Notes of Management Concepts

1 MANAGEMENT CONCEPTS
Teacher’s name: Sir Farrukh Usman

Book recommended: Robbins 7th edition
Lectures compiled by: Muhammad irfan Malik
(FUUAST gulshan campus)
Who is a manager?
A manager is someone who works with and through other people to coordinate work
activities to achieve the organizational objectives.
Define management
Such a process that is used to attain the objectives of an organization by efficient

and effective planning, organizing, leading and controlling its human, physical,
informational and financial resources.
Define the terms which are underlined in the definition of management
Objectives: objectives are the desired outcomes
• Efficient: getting the most output from the least amount of input
• Effective: performing activities that help in achieving the organizational goals
• Planning: the process of determining objectives, establishing an overall

strategy to achieve the objectives and creating a set of plans to coordinate
organizational work.
• Organizing: the process of determining what tasks to be done, who is to do

them and where the decisions are made
• Leading: process of motivating people to achieve objectives, hiring, selecting,

promoting and firing the employees.
PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL

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• Controlling: it is the process of monitoring actual performance, comparing

actual with the standard and taking corrective action in case of significant
deviations.
What is an organization?
An organization is a group of people in which the arrangement is deliberate to

achieve a particular objective.
Management levels
There are three levels of management
Top, middle, low or first line managers
First line managers supervise the work activities of non managerial staff who are
directly involved in the process of producing goods and services
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Middle managers are product, line, divisional and branch their work is to supervise
first line managers.
Top management takes organizational and major decisions that effect the whole
organization i.e. which business to enter, product launch and deals with the
competition.
Management roles
A manager performs the following three roles
Interpersonal roles: Involve people and other duties that are symbolic.
Figurehead: manager is a symbolic head of the org.
Liaison: to maintain contacts between insiders and outsiders and within the
organization department.
Leader: motivate employees, selects, hire promote and fire them
Informational roles: Involves receiving, collecting and disseminating

information
Monitor: receives information observe and monitor the information
Disseminator: information delivering to the members of organization and partners
Spokesperson: providing information to outsiders
Decisional roles: revolves around decision making

Entrepreneur: analyze environment, select opportunity and avail the opportunity.
Resource allocator: allocates the human, physical, informational and financial

resources of the organization.
Disturbance handler: competition handling, conflict handling among employees.
Negotiator: negotiate for sales purchase etc.

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Management skills:
There are three types of skills
Technical skills:
The knowledge of or the proficiency in a particular field
Human skills
The ability to work well with the people both individually and in groups
Conceptual skills
The ability to think and conceptualize about complex and abstract (none existing)
situation
System perspective
Different interrelated and interdependent parts working together to achieve a
particular.
Open system: system that interacts with the environment, take input and sometimes
output to produce goods
Close system
System that does nor interact or influenced by the environment

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What is interdependency of the departments in the organization/
The organization departments are dependent on each other. If the production

department is very efficient but the marketing department is not competent to
properly market the products and does not support the production department the
organization will suffer in this scenario.
Contingency perspective
A view that says the organizations are different and face different situations therefore
they require different ways of management.
Universality of management
A view that says management is required in all types of organizations, all sizes of
organization, in all organizational areas and at all levels of organization
Management theories
• Scientific management
• General administrative approach
• Quantitative approach
• Human behavior approach
Scientific management
Principles of scientific management
• Develop a science for each element of the work
• Scientifically select and train workers
• Heartily cooperate with the subordinates
• Divide work and responsibilities equally between worker and manager

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Fredrick Taylor observed the workers for 20 years and find out the inefficiency that is
why it is called the scientific management. Scientific selection means ability and job
requirements should match and training means match ability and than train. Frenk
and Lillian captured the workers and decrease the work activities. Scientific
management focuses on the efficiency of lower level
General administrative approach

Fayol’s 14 principles of management
Division of work: dividing a complete job into narrow and repetitive components.
Authority: rights inherent in a managerial position to tell people what to do and

expect them to do that.
Unity of command: each employee should report to one superior there should be
one boss for all subordinates.
Unity of direction: there should be a single plan of action
Subordination of individual interest to general interest: organizational objectives

should be the priority then the interest of individual interest.
Equity: manager should be kind there should be no discriminations.
Initiative: where there is more load of work on employees.
Scalar chain;
Authority flow should be from top to bottom.
Order: people and equipment should be at right place at right time.
Discipline: obedience of rules
Stability of tenure of personnel: labor tenure should be stable; labor turnover rate
should be low.
Centralization: in an organization where decisions are made by the top

management is called centralization.

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Remunerations: wages and payment should be fair.
Spirit de caught: team work
Max Weber
Bureaucracy: a form of organization characterized by division of labor, clearly

defined hierarchy, detailed rules and regulations and impersonal relationship.
Hierarchy: flow of authority should be defined who is superior
Quantitative approach
Use of quantitative techniques to improve decision making, statistical and

mathematical techniques are called quantitative techniques such as how much
quantity should we order.
Decision making
Define the decision making
A choice from two of more alternatives to solve the problem
Steps in decision making
• Identification of the problem: symptoms of the problem, when actual

performance is measured with the standard, if there is deviation there is a
problem. It shows symptoms. E.g. our sales are less than expected sales, It is
a symptom we have to discus the cause of the problem, the causes may be:
a. Weak advertisement
b. Weak product quality
c. Tough competition
d. Price increase

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• Identification of the decision criteria: it tells when the decision is going to

be taken. A decision criterion means what is relevant to the decision. E.g. for
advertisement
➢ Select the firm
➢ What cost
➢ What slogan
➢ What timing (what should be the timing of ad)
• Allocating weights to the criteria: every criterion is not important. We will

give weights to the criteria. Make the list of the alternatives.
• Developing the decision alternatives: make a list of the alternatives
• Analysis of the alternatives: carefully analyze the alternatives
Analysis of the firms for selection of advertisement
Firms Cost Reliability Slogan Timing
A 7 2 4 1
B 3 8 5 1
C 8 7 3 1
• Selection of an alternative: select the most appropriate alternative
Selection of the advertisement firms

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Firms Cost Reliability Slogan Timing Total
A 35 20 16 4 75
B 15 80 20 4 119
C 40 70 12 4 126
• Implementing an alternative : implement the alternative, make the decision,
• Evaluating results: evaluate the results through controlling.
Pervasiveness of decision making
Decision making is involved in every managerial function. It is involved in planning,

organizing, leading, controlling. Some experts say: managers are paid because they
make decisions.
Rational decision making
To select the best alternative is rational decision making
Assumptions of rational decision making
➢ The problem is cleared is unambiguous
➢ A single well defined goal is to be achieved
➢ All alternatives and consequences are known
➢ Preferences are cleared
➢ Preferences are constant and stable
➢ No cost or time constraints exist
➢ Final choice will maximize pay off

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Bounded rationality
Behavior that is rational within the parameters of simplified decision making process
which is limited or bounded by an individual’s ability to process information.
Intuitive decision making
A subconscious process of making decisions on the basis of experience and

accumulated judgments
Types of problems and decisions

Problems:
Structured problems: clear, straight forward, familiar, simple and well defined
problems
Unstructured problems: a problem that is not familiar and rarely faced by the
organizations is called unstructured problem
Decisions:
Program decisions: a simple, straight approach to solve the problem.
Non program decision: decision that need to be defined for a specific problem.
Planning
The process of determining objectives, establishing an overall strategy to achieve
the objectives and creating a set of plans to coordinate organizational work, At least
four years of plans should be planed in advance. The two important things of
planning are goal and plan. Goal is the desired outcome whereas plan is a
document that outlines how goals are going to be achieved including resource
allocation, scheduling necessary actions to achieve organizational goals.
Types of goals:
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Stated: written in the chartered, MOA, financial statements.
Real: actually defined by the actions of the members.
Purpose of planning;
➢ Gives directions: each member of the organization knows the rules and
regulations and the goals are very clearly set
➢ Reduce uncertainty: one can not prevent himself from the environment,
planning identifies the changes in the environment and that expected change
can be tackled.
➢ Minimize wastage: in planning the wastage can be highlighted, planning

minimizes the wastage of resources.
➢ Set standards used in controlling: planning supports controlling.
Types of plans on the basis of strategic plans

Breadth
Strategic plans: plans that apply to the entire organization and seek to position the
organization in terms of its environment.
Operational plans: plans that specify the details that how overall goals are to be
achieved.
Time frame
Long term: the plans which are for three or more years are long term plans.
Short term: plans for one or less than one year.
Specifically
Specific: plans that leave no room for interpretation
Directional: plans that set out general guidelines for activities
Frequency of use
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Single use: plans that are created to meet the needs of a unique situation
Standing use: plans that are used to guide the activities that are performed
repeatedly, they look the whole organization.
Approaches to goal setting:

Traditional approach of planning: goals are set by the top management
Management by objective MBO: goals are jointly determined by subordinates and

supervisors. Progress towards these goals periodically is assessed and rewards are
allocated on the basis of this progress.
Four elements of MBO:
• Participative decision making
• Performance feedback
• Goals specific
• Explicit time period
Characteristics of well designed plan:

• Measurable:
Goals should be measurable whither the marketing department could

increase sales; production department could decrease the prices and
enhanced the quality.
• Written:
The goals and plan should be in black and white. Written plans are evidence
and when you write you conceptualize more.
• Challenging:
The plans should be challenging but achievable. Challenging goals motivate

employees to achieve them.
• Clear as to time frame:

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The time should be clearly stated that in what period we want to achieve our
goals if the time is not clear we can not measure the performance.
• Communicated to all organization members:
The goals should be communicated to all organization members so that one

can know that where we are and what we want to achieve.
• Defined in terms of outcomes rather than actions:
Outcome is what we want to attain what to we want to get. The goals should
state the outcomes rather actions.
Contingency factor in planning:

Organizational level:
Top level: specific plans
Low level: operational plans
Environment uncertainty:
Directional plans
Length of further commitment:
If length of work is high plan should be high
Criticism on planning:
Creates rigidity:
Planning locks the managers
Can not be done for dynamic environment:
Can not be planed for an environment because the environment changes so fast
Reduce creativity:
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When the managers are rigid or locked creativity is reduced.
Strategic management
The set of decisions and actions that determine long run performance of an
organization, strategy is an action taken in response to competitors.
Strategic management process
• Analyze the current mission objectives and strategies
Analyze the objectives whether they are measurable or not review the
strategies and mission statement
• Analyzing the environment (external analysis)
Analyze the micro and macro environment
• Identifying threats and opportunities
Space to enter in a market is opportunity, threats of future which the company

may face in the long run.
• Analyze the organizational resources and capabilities (internal analysis)
Analyze the human, physical, financial resources, after sales services

activities may be our best capability
• Identifying strengths and weaknesses
Strength/capabilities: any unique resource that organizations possess or

activities that organizations perform well and better than others
Weakness: any resource that an organization needs but does not possess or
activities do not performed well.
• Formulating strategies
Design and make the strategies and plan
• Implementing strategies

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Implement the strategy in letter and spirit
• Evaluating strategies:
Evaluate the results through controlling.
Components of a mission statement:

Market: which is the market to target?
Customers: who are the customers of the firm? Students, teachers, doctors
Product: which need of the customer to satisfy? What will be the product?
Technology: whether using the current technology or not?
Self concept: which is the competitive advantage of the firm?
Concerns for employees: providing benefits to employees
Concerns for public image: societal marketing, green marketing
Concerns for growth and stability: searching new market for growth and stability
Business strategies
a. Corporate level strategies
b. Business level strategies
c. Functional level strategies
Corporate level strategies:
A strategy that seeks to determine what business a company should be in or wants

to be in
1. Stability: A strategy characterized by an absence of a significant change.

Work force, marker share, production
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2. Growth: a strategy in which an organization increase its operations

a. Direct expansion: growth can be achieved by different ways, new products
same market, same product new in this strategy firm wants to increase the
sales in existing and new markets.
b. Vertical integration: control on suppler and distributor
• Backward integration: control on supplier or self suppler
• Forward integration: control on distributor or self distributor
• Horizontal integration: combining operations with competitors to reduce
threats and avoid competition.
a. Diversification
• Related diversification: diversifying the products related to the main
products or business
• Unrelated: diversifying the product which is not related to the main
products of business
1. Defensive strategies
a. Retrenchment: downsizing or reduction or sales of assets
b. Divestiture: selling of the SBU which is unprofitable
c. Liquidation: selling complete organization
Business level strategies:
A strategy that determines how each SBU should compete in its industry.
Cost leadership: edge on the basis of cost, leader in the market, market leader.

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Differentiation: product is significantly different of the competitor
Focus: in big market satisfy the smaller segment which is called niche marketing.
Five forces that determine the industry attractiveness by Michel porter
1. Threats of new entrants
Capital requirements, brand loyalty
2. Threats of substitute products
Switching cost (price, time, energy) brand loyalty
3. Bargaining power of customer
Numbers of customer, customer information availability or substitute
4. Bargaining power of suppler
Supplier concentrations, availability and substitute input
5. Existing rivalry among firms
Product differences, industry growth rate
What is competitive advantage?
Any thing that sets a firm apart from its competitors design, service, unique strength
capability, unique resources, raw material, and technology may be the competitive
advantage of the firm.
Organizing
The process of determining what tasks to be done, which is to do them and where
the decisions are made
Organizational structure:
Formal framework through which jobs are divided, grouped and coordinated
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Organization design:
When a manager is engaged in changing structure is called organization design.
Factors that affect the organizational design
Work specialization: each component of the work should be done by specialized

individual
Departmentalization: the basis through which jobs are grouped together
a) Functional departmentalization: grouping of activities on the basis of functions

performed i.e. marketing, sales, accounts, etc
b) Product departmentalization: grouping of activities on the basis of product line
c) Customer departmentalization: grouping of activities on the basis of
customers. Customers can be segmented shoes companies can divide
customers as male and female.
d) Process departmentalization: grouping of activities on the basis of customers
and product flow.
e) Geographical departmentalization: departmentalization on the basis of
territory i.e. Karachi branch, Lahore branch
Chain of command: the continuous line of authority that extends from top
organizational level to lower and classify who reports to whom
a) Authority: rights inherent in a managerial position to tell people what to do and

expect them to do so
b) Responsibility: the obligation to perform any assigned duty is called
responsibility
c) Unity of command: each employee should report to only one superior, there
should be one boss for a single department
Span of control: the number of employees a manager can effectively and efficiently
manage is called span of control.
a) Training: trained employees require less supervision

b) Skill: if the worker is skilled the span will be wider
c) Complexity of tasks: complex tasks require more supervision
d) Simplicity of tasks: simple tasks widen the span
e) Sophistication of information system: if the information is not easily available
the employee will require more supervision
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f) Environment: stable environment wider span unstable environment narrow

span
Centralization and decentralization
The degree to which decision making in an organization is concentrated on a single

point is celled centralization.
The degree to which lower level employees are involved in decision making or
actually make the decisions is called decentralization
Formulization
The degree to which jobs within the organization are standardized at the extent to
which employee behavior is guided by rules and procedures
Factors of centralization and decentralization
• Environment:
Stable environment centralization unstable decentralization
• Nature of decision
If the decision is significant it should be centralized
• Skills of employees
Unskilled employees’ centralization, skilled employees’ decentralization
• Size of the company
Large size centralization, geographic decentralization
• Autocratic
Centralization
• Democratic
Decentralization
Organizational design:
Mechanistic: formulation, centralization, cross action teams, chain of command, rigid,

work specialization.
Organic: adoptive, not strict, jobs not highly standardized, departments are not rigid,
decentralization.
Factors of organizational design:

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Strategy: strategy is the means of achieving short term objectives in response to the
competitor. There are three strategies:
Cost minimization, innovation, imitation.
Technology:
Routine technology; structure is mechanistic, non routine technology; organic.
Size:
As the size increases its mechanistic
Environmental uncertainty:
If environment is stable the design is mechanistic
Leadership
A person who has followers is leader, the difference between a leader and a
manager is that the managers are appointed in contrast the leaders normally emerge
within a group. Leading is to influence people it can perform beyond the actions. All
the managers should be leader. Leader is someone who influences people and
managerial authority leadership is the process of influencing people towards the
achievement of a particular objective.
Characteristics of leadership
Trait theory:
Traits means the qualities or characteristics
Drive:
To exert high level of efforts, more needs of achievement and tireless efforts,
initiative.
Desire to lead:
Strong desire to lead and assumed great responsibility
Honesty and integrity:

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A leader should be truthful, consistent in words and deeds and there should be a
relationship between leaders the followers.
Intelligence:
The processing capability of a leader should be very should have the quality of
interpreting information
Self confidence:
Should be highly confident, the confidence will develop if the information or

knowledge will be reliable.
Job relative knowledge:
Must posses the knowledge about the company, industry, and technology
Behavioral theories
University of Lowa state
Autocratic style: a leader who centralize authority, dictate work methods and limit
employee participation
Democratic style: a leader who involves subordinates in decision making, delegates’

authority encourages participation in deciding work methods and goals.
Lazes fair: a leader who gives a group a complete freedom to make decision and
complete the work in whatever way it saw fit. For example an assignment by the
teacher
Ohio State
a. Initiating structure: the extent to which a leader was likely to define and
structure his or her role and the roles of the followers in the search for goal
attainment.
b. Consideration (friendly leader): the extent to which the leader has job
relationships characterized by mutual trust and the group members ideas and
feelings
University of Michigan study
• Employee oriented leaders

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• Production oriented leaders
Managerial Grid
Situational theories
The degree to which members have trust, respect and confidence in their leader
Fiedler contingency model

The Fiedler contingency model is a leadership theory of industrial and
organizational psychology developed by Fred Fiedler (born 1922), one of the leading
scientists who helped his field move from the research of traits and personal
characteristics of leaders to leadership styles and behaviors.
Two factors
The first management style, Taylorists, assumed there was one best style of
leadership. Fiedler’s contingency model postulates that the leader’s effectiveness is
based on ‘situational contingency’ this is a result of interaction of two factors:
leadership style and situational favorableness (later called situational control). More
than 400 studies have since investigated this relationship.
Least preferred co-worker (LPC)
The leadership style of the leader, thus, fixed and measured by what he calls the
least preferred co-worker (LPC) scale, an instrument for measuring an individual’s
leadership orientation. The LPC scale asks a leader to think of all the people with
whom they have ever worked and then describe the person, with whom they have
worked least well, using a series of bipolar scales of 1 to 8, such as the following:

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Unfriendly 1 2 3 4 5 6 7 8 Friendly
Uncooperative 1 2 3 4 5 6 7 8 Cooperative
Hostile 1 2 3 4 5 6 7 8 Supportive
.... 1 2 3 4 5 6 7 8 ....
Guarded 1 2 3 4 5 6 7 8 Open
The responses to these scales (usually 18-25 in total) are summed and averaged: a
high LPC score suggests that the leader has a human relations orientation, while
a low LPC score indicates a task orientation. Fiedler assumes that everybody's
least preferred coworker in fact is on average about equally unpleasant. But people
who are indeed relationship motivated, tend to describe their least preferred
coworkers in a more positive manner, e.g., more pleasant and more efficient.
Therefore, they receive higher LPC scores. People who are task motivated, on the
other hand, tend to rate their least preferred coworkers in a more negative manner.
Therefore, they receive lower LPC scores. So, the Least Preferred Coworker (LPC)
scale is actually not about the least preferred worker at all, instead, it is about the
person who takes the test; it is about that person's motivation type. This is so,
because, individuals who rate their least preferred coworker in relatively favorable
light on these scales derive satisfaction out of interpersonal relationship, and those
who rate the coworker in a relatively unfavorable light get satisfaction out of
successful task performance. This method reveals an individual's emotional reaction
to people they cannot work with. Critics point out that this is not always an accurate
measurement of leadership effectiveness.
Situational favorableness
According to Fiedler, there is no ideal leader. Both low-LPC (task-oriented) and high-
LPC (relationship-oriented) leaders can be effective if their leadership orientation fits
the situation. The contingency theory allows for predicting the characteristics of the
appropriate situations for effectiveness. Three situational components determine the
favorableness of situational control:
1. Leader-Member Relations, referring to the degree of mutual trust, respect and
confidence between the leader and the subordinates.
2. Task Structure, referring to the extent to which group tasks are clear and
structured.
3. Leader Position Power, referring to the power inherent in the leader's position
itself.
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When there is a good leader-member relation, a highly structured task, and high
leader position power, the situation is considered a "favorable situation." Fiedler
found that low-LPC leaders are more effective in extremely favorable or unfavorable
situations, whereas high-LPC leaders perform best in situations with intermediate
favorability.
Leader-situation match and mismatch
Since personality is relatively stable, the contingency model suggests that improving
effectiveness requires changing the situation to fit the leader. This is called "job
engineering." The organization or the leader may increase or decrease task structure
and position power, also training and group development may improve leader-
member relations. In his 1976 book Improving Leadership Effectiveness: the
Leader Match Concept Fiedler (with Martin Chemers and Linda Maher) offers a self
paced leadership training program designed to help leaders alter the favorableness
of the situation, or situational control.
Examples
• Task-oriented leadership would be advisable in natural disaster, like a flood or
fire. In an uncertain situation the leader-member relations are usually poor,
the task is unstructured, and the position power is weak. The one who
emerges as a leader to direct the group's activity usually does not know
subordinates personally. The task-oriented leader who gets things
accomplished proves to be the most successful. If the leader is considerate
(relationship-oriented), they may waste so much time in the disaster, that
things get out of control and lives are lost.
• Blue-collar workers generally want to know exactly what they are supposed to
do. Therefore, their work environment is usually highly structured. The
leader's position power is strong if management backs their decision. Finally,
even though the leader may not be relationship-oriented, leader-member
relations may be extremely strong if they can gain promotions and salary
increases for subordinates. Under these situations the task-oriented style of
leadership is preferred over the (considerate) relationship-oriented style.
• The considerate (relationship-oriented) style of leadership can be appropriate
in an environment where the situation is moderately favorable or certain. For
example, when (1) leader-member relations are good, (2) the task is
unstructured, and (3) position power is weak. Situations like this exist with
research scientists, who do not like superiors to structure the task for them.

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They prefer to follow their own creative leads in order to solve problems. In a
situation like this a considerate style of leadership is preferred over the task-
oriented
Hersey and Blanchard's Situational Leadership

Assumptions
Leaders should adapt their style to follower development style (or 'maturity'), based
on how ready and willing the follower is to perform required tasks (that is, their
competence and motivation).
There are four leadership styles (S1 to S4) that match the development levels (D1
to D4) of the followers.
The four styles suggest that leaders should put greater or less focus on the task in
question and/or the relationship between the leader and the follower, depending on
the development level of the follower.
Style
Follower development level
Leadership style in Low High

response to follower R4 R3 R2 R1
development level Task / directive behavior
Low High
Relationshi High
p /
supportive S3 S2
behavior Low
participating Selling
S4 S1
Delegating Telling
S1: Telling / Directing

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Follower: R1: Low competence, low commitment / Unable and unwilling or insecure
Leader: High task focus, low relationship focus
When the follower cannot do the job and is unwilling or afraid to try, then the leader
takes a highly directive role, telling them what to do but without a great deal of
concern for the relationship. The leader may also provide a working structure, both
for the job and in terms of how the person is controlled.
The leader may first find out why the person is not motivated and if there are any
limitations in ability. These two factors may be linked, for example where a person
believes they are less capable than they should be may be in some form of denial
or other coping. They follower may also lack self-confidence as a result.
If the leader focused more on the relationship, the follower may become confused
about what must be done and what is optional. The leader thus maintains a clear
'does this' position to ensure all required actions are clear.
S2: Selling / Coaching
Follower: R2: Some competence, variable commitment / Unable but willing or
motivated
Leader: High task focus, high relationship focus
When the follower can do the job, at least to some extent, and perhaps is over-
confident about their ability in this, then 'telling' them what to do may demotivate
them or lead to resistance. The leader thus needs to 'sell' another way of working,
explaining and clarifying decisions.
The leader thus spends time listening and advising and, where appropriate, helping
the follower to gain necessary skills through coaching methods.
Note: S1 and S2 are leader-driven.
S3: Participating / Supporting
Follower: R3: High competence, variable commitment / Able but unwilling or
insecure
Leader: Low task focus, high relationship focus
When the follower can do the job, but is refusing to do it or otherwise showing
insufficient commitment, the leader need not worry about showing them what to do,
and instead is concerned with finding out why the person is refusing and thence
persuading them to cooperate.

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There is less excuse here for followers to be reticent about their ability, and the key
is very much around motivation. If the causes are found then they can be
addressed by the leader. The leader thus spends time listening, praising and
otherwise making the follower feel good when they show the necessary
commitment.
S4: Delegating / Observing
Follower: R4: High competence, high commitment / Able and willing or motivated
Leader: Low task focus, low relationship focus
When the follower can do the job and is motivated to do it, then the leader can
basically leave them to it, largely trusting them to get on with the job although they
also may need to keep a relatively distant eye on things to ensure everything is
going to plan.
Followers at this level have less need for support or frequent praise, although as
with anyone, occasional recognition is always welcome.
Path-Goal Theory of Leadership

Description
The Path-Goal Theory of Leadership was developed to describe the way that
leaders encourage and support their followers in achieving the goals they have
been set by making the path that they should take clear and easy.
In particular, leaders:
• Clarify the path so subordinates know which way to go.
• Remove roadblocks that are stopping them going there.
• Increasing the rewards along the route.
Leaders can take a strong or limited approach in these. In clarifying the path, they
may be directive or give vague hints. In removing roadblocks, they may scour the
path or help the follower move the bigger blocks. In increasing rewards, they may
give occasional encouragement or pave the way with gold.
This variation in approach will depend on the situation, including the follower's
capability and motivation, as well as the difficulty of the job and other contextual
factors.
House and Mitchell (1974) describe four styles of leadership:

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Supportive leadership
Considering the needs of the follower, showing concern for their welfare and
creating a friendly working environment. This includes increasing the follower's
self-esteem and making the job more interesting. This approach is best when the
work is stressful, boring or hazardous.
Directive leadership
Telling followers what needs to be done and giving appropriate guidance along the
way. This includes giving them schedules of specific work to be done at specific
times. Rewards may also be increased as needed and role ambiguity decreased
(by telling them what they should be doing).
This may be used when the task is unstructured and complex and the follower is
inexperienced. This increases the follower's sense of security and control and
hence is appropriate to the situation.
Participative leadership
Consulting with followers and taking their ideas into account when making decisions
and taking particular actions. This approach is best when the followers are expert
and their advice is both needed and they expect to be able to give it.
Achievement-oriented leadership:
Setting challenging goals, both in work and in self-improvement (and often
together). High standards are demonstrated and expected. The leader shows faith
in the capabilities of the follower to succeed. This approach is best when the task is
complex.
Contingency factors:
• Environmental
• Work group
• Formal authority
• Task and structure
Follower’s personal trait
• Locus of control
• Perceived ability
• Experience
Leadership power:

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An essential part of leadership or management is to influence the people you

manage so that they do what you want them to do. The influence of a leader will
depend on a variety of factors including their personality and of those around them.
For the purposes of this article we will refer to the people that the leader is managing
or leading as followers. The influence of a leader over his followers is often referred
to as power. Below we will explore the different types of power a leader may have.
Reward Power
This type of influence is created when the leader is able to offer a reward to his
followers for completing tasks/behaving in a certain manner. Rewards in the
workplace can take a variety of forms from chocolates, gift vouchers and holidays to
promotions, commission and pay rises. This reward will only be effective if ;
• Firstly - the reward appeals to the followers. As you are aware there is no
point offering chocolate as a reward to somebody that likes crisps. This is
because they will not view chocolate as a reward, so there is no incentive to
complete the task.
• Secondly – the followers have to believe that the leader will give them (or
arrange for them to receive) the reward promised once the task is completed
by them.
Thirdly – the reward should be proportionate to the task the follower has to
complete. For example it would be disproportionate to reward an employee
with a promotion for making a cup of tea. Similarly a follower would feel
undervalued, if rewarded with a £5 gift voucher after they spent six months
doing their managers job without a pay rise.
• This type of power needs to be used carefully to prevent followers becoming

accustomed to rewards and refusing to complete routine tasks without a
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reward. Generally rewards should not be offered, to follower employees to

complete duties which are a normal part of their role. This is because as an
employee they are under a contractual obligation to complete these tasks and
they are already rewarded for this through their salary.
• The other reason why rewards should be offered carefully is that frequent use
can reduce the impact or influence that offering a reward initially had on the
follower. Followers will soon tire of the reward especially if the reward is small
for example chocolates or flowers.
Coercive Power
This is the opposite of reward power because this power is based on the leader
having control over what happens if followers do not act as required. If followers do
not undertake the action required, the leader will impose a penalty. Penalties take a
variety of forms including withdrawal of privileges, job losses, verbal abuse, and
delayed or loss of promotion. In all cases the leader will need to choose the penalty
carefully to prevent breaking the law or being the subject of an employment tribunal.
• Coercive power requires followers to believe that the leader has the ability to
impose the stated penalty. Also the penalty has to be something that the
followers do not want to have imposed on them. For example a penalty results
in coffee being banned is unlikely to influence a tea drinker.
• Finally (just as the reward in reward power should be proportional to the

action taken by the follower), the penalty should be proportionate to the action
not completed by the follower. For example it would be disproportionate to fire
an employee follower the first time they do not return from their lunch break at
the stated time. Similarly it is disproportionate to reduce the wages of an
employee follower that hasn’t completed their duties over a six month period
by £20 when their monthly pay is £1000.

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• Coercive powers should be used carefully; overuse can lead to unhappy

employee followers. Unhappy followers can be negative or unmotivated; they
may resign or adopt a “work to rule” attitude. Work to rule is where employees
refuse to undertake any duties (or adopt working practices) that are not stated
in their contract.
Legitimate Power
This is the power that a leader has when the followers believe that the leader has “a
right” to instruct them and that they have an obligation to follow instructions.
Sometimes legitimacy power is created by the leader’s job title (such as captain,
doctor, or area manager), combined with the follower’s belief that the job title gives
the leader the right to give them orders.
Referent Power
This is created when the followers believe that the leader possess qualities that they
admire and would like to possess. The followers identify with their leader and attempt
to copy their leader. As referent power is dependant on how the follower views the
personality of their leader, a leader will not have referent power over every follower
they lead. Some leaders will have referent power over just a few, whilst others such
as Gandhi have lead millions through their personality and charisma.
Expert Power
As the title suggests a leader has expert power when the followers believe that the
leader has “expert” knowledge or skills that are relevant to the job or tasks they have
to complete. Often an experienced member of the team or staff in an organization
can have expert power even though they are not a supervisor or manager.
Controlling
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Controlling as a management function involves following steps:
1. Establishment of standards- Standards are the plans or the targets which

have to be achieved in the course of business function. They can also be
called as the criterions for judging the performance. Standards generally are
classified into two-
a. Measurable or tangible - Those standards which can be measured and

expressed are called as measurable standards. They can be in form of
cost, output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be

measured monetarily. For example- performance of a manager,
deviation of workers, their attitudes towards a concern. These are
called as intangible standards.
Controlling becomes easy through establishment of these standards because

controlling is exercised on the basis of these standards.
2. Measurement of performance- The second major step in controlling is to

measure the performance. Finding out deviations becomes easy through
measuring the actual performance. Performance levels are sometimes easy
to measure and sometimes difficult. Measurement of tangible standards is
easy as it can be expressed in units, cost, money terms, etc. Quantitative
measurement becomes difficult when performance of manager has to be
measured. Performance of a manager cannot be measured in quantities. It
can be measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment,

and
d. Their communication with the superiors.

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It is also sometimes done through various reports like weekly, monthly,

quarterly, yearly reports.
3. Comparison of actual and standard performance- Comparison of actual

performance with the planned targets is very important. Deviation can be
defined as the gap between actual performance and the planned targets. The
manager has to find out two things here- extent of deviation and cause of
deviation. Extent of deviation means that the manager has to find out whether
the deviation is positive or negative or whether the actual performance is in
conformity with the planned performance. The managers have to exercise
control by exception. He has to find out those deviations which are critical and
important for business. Minor deviations have to be ignored. Major deviations
like replacement of machinery, appointment of workers, quality of raw
material, rate of profits, etc. should be looked upon consciously. Therefore it is
said, “If a manager controls everything, he ends up controlling nothing.” For
example, if stationery charges increase by a minor 5 to 10%, it can be called
as a minor deviation. On the other hand, if monthly production decreases
continuously, it is called as major deviation.
Once the deviation is identified, a manager has to think about various cause
which has led to deviation. The causes can be-
a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.
4. Taking remedial actions- Once the causes and extent of deviations are
known, the manager has to detect those errors and take remedial measures
for it. There are two alternatives here-
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a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in

conformity with plans, the manager can revise the targets. It is here the
controlling process comes to an end. Follow up is an important step
because it is only through taking corrective measures, a manager can
exercise controlling.
Types of control (on the basis of activities):
Feed forward: when corrective measures are before the start of activity. E.g.
McDonalds train workers how to grow potatoes, it minimizes the wastage.
Concurrent: when the activity is in progress and the worker doing his work and he is
being controlled
Feedback: controlling measures are taken after the activity performed. E.g. income
statement
Qualities of good control system:
The management of any organization must develop a control system tailored to its
organization's goals and resources. Effective control systems share several common
characteristics. These characteristics are as follows:
• A focus on critical points. For example, controls are applied where failure
cannot be tolerated or where costs cannot exceed a certain amount. The
critical points include all the areas of an organization's operations that directly
affect the success of its key operations.
• Integration into established processes. Controls must function harmoniously
within these processes and should not bottleneck operations.
• Acceptance by employees. Employee involvement in the design of controls
can increase acceptance.
• Availability of information when needed. Deadlines, time needed to
complete the project, costs associated with the project, and priority needs are

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apparent in these criteria. Costs are frequently attributed to time shortcomings

or failures.
• Economic feasibility. Effective control systems answer questions such as,
“How much does it cost?” “What will it save?” or “What are the returns on the
investment?” In short, comparison of the costs to the benefits ensures that the
benefits of controls outweigh the costs.
• Accuracy. Effective control systems provide factual information that's useful,
reliable, valid, and consistent.
• Comprehensibility. Controls must be simple and easy to understand.

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1 MANAGEMENT CONCEPTS

Teacher’s name: Sir Farrukh Usman

Such a process that is used to attain the objectives of an organization by efficient

Define the terms which are underlined in the definition of management

Objectives: objectives are the desired outcomes

• Effective: performing activities that help in achieving the organizational goals

• Planning: the process of determining objectives, establishing an overall

• Organizing: the process of determining what tasks to be done, who is to do

• Leading: process of motivating people to achieve objectives, hiring, selecting,

PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL

• Controlling: it is the process of monitoring actual performance, comparing

An organization is a group of people in which the arrangement is deliberate to

Top, middle, low or first line managers

Leader: motivate employees, selects, hire promote and fire them

Informational roles: Involves receiving, collecting and disseminating

Monitor: receives information observe and monitor the information

Disseminator: information delivering to the members of organization and partners

Spokesperson: providing information to outsiders

Decisional roles: revolves around decision making

Resource allocator: allocates the human, physical, informational and financial

Disturbance handler: competition handling, conflict handling among employees.

Negotiator: negotiate for sales purchase etc.

PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL

The knowledge of or the proficiency in a particular field

System that does nor interact or influenced by the environment

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What is interdependency of the departments in the organization/

The organization departments are dependent on each other. If the production

• General administrative approach

• Human behavior approach

• Develop a science for each element of the work

• Scientifically select and train workers

• Heartily cooperate with the subordinates

• Divide work and responsibilities equally between worker and manager

PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL

General administrative approach

Authority: rights inherent in a managerial position to tell people what to do and

Unity of direction: there should be a single plan of action

Subordination of individual interest to general interest: organizational objectives

Equity: manager should be kind there should be no discriminations.

Initiative: where there is more load of work on employees.

Authority flow should be from top to bottom.

Order: people and equipment should be at right place at right time.

Discipline: obedience of rules

Centralization: in an organization where decisions are made by the top

PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL

Remunerations: wages and payment should be fair.

Spirit de caught: team work

Bureaucracy: a form of organization characterized by division of labor, clearly

Hierarchy: flow of authority should be defined who is superior

Use of quantitative techniques to improve decision making, statistical and

A choice from two of more alternatives to solve the problem

Steps in decision making

• Identification of the problem: symptoms of the problem, when actual

b. Weak product quality

PREPARED BY: MUHAMMAD IRFAN MALIK MBA FEDERAL

• Identification of the decision criteria: it tells when the decision is going to

➢ Select the firm

➢ What timing (what should be the timing of ad)

• Allocating weights to the criteria: every criterion is not important. We will

• Developing the decision alternatives: make a list of the alternatives

• Analysis of the alternatives: carefully analyze the alternatives

Analysis of the firms for selection of advertisement