Introduction to

Management
Objectives
• Define what is management;

• Describe the history of management; and

• Recognize the importance of management.

What is Management?
• Process of dealing with or controlling things or people
• Process of designing and maintaining an environment where people
work in groups to accomplish one common goal – Weihrich (1993)
• A unifying and coordinated activity which involves individuals to
combine their actions to achieve a meaningful and purposeful group
endeavor – Mahony (1961)
• “process by which a cooperative group directs action toward common
goals” – Massie (1964)
• A field of study that indicates a social position and authority that
involves people and their functions – Drucker
Importance of Management
• Helps achieve goals and objectives
• Good managements plans the goals first
• Directs efforts towards the achievement of pre-determined goals

• Efficient utilization of resources

• Include both human resources and technology
• Management makes use of experts and professionals and assigns them
roles that best suit them to maximize their output
• Reduces costs, avoids wastage and under employment of limited
resources
Importance of Management
• Maintain responsibility and order
• Smooth and coordinated functions of employees is always effective
• When each one has their own task, they feel more responsible because
they are doing what they do best
• Specific responsibilities also helps manager identify who is accountable
for what

• Establishes equilibrium
• Enables organization to survive and adapt the ever changing environment
Importance of Management
• Essentials for prosperity of society
• Efficient management will lead to economical production which in turn
helps improve the welfare of people
• Good management increases profit that is beneficial to businesses
• Organization may also do researches and make products beneficial to the
society
Evolution of Management
• Like all other professions, management has evolved through time to
adapt to changes: industrial, social and technological revolutions, and
has to remain effective despite the opportunities and constraints
offered by each
• It has to endure the pressures placed by politicians, financial
interests and social and legal changes
Evolution of
Management

• Ancient
Management
• Egyptians’
showcase of the
pyramids
• Venetians’ floating
warship assembly
line
• China’s Great Wall
• India’s Taj Mahal
Evolution of Management

Adam Smith
•Author of “An Inquiry into the Nature and
Causes of the Wealth of Nations” or
commonly referred to as “The Wealth of
Nations” in 1776
•Promoted “division of labor” in an organization.
He argued that job specialization increases
productivity of employees
Evolution of
Management

Industrial Revolution
• Substituted machine power
for human labor
• Created large organizations
in need of management
Evolution of Management

Henri Fayol (1841 – 1925)

• French mining engineer

• Helped develop an “administrative science”
• Developed Fayol’s 14 Principles of
Management
Evolution of Management
Fayol’s 14 Principles of Management
• Division of labor / Specialization – works become more efficient and
increases their output
• Authority / Responsibility – authority comes with responsibility to get
things done
• Discipline
• Unity of Command – orders must come from one boss ONLY to avoid
conflicts in instructions
• Unity of Direction – aside from one boos, employees must also follow
one plan
• Subordination of Individual Interest – interest of the company as a
whole should ALWAYS come first before the interest of one person
Evolution of Management
Fayol’s 14 Principles of Management
• Remuneration – fair salary for all employees
• Centralization – refers to decision-making: centralized (made by
management) or decentralized (made by employees). Depends on the
company’s situation and quality of its workers
• Line of Authority – top management down to lowest ranks
• Order – refers to environment and materials as well as policies and
rules. People and materials should be in the right place at the right
time
• Equity – fairness to everyone: both for management and employees
• Stability of Tenure – promotes loyalty and efficiency
Evolution of Management
Fayol’s 14 Principles of Management
• Initiative – the right to create plans and implement it makes
employees more enthusiastic at work
• Esprit de Corps – team spirit and harmony helps build morale and
unity inside the company
Evolution of Management

Frederick Winslow Taylor

• Published “The Principles of Scientific
Management” in 1911
• Father of Scientific Management
• Believed that money motivates people to work
• Introduced the DIFFERENTIAL PIECE RATE
SYSTEM of paying workers
Evolution of Management
Peter F. Drucker
• Father of Management
• Contributions to the modern business corporation
• Invented the concept known as management by
objective
• Vitalized the concept of the entrepreneur
• Published notable management book such as “The
End of Economic Man” in 1939; “The Concept of
Corporation” in 1946; and “The Age of
Discontinuity” in 1969, to name a few
Management
Functions
Objectives
• Enumerate the five basic management functions; and

• Explain each functions.

Planning
• Formulation of goals and objectives and the actions to achieve
them
• Requires sound decision-making: choosing among alternative
future course of action
• Closes the gap between ‘where we are now’ and ‘where we want to
be’
• Minimizes cost – puts emphasis on efficient and effective
operations
• Should include review and feedback mechanism to introduce new
planning cycle
Planning
Kinds of Plans
• Mission or purpose
• It identifies the basic function of an organization
• Defines the specific task an organization has to perform
• Missions can be achieved by following activities through clearly defined
directions
For example:
• The purpose of a business enterprise is to produce goods and services.
• The purpose of Bicol University is to produce leaders and change agents for social
transformation and development
Planning
Kinds of Plans
• Goals and objectives
• The result that must be achieved toward which effort is directed
• End point of planning
• Goals are made up of mission and purpose statements in a wider
perspective
• Objectives are goals expressed in concrete terms and are readily
measurable
• Objectives must be SMARTER: Specific, Measurable, Attainable, Relevant,
Time-bound, Ethical, Rewarded/Revisited
For example:
• Goal: Increase sales.
• Objective: Increase sales by 15% of last year’s annual sales.
Planning
Kinds of Plans
• Strategies
• Involves a series of maneuvers in obtaining a specific goal
• Determines the basic long-term objectives of an organization and use of
course of action and allocation of scarce resources needed to achieve
goals
• Provides managers framework for thoughtful planning and action
• Policies
• General statements that guide managers in decision-making
• Decide issues before they become problems
• Define the parameters of operation where decisions are made and to
ensure that decision will be consistent
Planning
Kinds of Plans
• Procedures
• Spelled-out plans in a detailed manner where specific activities must be
accomplished
• Guides that are chronologically arranged that organizations observe as
they operate
• Often cut across department lines
• Rules
• Simplest type of plan
• Regulations made by the organization over conduct observed by
employees without specific time sequence
For example:
• No smoking
• Observe silence
Planning
Kinds of Plans
• Programs
• Plans or schedules to be followed
• May be a minor one formulated by one supervisor to improve morale of
workers
• Budget
• Itemized estimate of expected income and expenses
• Statement of expected output expressed in numerical values
• Usually prepared in advance
For example:
• No smoking
• Observe silence
Planning
Steps in the Planning Process
1. Seek opportunities – starting point of planning is availability of
an opportunity and possible problems in the environment.
2. Establish objectives – specifies expected results. Objectives are
established yearly. Also necessary to refer to performance
indicators to ensure that objectives are being accomplished as
planned
3. Develop premises – premises are assumptions about the
environment where the plan is to be carried out. Forecasting is
very important during this step
Planning
Steps in the Planning Process
4. Determine alternatives – look for and determine alternative
courses of action. However, alternatives must be reduced to the
most promising one.
5. Evaluate alternative courses of action – after determining
alternatives, they must be evaluated by weighing them in terms of
goals
6. Select a course of action – the most crucial point when the plan is
to be adopted.
Planning
Steps in the Planning Process
7. Implementation – execution of the selected alternative
8. Evaluation – selected alternative may even undergo some
revisions and other adjustments
Organizing
• Originated from the word organism which means “to create a
structure with fully integrated parts that are related to each other
and is governed by their relationships to the whole” (Castro de
Lara, Nebres & Zulueta, 1999)
• A formal structure of roles, positions, responsibility and
accountability
• The means to develop a collective gap action for the attainment of
organizational goals and objectives
• Determines who does what and who reports to whom
Organizing
Basic Elements of Organizing
• Designing Jobs – process of organizing work into specific tasks in
performing a specific job

• Grouping Jobs – also called “departmentalization” or “job

specification”. Groups jobs according to some logical arrangement

• Establishing Reporting Relationships – an essential building block

in determining the chain of command: who is responsible to whom
and for what. The allocation of authority and responsibility among
employees
Organizing
Basic Elements of Organizing
• Distributing Authority– delegation of power. Involves assigning
portions of power/workload by managers to subordinates

• Coordinating Activities – links activities of different departments in

an organization

• Differentiating Between Positions – line position vs. staff position.

Line position – position in direct chain of command responsible
for the attainment of an organization’s goal (managers). Staff
position – position that provides support, expertise and advice to
line positions (expert employees, consultants)
Staffing
Staffing
• Personnel management or human resource management
• Process of supplying people needed by the organization to achieve
its goals and objectives
• Involves activities such as recruiting, interviewing, testing,
selecting, orienting, training, developing, caring for, evaluating,
rewarding, disciplining, promoting, transferring, demoting, and
dismissing employees, as well as managing union relations
• Must be clearly established and linked to organizing: setting up of
deliberate structures of roles and positions
Staffing
Factors Affecting Staffing
• External Environment – factors include educational, socio-cultural,
political and economic constraints or opportunities
• Internal Environment – involves factors within the organization
• Promotion from Within – promotion affects morale of employees
and their commitment to the organization
• Policy of Open Competition – opening of positions to best qualified
persons available, whether inside or outside the organization.
• Responsibility of Staffing
Directing
• Process where managers communicate and influence employees in
the pursuit of company objectives to achieve desired end

• Managing through which subordinates are motivated, persuaded

and encourage to contribute to the attainment of the
organization’s goals
Directing
Motivating
• Involves activities in shaping human behavior

• Defined as the process of influencing people to obtain specific

goals

• Process of stimulating someone’s interest in or enthusiasm to do

something

• Includes at least four major activities: leadership, group dynamics,

communication and organizational change
Directing
• Leadership – defined by Drucker as lifting one’s vision to higher
sights, raising of one’s performance to a higher standard, and
building of one’s personality beyond its normal limitations. It is
also the art of motivating people toward achieving a common goal

• Group dynamics – plays a big role in employee morale and

satisfaction. Informal groups form in all organizations. It is up to
the managers to identify its composition and nature to facilitate
strategy formulation, implementation and evaluation
Directing
• Communication – the most important word in management. An
organization’s system of communication determine whether
strategies can be implemented properly. Good communication
encourages subordinates to discuss their concerns, reveal
problems, provide recommendations and suggestions

• Organizational change – small changes in the organization may

result to unmotivated employees. It is up to the managers to keep
their employees happy during these changes by valuing their
opinions and personal developments
Directing
It is also believed that humans seek and pursue the ultimate
satisfaction of their needs. With this, one theory used by various
behavioral scientists is Maslow’s Hierarchy of Needs.
• Physiological
• Safety and Security
• Social
• Esteem
• Self-actualization
Directing

Self-fulfullment
Self-

Needs
actualization:
Achieving one’s
Abraham Harold Maslow full potential,
including creative
• American psychologist activities
Esteem:
• Known for Maslow’s

Psychological
Prestige and feeling of
Hierarchy of Needs

Needs
accomplishmnet
Social (sense of belongingness and
• Needs in the lower love):

portion of the pyramid Intimate relationships and friends

must be fulfilled first Safety and Security:

Basic Needs
When survival needs are provided for, people
before they can attend would want it to last
to the needs higher up Physiological Needs (survival needs):
Food, warmth, work, rest, sleep, air, movement
Controlling
• All activities made to ensure that actual operations are in line
with the planned operations

• The managerial function of evaluating performance to make sure

that organizational objectives and plans are being accomplished

• Control is the process of assuring management that

organizational plans, objectives, and other specific tasks are
efficiently and effectively carried out
Controlling
The Control Process
• Establishment of Standards – setting criteria where actual
performance can be measured. Most common tool used as
criterion is BUDGET. The budget shows the quantitative targets of
different departments within the organization and shows the
expected impact of these on income, balance sheet and cash flows

• Measurement of Performance – regular and proper monitoring of

performance must be done to determine where, when and how
often to inspect and check their performance
Controlling
The Control Process
• Remedies of Deviation – after the two processes has been done,
action should be made but it must also be uncomplicated to keep
up with the status quo. However, there are times where actions
taken will need a change in standards. Standard may not have
been met or conditions may have differ so that there is a need for
change
Categories of
Management
Strategic Management
• Defined as the art and science of formulation, implementation and
evaluation of cross-functional decisions that helps an organization
to achieve its objectives and goals (David, 2007)

• Focus on integrating management, marketing, finance/accounting,

production/operations, research and development, and computer
information systems to achieve success

• Almost synonymous to strategic planning

Strategic Management
Stages of Strategic Management
1. Strategy Formulation

- includes development of vision and mission statements;

identifying organization’s external opportunities and threats;
determining of internal strengths and weaknesses; establishing
long-term objectives; formulation of alternative strategies; and
choosing particular alternative to pursue
Strategic Management
Stages of Strategic Management
2. Strategy Implementation
- requires organizations to establish annual objectives, devise
policies, motivate employees, and allocate limited resources so that the
chosen strategy/alternative in strategy formulation stage can be executed
- often called the action stage of strategic management
- implementing strategy means mobilizing of resources to put
strategies into action
- strategies/alternatives formulated but not put into action is
useless
Strategic Management
Stages of Strategic Management
3. Strategy Formulation
- final stage in strategic management
- primary means to know if a particular strategy is working
well
- ALL strategies are subject for evaluation as it is affected by
changing external and internal factors
- needed by every organization because today’s success is no
guarantee of success tomorrow!
Strategic Management
PEST Analysis (Political-Economic-Social-Technological)
- one strategic business tool used by managers to identify
major external factors that influence an organization’s operations to
become more competitive in the market
- used for tracking macro-economic factors that affects the
current and future position of an organization
- useful tool in understanding market growth or decline;
position, potential and direction for an organization
- sometimes has two additional component: Environmental
and Legal (making the acronym into PESTEL Analysis)
Strategic Management
PEST Analysis (Political-Economic-Social-Technological)
POLITICAL – politically-motivated factors that affect the
organization
Example: government policy, corruption, competition regulation,
foreign trade and policy, trade restrictions,
labor/environmental/copyright/consumer protection laws, funding
grants and initiatives
Questions to ask:
Is the political environment stable or likely to change?
What government policies are in favor or detrimental to our
success?
Strategic Management
PEST Analysis (Political-Economic-Social-Technological)
ECONOMIC – overall economic factors that may influence success
Example: economic trends, growth rates, inflation rates,
international exchange rates, taxation, unemployment rates,
monetary policies, availability of credit
Questions to ask:
What economic factors may affect us moving forward?
How does the current economic performance affect us?
How are our pricing, revenues, and costs impacted by each
economic factor?
Strategic Management
PEST Analysis (Political-Economic-Social-Technological)
SOCIAL – social attitudes, behaviors, and trends that impact your
organization and market. Usually based on customers’ beliefs and
values.
Example: Attitudes and shared beliefs about a range of factors such
as money, customer service, religion, health, cultural taboos, leisure,
environment, family size/structure, lifestyle trends
Questions to ask:
How do our customers’ beliefs and values affect their buying
behavior?
How do cultural trends play a role in our business?
Strategic Management
PEST Analysis (Political-Economic-Social-Technological)
TECHNOLOGICAL – technology that can affect the way a business
make, distribute, and market your products and services
Example: Research and innovation, technology and communications
structure, emerging technologies, automation, technology
incentives, consumer access to technology
Questions to ask:
What technological advancements and innovations are
available in the area?
How will technologies impact our operations?
Strategic Management
Sample PEST Analysis of Food Industry
POLITICAL – expansive regulatory frameworks: such as cleanliness
of commercial kitchens, standards for storing and transporting
produce

ECONOMIC – growing disposable income: all individuals in the lower,

middle and upper classes all have more money to spend on luxuries.
Individuals today tend to cook less and eat out more often
increasing labor cost: cost of hiring workers is
increasing in all industries
Strategic Management
Sample PEST Analysis of Food Industry
SOCIAL – health consciousness: consumers become more conscious
of what they eat
dietary restrictions: consumers become more
knowledgeable about their dietary restrictions, many hypertensive
customers tend to avoid foods high in cholesterol, and saturated and
trans fat

TECHNOLOGICAL – automation: best example is the self-checkout

screens at McDonalds
Strategic Management
SWOT Analysis (Strengths-Weaknesses-Opportunities-Threats)
- an important matching tool that helps managers develop four
types of strategies: SO (strength-opportunity) strategies, WO (weakness-
opportunity) strategies, ST (strength-threat) strategies and WT
(weakness-threat) strategies

Strength and weakness can be found internally or within the

organization.
For example:
STRENGTHS – skilled workers, excellent legal department, largest
market share, known brand
WEAKNESSES – many debts, lacks innovation, no available
research and development department
Strategic Management
SWOT Analysis (Strengths-Weaknesses-Opportunities-Threats)
Opportunities and threats are external factors that may affect the
organization.
For example:
OPPORTUNITY – increase in disposable income of customers,
increased governmental support
THREAT – changing government regulations, frequent natural
disaster, terrorism, many competitors, economic recession
Strategic Management
SWOT Analysis (Strengths-Weaknesses-Opportunities-Threats)
SO Strategies – uses a firm’s internal strength to take advantage of
external opportunities
WO Strategies – used to improve a firm’s weaknesses by taking
advantage of external opportunities
ST Strategies – uses a firm’s strengths to lessen or avoid the impacts
of external threats
WT Strategies – usually defensive tactics aimed at reducing internal
weakness and avoid external threats
Strategic Management
SWOT Analysis (Strengths-Weaknesses-Opportunities-Threats)
Steps in constructing a SWOT Matrix
1. List the organization’s key external opportunities.
2. List the organization’s key external threats.
3. List the organization’s key internal strengths.
4. List the organization’s key internal weaknesses.
5. Match internal strengths with external opportunities, and record the
resulting SO Strategies in the correct cell.
6. Match internal weaknesses with external opportunities, and record the
resulting WO Strategies in the correct cell.
7. Match internal strengths with external threats, and record the resulting ST
Strategies in the correct cell.
8. Match internal weaknesses with external threats, and record the resulting
WT Strategies in the correct cell.
Sample SWOT Matrix for a Cruise Line Company
STRENGTHS – S WEAKNESSES – W
1. Holds 34% market share 1. Major loss in affiliated operations
2. Largest fleet of ship 2. Increased debt from building new ships
3. Six different cruise line 3. Not serving Asian market
4. Innovator in cruise travel industry
5. Largest variety of ships
6. Building largest cruise ship
7. High brand recognition
8. Internet friendly with online booking
OPPORTUNITIES – O SO STRATEGIES WO STRATEGIES
1. Air travel has decreased 1. Increase capacity of ships to obtain 1. Begin serving Japan and Pacific Islands
2. Asian market not being served travelers from air industry (S6, O1, O3) (W3, O2, O3, O4)
3. Possible acquisition of Princess Cruise 2. Display the weather of vacation locations 2. Use weather forecasting to alert customers
Lines on website (S8, O4) of possible storm during their vacation
4. New weather forecasting systems 3. Offer Trans-Atlantic cruises (S6, O4) (W1,O4)
available 4. Acquire P&O Princess (S1, O3)
THREATS – T ST STRATEGIES WT STRATEGIES
1. Decrease in travel 1. Advertise ship variety, brand recognition 1. Lower prices of cruise during hurricane
2. Terrorism and safety policies (S3, S7, T1, T2, T3) season (W1, T4)
3. Economic recession 2. Advertise alternative vacations that are not 2. Research viability of entering other foreign
4. Chance of natural disasters affected by hurricane season (S3, T3, T5) markets (W2, W3, T6, S8)
5. Increasing fuel prices 3. Offer discounts on website (S8, T4)
6. Changing government regulations
Strategic Management
Porter’s Five Forces Model
- a framework in analyzing the competitive environment of a
company

- defines the five forces that affect the attractiveness of an

industry in terms of its profitability
Strategic Management
Porter’s Five Forces Model
1. Barriers to entry – profitable industries attract more entities
therefore, it is up to the current players to make it more difficult or
easy for a new entrant to venture into such industry

2. Threat of substitute products – substitute products are products

that are made of different materials or technology but are used to
meet the same needs. For example: chicken meat as substitute for
pork in terms of protein need
Strategic Management
Porter’s Five Forces Model
3. Bargaining power of buyers – this is the ability of the customer to
put pressure on a company, especially on the prices of their
products

4. Bargaining power of suppliers – suppliers of raw materials can

also put pressure to a company especially if there are few substitute

5. Industry Rivalry – the intensity of competition in an industry

Thank you!