MANGEMENT (526)

AIOU MBA (Spring 08)

MANGEMENT (526)

Q. 1

(a)

Role of Management and its importance as resource in Organization

Management is designing and maintaining of an environment in which individuals working together in groups can accomplish their selected objectives within an organization. Effective planning, organizing, directing and controlling the human efforts directed towards specific ends in a company, department or a section within an organization can achieve this environment. Management may be cleared as an art and science of planning, organizing, directing and controlling human efforts within the organizational framework and economic environment of the firm to achieve its objectives. Management is the activity which plans, organizes and controls, operations of the basic elements of men, materials, machines, methods, money and market providing direction and coordination and giving leadership to human efforts so as to achieve the objectives of enterprise. Management is directly related to the resources in order to control, manipulate and direct them for gain. Management requires the knowledge of organization's objectives, policies and resources that can be called upon to accomplish the predefined objectives.
Land and Building Materials Plants and Machines Men's Services

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Management obtains Facts Plans, Directs Coordinates, Controls & Motivates in order to produce

Goods and Services

Purposes of management The basic purposes of management in any organization are: Enforcing the policies and daily activities. Establishing the organization's structure to carry out its programs. Providing, maintenance and safeguard of appropriate resources of an organization. Looking after the weakness influencing any aspect of organization. Role of Management as a resource The essence of management is decision making. Its unique role is selection between alternative means of moving towards an objective. The decision making process involves the following steps in the following figure:
Identification of problem Analysis of Problem Selection of the best solution

Conversion of decision into effective action

Development of alternative solutions

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Management increases the efficiency and affectivity of the work in the organization. Management gives the opportunity to organizations to reduce the costs of production. Management has given a proper way to produce more output with the limited input. Proper management schemes help to increase the productivity of the labors. A society depends on specialized organizations to provide products and services. Such organizations are guided and directed by the decisions of management. Management establishes the conditions under which workers are provided jobs, income and the customer's life styles, products, services, protection, healthcare and knowledge. Management helps to motivate employees through good human relation programs to increase the productivity. Management teaches the managers to keep good relations even with the people outside the organizations. Management utilizes the basic organizational structure to make it work effectively. Management stimulates growth and development of organization by involving all of its employees. Management is a way to attain mutually determines objectives between employees and supervisors. Management helps to overcome many chronic managerial problems.

Q. 1

(b)

Principle effects of Scientific Management

Scientific management defines one Best Way for a job to be done. This Theory was firstly present by Fredrick W. Taylor. (i) On Managers

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1. Managers are able to study each part of the task scientifically and develop a best method to perform it. 2. Managers can carefully select workers and train them to perform a task using the scientifically developed methods. 3. Manager can co-operate fully with workers to ensure they use the proper method. 4. They can divide work and responsibility so management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly (ii) On Employees

In manufacturing, the efficiency movement caused an increase in output per unit of labor Scientific management principles help the employees to get specialized in their work, which deliberately increase their efficiency. Scientific management allowed the raising of wages of employees. Scientific management caused a shift in the factories from unskilled laborer, usually paid at a subsistence wage, to machine operator, who was more highly paid. In machine shops, for example, owners began to devise routing slips, inventory tracking methods, and an entire range of techniques for organizing production. These new techniques used by the labors, were inspired by the work of Taylor and the principles of scientific management. Thousands of plants introduced elements of scientific management: time study methods; new machine tool practices; methods for managing tools, materials, machines, supervisors, and workers; and formal planning departments. Industrial workers today are still taught the methods of scientific management including time and motion studies, job-tasks analysis, wageincentive determination, and detailed production planning. On the past time, through the scientific management methods, workers were treated as machines, devalued, and paid less money for their efforts. A consequence of this treatment of workers was the rise of the unions and increased strikes and unrest among workers. Interestingly,
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later, the principles of scientific management were accepted by organized labor who considered Taylor's principles a means for protecting jobs and controlling members (Sullivan, 1987). Using these principles, increased specialization in production enabled the unions to emphasize job control and worker rights in the shop floor.

Q. 2

(i)

Review of Objectives

Objectives result not only the end results of planning but also the ends towards which organizing, staffing, leading and controlling are aimed. Objectives are guides for future actions. Objectives refer to

Objectives provide the roadmap of future operations for the organization. Objectives should be established and reviewed to provide a framework for thinking about the organization's situation and for creating and applying strategy. Objectives setting process starts with a thorough understanding of the organization, its mission and strategic goals, its strengths and weaknesses compared with competitors. This could be helpful for the later on success of the organization. Reviewing objectives involves detecting those environmental forces and changes that organizations should or must respond to. Long term objectives link strategic formulation and implementation. A clever strategy that cannot be implemented in the real world is doomed to fail, just as workable strategy that is badly executed will fall short of achieving organizations goals. Objectives help managers systematically examine the organization's basic problems and capabilities, and it helps them anticipate changing conditions. Short run objectives can improve the coordination of activities and allocation of resources on all levels.

Example
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Seeing an opportunity to reach young male readers 14-21, publisher Bobby Halfin and the editorial staff launched Dirt Magazine in 1991. as the magazine grows, Halfin will be using the review of its objectives to watch for competition from larger publishers and to formulate an appropriate strategy for maintaining profitability. (ii) Advantages and Disadvantages of Strategic Management Review

To be able to attain the organizations overall objectives effectively and efficiently, top mangers need a structured way of guiding and integrating their long-term and short term planning. To accomplish this, organizations rely on strategic management. Definition The ongoing process of formulating, implementing, and controlling broad plans to guide the organization in achieving the strategic goals, given in internal and external environment is known as strategic management. Explanation The strategic management process enables top managers to consider the organizations long term situation from a broad perspective, and it helps them align the internal capabilities and resources with the demands of the external environment. By following the strategic management process, managers are able to design an organizational strategy, a large scale plan of action designed to help to achieve the organization's goal within a specified time. A strategy is not a static planning document that is developed once and then implemented. Rather strategy is adjusted and works on time to ensure that this guiding plan remains in tune with the environmental changes that challenge the organization's ability to achieve its goals. Strategy is the corner stone of the strategic management process. The Advantages of Strategic Management Review Discharges Board Responsibility The first reason that most organizations state for having a strategic management process is that it discharges the responsibility of the Board of Directors.

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Forces an Objective Assessment Strategic management provides a discipline that enables the board and senior management to actually take a step back from the day-to-day business to think about the future of the organization. Without this discipline, the organization can become solely consumed with working through the next issue or problem without consideration of the larger picture. Provides a Framework for Decision-Making Strategy provides a framework within which all staff can make day-to-day operational decisions and understand that those decisions are all moving the organization in a single direction. It is not possible (nor realistic or appropriate) for the board to know all the decisions the executive director will have to make, nor is it possible (nor realistic or practical) for the executive director to know all the decisions the staff will make. Strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives, clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a framework and clear boundaries within which decisions can be made. The cumulative effect of these decisions (which can add up to thousands over the year) can have a significant impact on the success of the organization. Providing a framework within which the executive director and staff can make these decisions helps them better focus their efforts on those things that will best support the organization's success. Supports Understanding & Buy-In Allowing the board and staff participation in the strategic discussion enables them to better understand the direction, why that direction was chosen, and the associated benefits. For some people simply knowing is enough; for many people, to gain their full support requires them to understand. Enables Measurement of Progress A strategic management process forces an organization to set objectives and measures of success. The setting of measures of success requires that the organization first determine what is critical to its ongoing success and then forces the establishment of objectives and keeps these critical measures in front of the board and senior management. Provides an Organizational Perspective
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Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying components. Strategic management takes an organizational perspective and looks at all the components and the interrelationship between those components in order to develop a strategy that is optimal for the whole organization and not a single component. The Disadvantages of Strategic Management The Future Doesn't Unfold As Anticipated One of the major criticisms of strategic management is that it requires the organization to anticipate the future environment in order to develop plans, and as we all know, predicting the future is not an easy undertaking. The belief being that if the future does not unfold as anticipated then it may invalidate the strategy taken. Recent research conducted in the private sector has demonstrated that organizations that use planning process achieve better performance than those organizations who don't plan - regardless of whether they actually achieved their intended objective. In addition, there are a variety of approaches to strategic planning that are not as dependent upon the prediction of the future. It Can Be Expensive There is no doubt that in the not-for-profit sector there are many organizations that cannot afford to hire an external consultant to help them develop their strategy. Today there are many volunteers that can help smaller organizations and also funding agencies that will support the cost of hiring external consultants in developing a strategy. Regardless, it is important to ensure that the implementation of a strategic management process is consistent with the needs of the organization, and that appropriate controls are implemented to allow the cost/benefit discussion to be undertaken, prior to the implementation of a strategic management process. Long Term Benefit vs. Immediate Results Strategic management processes are designed to provide an organization with long-term benefits. If you are looking at the strategic management process to address an immediate crisis within your organization, it won't. It always makes sense to address the immediate crises prior to allocating resources (time, money, people, opportunity, and cost) to the strategic management process.

Impede Flexibility
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When you undertake a strategic management process, it will result in the organization saying "no" to some of the opportunities that may be available. This inability to choose all of the opportunities presented to an organization is sometimes frustrating. In addition, some organizations develop a strategic management process that become excessively formal. Processes that become this "established" lack innovation and creativity and can stifle the ability of the organization to develop creative strategies. In this scenario, the strategic management process has become the very tool that now inhibits the organization's ability to change and adapt. A third way that flexibility can be impeded is through a well-executed alignment and integration of the strategy within the organization. An organization that is well aligned with its strategy has addressed its structure, board, staffing, and performance and reward systems. This alignment ensures that the whole organization is pulling in the right direction, but can inhibit the organization's adaptability. Again, there are a variety of newer approaches to strategy development used in the private sector (they haven't been widely accepted in the not-for-profit sector yet) that build strategy and address the issues of organizational adaptability.

Q. 3

(a) Decision Making Process and Problems involved in Group Decision Making There is no guarantee that managers who apply process will make correct decision, but they will increase the chances of achieving good results. Also, managers must take into account organizational goals and the broader implication of their own decision when following the process. Although the steps are generally followed in order, managers sometimes lack the information to continue the next step, or they uncover information that promotes them to return to earlier steps before the process is complete. The six steps in the rational decision-making process.

Identifying the problem Generate alternatives Evaluate alternatives Make the decision
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Implement the decision Evaluate the result and provide feedback Step 1: Identify the Problem The first step in the managerial decision-making process is to identify the problem. Managers must be aware of the problem and analyze its scope and the nature before they can take any steps to solve it. To identify a problem, managers first recognize that a problem exists, define it, and then diagnose the situation. Recognize the problem Managers recognize a problem by noticing changes in their organizations performance or changes in their internal or external environment that can potentially affect performance. Define the problem Once managers recognize that a problem exists, they need to consider the elements that make up the problem and the relationship among the elements. Managers cannot develop a good solution if the question is not framed correctly, so they try to include the tight elements in the problem definition; they try not to exclude anything that may be vital, and they try to be as specific as possible. Diagnose the situation In this phase managers gather additional information and consider the causes of the problem so they can come up with the meaningful alternatives. If this part of the process is rushed, managers may prematurely pounce on a probable cause without looking further for the confirmation. Step 2: Generate Alternatives In this step managers try to develop as many possible alternatives courses of action as they can including the most obvious as well as the most creative, but without passing the judgment on any if the ideas. Some experiments come from past experiences and some from competitive practices; others may be generated by creative techniques.

Step 3: Evaluate Alternatives The third step in the process is evaluating the alternatives by considering the implications and the likely consequences of the cash. In this step managers asses the attractiveness of each alternative and prepare those that seem
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unfeasible, in adequate, too expensive, or otherwise unacceptable. If the solution is not implemented, or if it does not help the organization achieve its goals, then its not a realistic alternative. Moreover, the way a decision might influence other part of the organization or an environment is another consideration. Step 4: Make the Decision After evaluating the alternatives managers make the decision. They select the best alternative by weighing the risk and the benefit of each one. In this step, the managers risk propensity, or willingness to take risk is a major element. Some managers are more willing to take risk if the potential benefits are greater, so its important to consider the risk-reward tradeoff and understand the benefits that each alternative offers for its associated risk. But alternatives are rarely perfect. Thats why managers seek to optimize their decisions by selecting the alternative that best solves the problem and most closely meets requirements such as time and cost. Step 5: Implement the Decision After they select the best alternative, managers implement the decision. Because decision-making managers generally depend on others to carry out decisions, they must carefully consider how implementation will affect these people and their functions. By openly discussing anticipated changes and expected results, managers can help their employees adjust to any changes that stem from decisions. When alternative are being developed and evaluated, employees can make valuable contributions by spotting hidden difficulties or by uncovering additional resources. In general, successful implementation depends on the managers communication skills and sensitive about peoples reaction to change. Step 6: Evaluate the Results and Provide Feedback The final step is to evaluate the result and provide the feedback about the decision and its implementation. This allows managers to see whether the results meet expectations and to make changes needed to improve the decision or its implementation. If the original decision does not achieve the desired results then perhaps the problem was incorrectly defined, or perhaps another alternative must be substituted. It is important to give the decision enough time to work before retracing the decision-making process. Benefits of Group Decision Making

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When attacking a problem group member are able to contribute more knowledge and information than individuals. The group can bring a broader perspective to a problem definition alternative generation, and evaluation of possible solutions People who participate in the process generally feel more satisfied and more likely to accept d to support its implementation. Group decision making fosters good communication about the decision. The group decision making process serves as an important communication device. Individuals who participate in group decision making are more likely to be satisfied with the decision and to support the implementation. Groups can accumulate more knowledge and facts. Groups may have a broader perspective and consider more approaches and alternatives. Limitations of Group Decision Making

Group decision making usually takes more time than individual decision making. Managers who rely on group decisions must guard against loosing the ability to act quickly and decisively when necessary. Groups may be dominated by one or more individuals who prevent others from participating. Group process may result in compromises that do not represent the optimal decision from the organizational perspective. When the groupthink occurs, members of a closely knit group feels pressure to avoid topics that can cause conflict and threaten and unanimity, so they do not discuss every possible alternative. (b) Decision Model for Decision Making

Q. 3

There are two major models of managerial decision making, which basically follows the above mentioned six step decision making process. The Classical model
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The Administrative Model The Classical Model The classical model of decision making is based on the assumption that managers approach decision making in an objective and rational manner and that they always make decisions that are in the best interests of the organization. According to this model, managers carefully examine every possible alternative and consider the wide range of likely consequences for each choice before the selecting alternative that best fits the organization needs. The Administrative Model This model says that managers cannot actually attain the ideal state of completely rational decision making represented by the classical model. The Administrative Model of decision making is based on the observation that managers do not always approach decision making in a logical, rational way and that they do not always make objective decisions. Use of Decision Model for Decision Making Although the classical decision making model is perspective and the administrative decision making model is descriptive, both offer valuable guidance for managers. By applying the classical model, I can approach decisions more objectively and systematically. In order to this, I would need to have complete information about the problem, clearly defined goals, all the information about every possible alternative and consequence, and a logical method of weighing each alternative to come to a decision. However, researchers pointed out that manger do not always make their decisions this way, because managers make dozens and sometimes hundreds of decisions in a day, it is impractical for them to approach every decision in systematic, logical fashion assumed by the classical model, and they frequently don't have enough information to make a thorough analysis, even they were so inclined. This classical model is therefore prescriptive, presenting an idealized approach to guide managers toward better decision making. But tools do exist that help managers make more rational decisions. But at times, if I confront with decisions in such numbers and in such rapid succession that I cannot effectively apply the classical model, so I can get help from administrative model and search for alternatives only until satisfactory, not
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an optimal solution is found. It is may be the case, when there is constraint of time and money.

Q. 4

Planning, Controlling and their Independence Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired future on some scale. As such, it is a fundamental property of intelligent behavior. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans, that is, it combines forecasting of developments with the preparation of scenarios of how to react to them. The term is also used to describe the formal procedures used in such an endeavor, such as the creation of documents, diagrams, or meetings to discuss the important issues to be addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning has a different meaning depending on the political or economic context in which it is used. A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities. Preparing a satisfactory plan of the organization is essential. The planning process enables management to understand more clearly what they want to achieve, and how and when they can do it. A well-prepared business plan demonstrates that the managers know the business and that they have thought through its development in terms of products, management, finances, and most importantly, markets and competition. Planning helps in forecasting the future, makes the future visible to some extent. It bridges between where we are and where we want to go. Planning is looking ahead. Preparing a Plan: Planning is not done off hand. It is prepared after careful and extensive research. For a comprehensive business plan, management has to Clearly define the target / goal in writing. It should be set by a person having authority.
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The goal should be realistic. It should be specific. Acceptability Easily measurable Identify all the main issues which need to be addressed. Review past performance. Decide budgetary requirement. Focus on matters of strategic importance. What are requirements and how will they be met? What will be the likely length of the plan and its structure? Identify shortcomings in the concept and gaps. Strategies for implementation. Review periodically.

Controlling directly related to planning. The controlling process ensures that plans are being implemented properly. In the functions of management cycle - planning, organizing, directing, and controlling - planning moves forward into all the other functions, and controlling reaches back. Controlling is the final link in the functional chain of management activities and brings the functions of management cycle full circle. Control is the process through which standards for performance of people and processes are set, communicated, and applied. Effective control systems use mechanisms to monitor activities and take corrective action, if necessary. The supervisor observes what happens and compares that with what was supposed to happen. He or she must correct below-standard conditions and bring results up to expectations. Effective control systems allow supervisors to know how well implementation is going. Control facilitates delegating activities to employees. Since supervisors are ultimately held accountable for their employees' performance, timely feedback on employee activity is necessary. Control Process: The control process is a continuous flow between measuring, comparing and action. There are four steps in the control process:
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establishing performance standards, measuring actual performance, comparing measured performance against established standards, and taking corrective action. Control is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. Thus, control comprises these three main activities. Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring. Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished. Characteristics of Control Control is a continuous process Control is a management process Control is embedded in each level of organizational hierarchy Control is forward looking Control is closely linked with planning Controlling is tool for achieving organizational activities While planning is looking ahead, controlling is acting in the present. Planning and controlling are 'Siamese sisters' and are inseparable as without one, the application of the other would be nothing but a practice in futility. Any attempt to control without planning is as mentioned above totally futile when one does not even know whether he is going where they want to unless they know from the very beginning where they want to go. Planning directs which way to go whereas controlling confirms whether it is the right way towards which
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one is heading and should be heading. It also encumbers one's notorious tendency to get immensely affected by unwanted and gratuitous deviations that always become a purpose of distorting the objectives and planning process as well as the controlling mechanism. Planning, thus, becomes the ultimate means to furnish and establish the particular benchmarks for developing an effective control mechanism.

Q. 5

Alternatives for an Organization, Advantages and Disadvantages Organizational structure is a formal arrangement of job within an organization. It is the system of interaction and coordination that links the tasks of individuals and groups to help achieve organizational goals. This is formal because top mangers officially create the structure. When mangers develop or change the structure, they are engaged in organizational design, a process that involves decisions about six key elements;

Work Specialization Departmentalization Chain of Command Span of Control Centralization and Decentralization Formalization

Work Specialization It is dividing work activities in an organization into separate job tasks. The essence of work specialization is that an entire work is not done by an individual, but instead is broken down into tasks with each task completed by a different person. Departmentalization
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The basis by which jobs are grouped together is called departmentalization. Every organization will have its own specific way of classifying and grouping jobs. In the given case study, the management can use geographical segmentation. Chain of Command It is the unbroken line of authority that extends from the bottom to the top of the organization and defines reporting relationships. Span of Control It can be explained as the number of people who report directly to one manager or we can say number of people who are working under the control of a single manager. Centralization and Decentralization Centralization is the extent to which authority is concentrated at the top management levels where as decentralization is the extent to which authority is delegated to lower management levels. Formalization Formalization refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures. Alternative Organization Structures As in the given case study, PRIDE is a national, single product manufacturing company which has taken over a more diversified rival company, half of its productive capacity overseas. So management has to go through organizational design and it has the option to choose among the various alternative structures. Organic Structure and its advantages Management can go for this structure because: It is highly adaptive and flexible structure. Rather than having standardized jobs and regulations the organic organization is flexible, meaning jobs can change rapidly as needs require.

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Organic structures may have specialized jobs, but those jobs are not standardized. Employees are highly trained and empowered to handle diverse job activities and problems. These organizations frequently use employee teams. Employees in these types of organizations require minimal formal rules and little direct supervision. Their high levels of skills and training and the support provided by other team members make formalization and tight managerial controls unnecessarily.

Divisional Structure and its advantages Management of new group can also choose divisional structure because half of its productive capacity is overseas. It is an organizational structure made up of separate business units or divisions. In this structural design each unit has limited autonomy, with a division manager responsible for performance and who has strategic and operational authority over his or her unit. In divisional structure, the parent corporation typically acts as an external overseas to coordinate and control the various divisions and often provides support services such as financial and legal.

Team structure and its advantages Management of new group has another option of this type of structure: In the team structure, the entire organization is made up of work teams that perform the organization's work. Employee empowerment is crucial in team structure because there is no line of managerial authority from top to bottom. Employee teams are free to design work in the way they think is the best. Teams are also responsible for all the work and performance results in their respective areas.

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This structure allows the organization to have the efficiency of a bureaucracy while providing the flexibility.

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