an organization’s managers by providing daily
reports, schedules, plans, and budgets
MIS relies on an integrated database
MIS components:
◦ Input
◦ analysis and processing
◦ storage and retrieval
◦ output
◦ information flow
DSS is more advanced form of MIS
Employee
Materials Technology Methods
involvement
Quality improvements
TQM Tools and Techniques:
◦ Value-added analysis: The comprehensive evaluation of all work
activities, materials flows, and paperwork to determine the value
that they add for customers.
Materials:
◦ Quality of raw materials affects the quality of goods produced
Equipment
◦ Equipment used in the production process determines the
efficiency and cost of production
◦ Poor equipment leads to poor processing, poor quality, higher
rejection rates, higher wastages, frequent breakdowns, higher
repair and maintenance costs, and so on.
In Japan, Deming got the opportunity to meet and talk with top
Japanese executives
Constant purpose
New philosophy
Give up quality by inspection
Seek continuous improvement
Train everyone
Avoid the constant search for lowest-cost suppliers
Provide real leadership
Drive fear out of the workplace
Promote teamwork
Avoid slogan and targets
Get rid of numerical quotas
Remove barriers that stifle pride in workmanship
Education and self-improvement are key
The transformation is everyone’s job
Deming’s 14 Points on Quality Management, a core
concept on implementing total quality management,
is a set of management practices to help companies
increase their quality and productivity.
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chapter
Nature, forces, paradigm shifts and areas
(structure, technology, business process and
behaviors) of organizational change.
Resistance to change. Overcoming resistance to
change.
Concept of Organizational Development, OD
intervention.
Uncertainty
Threatened Self-Interests
Different Perceptions
Feelings of Loss
Facilitation
Coercion
ODis a planned process of change
in an organization’s culture
through the utilization of
behavioral science technology,
research, and theory.
Cultural Globalization:
◦ Culture is the set of norms, value, beliefs, traditions and social system of
people
◦ The exchange of the cultural values among the people of different parts of
the world helps them to understand each other and develops a feeling of
mutual respect.
◦ Due to movement of people, television programs, flow of varieties goods,
people are familiar with foreign culture and social values.
◦ Helps to reduce cultural differences.
Political Globalization:
◦ The process of reconciling national institutions, policies, laws and
regulations into the multilateral framework provided by international
treaties and regulations to exercise globally
◦ Exchanges of views and experiences between nations regarding the
establishment of good governance system, legal system, human rights,
free media, property rights, decentralized pattern of governance, relatively
free access to state information, and so on.
Environmental Globalization:
◦ Environment pollution, global warming, increasing the volume of the
depletion of ozone layer are common agendas of all countries in the
world.
◦ Ecological problems like: floods, water and air pollution, deforestation,
soil erosion, and acid rain are cross boarder problems and only country
can’t solve these problems alone.
◦ Countries are trying to encourage understanding these global agendas and
making a joint action plan to protect the environment
Exporting:
◦ a direct sale by a manufacturer to an overseas customer
◦ Export is preferable when the cost of production in the home
country is substantially lower than producing goods in foreign
markets
Joint Venture:
◦ A partnership in which the domestic and the foreign firm negotiate tie-ups
involving one or more factors such as equity, transfer of technology,
investment, production and marketing
◦ In some cases, there are more than two parties involved.
◦ There are laws regulating joint ventures
Merger and Acquisitions:
◦ Combination of two or more than two companies is called merger
◦ Acquisition is take over of weak organization or the way to buy smaller
organization by big organization
Strategic Alliances:
◦ Linkages between firms to jointly pursue a common goal, such as
collaborative agreements, strategic alliances, and global strategic
partnerships
Globalized Production:
◦ The production activities are now moving out of the developed countries
◦ The manufacturer activities are scattered around the world and becoming
a global affairs
Global Outsourcing:
◦ Outsourcing is the process of subcontracting raw materials and suppliers
to another organization that helps to reduce cost and improve quality.
◦ It is the activities of doing contract to outsiders’ organization regarding
production task
Global competition:
◦ Competition has increased
◦ The world has been considered as a small global village due to
development of informational technology
Companies originated in one country but operate its business
unit more than one country are called multinational
companies.
Big in size, operates their activities more than one countries,
centralize ownership and control and local currency are used
to trade in local country.
Controlling power of MNC retains in the home country.
Companies go multinational to search new market, to reduce
the cost, generate more income and enjoy competitive
advantages
Some example of MNC are IBM corporation, General Electric
company, Ford Motor corporation, Mercedes Benz car
company, etc.
The major multinational companies working in Nepal are
Uniliver limited, Colgate-Palmolive, Bottlers Nepal, Pepsi cola
Nepal, Dabur Nepal, so on.
Productive enterprises:
◦ Large scale productive enterprises that produce goods and services by
using advanced technology
Efficient management:
◦ Success of multinational companies is efficient management
Advanced technology:
◦ Use advanced and modern technology that minimize the production cost
Market Seekers:
◦ To produce and sell their product in foreign market
◦ Main objective is to expand their business at international level
Cost Minimizers:
◦ Objective of reducing cost of the goods and services through installing
plants in the countries where labor and energy cost is low
◦ E.g. Sony, Honda, Suzuki have established their production plants in
China, India, Malaysia, etc.
Promotes the investment climate
Technology transfer
Export increase of host country, import decrease causing
improvement in balance of payment
MNCs help cost of factor of production become equal all over
the world
MNCs with efficient research and development system make
contribution to innovation and investments
Presence of MNCs is a support for domestic industries,
suppliers and other business activities
Greater availability of products for local consumers
MNCs may increase dependency of developing countries
MNCs are also criticized for sending a huge amount of profits
to their own home countries.
They are also criticized for taking away capital and job
opportunities from home country to host country
may destroy competitive environment in the country