ORGANIZATION

Is a collection of people working together to achieve a common purpose. It is a means used

by people to achieve certain objectives.

CHARACTERISTICS OF ORGANIZATION

 Have a distinct purpose (goal)

 Composed of people
 Have a deliberate structure

Basic reason why the organization is establish: Satisfaction of human wants, which is a universal
concern.

MANAGEMENT

— May be defined as the achievement of organizational objectives through people and other
resources.

EFFECTIVENESS AND EFFICIENCY : A Basic Requirement

An organization can only survive if its activities are effective and efficient.

Effectiveness

— is a central element on the management process, which requires the achievement of an

objective. (Doing the right things)

Efficiency

— is a central element in the management process, which requires that the minimum amount
of resources is used to achieve an objective. (Doing things right)

FUNCTIONS OF MANAGEMENT

1. Planning - defining goals, establishing strategies to achieve goals, developing plans to

integrate and coordinate activities, deciding in advance , what, when and how to do. "Where
are we now and where are we going"

2. Organizing - arranging and structuring work to accomplish organizational goals.

3. Staffing - manning the organization structurs and keeping it manned.

4. Leading - working with and through people to accomplish goals.

5. Controlling - monitoring, comparing and correcting work.

MANAGEMENT SKILLS

Robert L. Katz - proposed that managers need three critical skills in managing.

1. Technical Skills - are the job specific knowlegde and techniques needed to proficiently
perform work tasks.

2. Human Skills - involve the ability to work well with other people both individually and in a
group.

3. Conceptual Skills - are the skills managers use to think and to be conceptualize about abstract
and complex situations.

FOUR MAJOR APPROACHES TO MANAGEMENT THEORY

1. Classical Approach - emphasized rationality and making organizations and workers as

efficient as possible.

Scientific Management Theory :

Frederick Winslow Taylor (Mechanical Engineer and Father of Scientific Management).

–"one best way" for a job to be done.

–increase level of productivity by putting the right person in the job w/ the right equipment and
tools.

–having/following correct rules and procedures

–focused on lower-level of management

Frank and Lillian Gilbreth

–most prominent followers of Taylor. Gilbreth invented a device called microchronometer that
recorded a worker's hand-and-body motions and total amount of time spent doing each
motion.

General Management Theory :

Henri Fayol - focused all levels of management. He first identified five functions. (Father of
Management)
14 Principles of Management by Henri Fayol

1. Division of Work - employees are specialized in different areas and they have different skills.

2. Authority and Responsibility - in order to get things done in an organization, management

has the authority to give orders to the employees.

3. Discipline - often part of the core values of a mission and vision in the form of good conduct
and respectful interactions.

4. Unity of Command - means that an individual employee should receive orders from one
manager and that the employee is answerable to that manager.

5. Unity of Direction - all activities must be carried out by one group that forms a team, these
activities must be described on a plan of action.

6. Subordination of Individual Interest - primary focus is on the organizational objectives and

not on those of the individual.

7. Remuneration - should be sufficient to keep employees motivated and productive.

8. Centralization - implies the concentration of decision making authority at the top

management.

9. Scalar Chain - there should be a clear line in the area of authority

10. Order - employees must have the right resources at their disposal so that they can function
properly in an organization.

11. Equity - managers should treat employees fairly and impartially.

12. Stability of Tenure of Personnel - management strives to minimize employee turnover and
to have the right staff in the right place.

13. Initiative - encourages interest and involvement and creates added value for the company.

14. Esprit de Corps - stands for striving for the involvement and unity of the employee.

Weber - German sociologist who studied organizations, developed a theory called bureaucracy.

Bureaucracy - a form of organization characterized by division of labor, a clearly defined

hierarchy, detailed rules and regulations and impersonal relationships.

2. Behavioral Approach - the field of study that researches the actions of people at work is
called organizational behavioral (OB). HBO - Human Behavior in Organization.
3. Quantitative Approach - which is the use of quantitative techniques to improve decision
making. This approach also known as management science.

Total Quality Management or TQM - is a management philosophy devoted to continual

improvement and responding to customer needs and expectations.

4. Contemporary Approach

Two Contemporary Management Perspectives:

1. Systems - is a set of interrelated and interdependent parts arranged in a manner that

produces a unified whole.

2. Contingent Approach - says that organizations are different, face different situations
(contingencies), and require different ways of managing.

What is Business?

Business may be defined as all profit - seeking activities and enterprises that provide goods and
services necessary to an economic system.

Profits refer to the rewards for business persons who take the risks involved in producing and
marketing goods and services.

Environmental Analysis - is to analyze changes pattern and impact of business for decisions.

PEST Analysis

Political Factors - are basically how the government interveness in the economy, governments
have high impact on the health, education, and infrastructure of a nation.

 Include government regulations and legal issues and define both formal and informal
rules under which the firm operates.
 Tax Policy
 Employment laws
 Environmental regulations
 Trade restrictions and tariffs
 Political stability

Economic Factors - these factors greatly affect how businesses operate and make decisions
  Influence the purchasing power of potential customers and the firm's cost capital
 Economic growth
 Internal rates
 Exchange rates
 Inflation rate

Social Factors

 Include the demographic and cultural aspects of the external macro-environment.

These factors affect the customer needs and size of the potential market.
 Health Consciousness
 Population growth rate
 Age distribution
 Career attitudes
 Emphasis on safety

Technological Factors

 Can lower barriers to entry, reduce minimum efficient production levels and influence
outsourcing decisions
 R and O Activity
 Automation
 Technology Incentives
 Rate of technological change

Roles of Business in Relation to the Economy

 Understanding the local and international business environment of the firm requires
managers of organization to sharpen their cultural intelligence.
  Cultural intelligence (knowinh self, knowing others, leading together) is an individual's
ability to favorably receive and adjust to an unfamiliar way of doing things.
 This will enable them to develop their ability to accept and adapt to different cultures
both local and international that may affect the organization.
 HOFSTEDE's CULTURAL DIMENSIONS THEORY is a framework for cross-cultural
communication, developed by Geert Hofstede. It describes the effects of a society's
culture on the values of its members and how these values relate to behavior using a
structure derived from factor analysis.

Hofstede's Dimensions of Cultural Differences

1. Power Distance - the degree to which a society accepts or rejects the unequal distribution of
power among people in organizations and the institutions of society.

2. Uncertainty Avoidance - the degree to which society is uncomfortable with risk, change and
situational uncertainty.

3. Individualism-Collectivism

4. Masculinity-Feminity - the degree to which society value assertiveness feelings of material

success versus concern for relationships.

5. Time Orientation - the degree to which a society emphasizes short-term thinking versus
greater concern for the future or long-term thinking.

STAGES OF ECONOMIC DEVELOPMENT

Walt Whitman Rostow wrote the Economic Growth: A Non-Communist Manifesto such as,

1. Traditional Society

 mainly use subsistence farming

 This tribe has zero contact with modern technology other than airplane that has flown
over them.
 They use the plants around them to create shelter.

2. Preconditions for take off

 Industrial/manufacturing society begins.

 Trade expands overseas creating an international market.
 This stage is the preparation for take-off.
 Agriculture becomes commercialized and mechanized due to technological
improvement.
3. Take-Off

 Productive Investment rises 5%-10% of national income.

 Substantial manufacturing sectors become developed.
 Technological breakthrough occurs.
 The textile industry had launched as did the economy of Britain when the industrial
revolution occured.

4. Drive to maturity

 Rostow defines this "as the period when a society has effectively applied the range of
modern technology to the bulk of its resources"!
 Steadily growing economy and modern technology
 Agriculture workers decrease drastically.

5. High Mass Consumption

 Tertiary activities increases

 Consumers have beyond their basic needs
 High valued goods become normalized to purchase
 People live in cities creating an urban society
 Society is able to focus on military, security issues, equality and welfare issues.