Winter 2020

PRINCIPLES OF MANAGEMENT

SAKLI DRIDI SONIA

 Program
% of Individual Learnin Course
final or group g Learning
Assessmen grad assessme Outcom Outcome Due
t Method e nt es (PLO) s (CLO) Date
Quiz 60% Individual PLO1 CLO1-2-3 2/24/2020

Case study 40% Individual PLO1-2-3 CLO4 3/1/2020

           

       
Total 100%
 CASE STUDY : GUIDELINE
(word doc,5 P)
Part I: COMPANY’S OVERVIEW
-Firm Presentation (name - location - type – size, history,mission…)
- Performance indicators : Revenues, market share, result……
Part II: - ANALYZE THE ENVIRONMENT IN WHICH THE COMPANY OPERATES:
(*)
• Presentation of the sector (industry) in which the company operates: Type of the sector,
Current Situation of the sector: (Good, bad, changing, complex…), Trends
• External analysis in terms of opportunities and threats using the PESTLE framewok and
Porter’s five forces model.
Part III - SWOT ANALYSIS
(strengths, weaknesses, opportunities and threats)
The internal analysis must refer to the concepts presented in chapter 4 and 5.
NB1: This form is only an example to be followed. The student can add other information and
enrich the work.
NB2: Don’t forget the list of all the sources
(*) You must choose just one strategic business unit (SBU)
 OUTLINE
I. The organization and its environment

2. The manager’s roles and skills

3. Decision making

4. The management process

5. The main business functions

Quiz

Case study
 1. The
organization and
its environment
Describe…

6
 What is an organization?
An organization is a deliberate arrangement of people
to accomplish some specific purpose (that individuals
independently could not accomplish alone).

Organizations are tools people use to coordinate

their actions to obtain something they desire or value –
to achieve their goals.

Organizations share three common characteristics:

• (1) each has a distinct purpose;
• (2) each is composed of people;
• (3) each develops some deliberate structure so
members can do their work.

7
All companies are organizations but all
organizations are not companies

8
 Firm, corporation,
enterprise and business
… are synonyms of "company”.
•Business: Any profit-seeking organization that provides
goods and services designed to satisfy customers’ needs.

9
 The performance triangle

Effectiveness Relevance

Efficiency
10
 The organization as a system

• What is a system?
• A system is a set of elements ('components')
and relationships.
in a dynamic interaction
organized according to some goals

• A subsystem is a set of elements, which is a system itself,

and a component of a larger system

11
The company as a system

- A set of resources, means, skills

- in interaction,
- organized into several activities (commercial, productive,
administrative…)
- in order to produce and sell goods and services to satisfy a
market

12
The company as a set subsystems

Unit 1 Unit 2

Unit 4
2
Unit 3
Firm

Environment
13
The company: an organized system

Responsible for making organization-wide decisions &

establishing plans & goals that affect the entire
organization
Responsible for the organization & functioning
of their department/region/ project/plan/division

Responsible for the personal oversight &

direction of operative employees. They guide &
instruct workers for day to day activities

Reference: www.managementstudyguide.com

14
 The Interaction between the
company and the environment
Environment

System

Inputs Transformation Outputs

process
Raw Materials Products and
Human Employee’s work activities Services
Resources Management Activities Financial results
Capital Technology and Information
Technology Operations Methods Human Results
Information

Feedback

Environment
15
 The firm: An open system
• In interaction with its environment
• It has relations of exchange with this environment
(suppliers, distributors, consumers……)
• Draws resources and information from this
environment
• Evolves according to the environment’s evolutions
• Acts on this environment (by its products, its prizes, its
ways of distribution, its communication)

16
 What’s the external environment?

• The external environment refers to the major factors ,

forces, situations and events outside the organization
that have the potential to affect its performance.
• Lies outside the boundary of the organization
• Provides the organization with resources and absorbs
its products and services.
• Imposes constraints and demands adaptation from the
organization.

17
 Why analyzing the external
environment?

Firms study the external environment in order to

• Identify opportunities and threats in the marketplace
• Avoid surprises
• Respond appropriately to any environmental evolution.

18
 Components of the
Environment
•Every business operate in overlapping mix of dynamic
environments. The external environment can be divided into 2
broad categories:
General environment (Macro- Specific environment (Micro-
environment) environment or operating env)
Refers to the non-specific External forces/actors that have a
elements of an organization’s direct and immediate impact on
surroundings that might affect the firm.
the organization indirectly :broad
economic, socio-cultural,
political/legal, demographic,
technological, and global
conditions that may affect the
firm. 19
20
 General environment

https://business-docs.co.uk/downloads/pestle-product-strategy- 21
Political environment
The political environment refers to the government actions,
regulations, policies and activities which are designed to
influence organizations indirectly and set boundaries on what
they can or cannot do ( government attitudes, political system,
political instability, terrorism….)

22
Economic environment
It Includes the impact of economic factors
like interest rates, inflation monetary,
wage rates, GDP (Gross domestic
product)……..
These forces are most likely to affect an
organization’s production of goods and
services.
It refers to the conditions and forces that
affect the cost and availability of goods,
services and labor and thereby shape the
behavior of buyers and sellers.

23
Socio-cultural environment: Trends and
forces in society in general

http://www.free-management- 24
Technological environment

• Forces resulting from the

practical application of science
to innovations, products and
processes.
• Refers to the changes in
technology that affect the way
that organizations operate.

25
Environmental

• Climate change (global

warming)
• Water resources
• Energy supplies…

26
 LEGAL AND REGULATORY
ENVIRONMENT
• Its refers to laws and
regulations at local, state
and even international laws.
(ex: Tax policies,
Employment laws,
Competition regulations……)

27
 PESTLE ANALYSIS OF PHARMACEUTICAL INDUSTRY
OPPORTUNITIES THREATS
Political
………………………………………………. Global governments looking for healthcare
saving
Economic
……………………………………………… Reduction in individual disposable income

Social
Market is likely to grow due to aging
population
Technological
Direct to patient advertising
(New digital opportunities )
Environmental
Growing environmental agenda and
community awareness
Legal
28
New drug application
 Task or specific environment
External forces /actors that have a direct and immediate impact on the firm
(eg: competitors, suppliers, customers…..)

Government

29
Framework/theory
•Porter's Five Forces of Competitive Position Analysis were
developed in 1979 by Michael E Porter of Harvard Business School as
a simple framework for assessing and evaluating the competitive
strength and position of a business organization.
•This theory is based on the concept that there are five forces that
determine the competitive intensity and attractiveness of a
market. Porter’s five forces help to identify where power lies in a
business situation. This is useful both in understanding the strength
of an organization’s current competitive position, and the strength
of a position that an organization may look to move into.

30
 Theory framework Porter's Five Forces of
Competitive Position Analysis
• Developed in 1979 by Michael E Porter of Harvard Business School.
• For assessing and evaluating the competitive strength and position
of a business organization.
• Is based on the concept that there are five forces that determine
the competitive intensity and attractiveness of a market.
• The attractiveness of an industry will depend on the intensity of
the five forces. Each force must be assessed.
1 2 3 4 5
Very low Low Moderate high Very high

31
Porter’s five forces model example

32
 Stakeholders theory

• A stakeholder is « any group or individual who can

affect or is affected by the achievement of the
organization’s objectives » (Freeman)
• Managers have to manage stakeholders relationships

33
Stakeholders theory

34
 Why managing stakeholder
relationships?

Good stackeholder relationships can:

• positively affect organizational performance
• Be recognized as « doing the right thing » and show
corporate social responsibility (CSR)
• Create and reinforce a positive image of the
organization among its stakeholders and community.

35
 Characteristics of business
• Interrelatedness: environment
• The different factors of business environment are co-related. For
example, the coming of new government to power and change in the
import-export policy are political and economic changes respectively.
Thus, a change in one factor affects the other factor.
• Dynamic Nature:
• It is said that business environment is dynamic when the components of
an organization’s environment change frequently.

36
•  Uncertainty:
• Nothing can be said with any amount of certainty about the factors of
the business environment because they continue to change quickly. The
professional people who determine the business strategy take into
consideration the likely changes beforehand.
• For example, technical changes are very rapid. Nobody can anticipate
the possibility of these swift technical changes. Anything can happen,
anytime. The same is the situation of fashion.
•  Complexity:
• Environment comprises of many factors. All these factors are related to
each other. Therefore, their individual effect on the business cannot be
recognized. This is perhaps the reason which makes it difficult for the
business to face them.
•  Relativity:
• Business environment is related to the local conditions and this is the
reason the business environment happens to be different in different
countries and different even in the same country at different places.
37
 The manager’s monitor role

• In this role, the manager regularly seek out information

related to the organization and industry, looking for
relevant changes in the environment.
• The manager must be able to anticipate the trends to
be able to make the right decisions to adapt the
company to its environment and thus guaranteeing the
the company’s performance.

38
 SWOT ANALYSIS

SWOT ANALYSIS
Reference 39
SWOT ANALYSIS EXAMPLE TEMPLATE

Source: http://bara.myonlineportal.at/example-of-a- 40
2.The manager’s
roles and skills
 Management is…

Efficiency
Efficiency
Getting
Getting work
work
done
done through
through
others
others
Effectiveness
Effectiveness

1
 What is management?

 Management involes coordinating and overseeing the

work activities of others so their activities are
completed efficiently and effectively.

 Management strives for:

• Effectiveness: doing those work activities that will result in
achieving goals.
• Efficiency: Refers to getting the most output from the least
amount of inputs or resources.
Strategic vs operational management

Strategic management Operational management

Organization-wide, holistic Functional, routinized

Conceptualization of issues Techniques, processes, actions

Creating new directions : new Managing existing resources

resource allocation
Developing new resources
Ambiguous/uncertain
Long term perspective
Optimizing existing resources
Functionally and Operationally
specific
Day to day issues

Both are important to ensure the company’s long term

performance.
 Universality of management

All sizes of organizations

Small large

All organization areas

Management is All types of organizations
Manufacturing, marketing,
needed in … Profit Not-for-profit
Human resources…

All organization levels

Bottom Top
 Management Process: Management
functions
• Management is the attainment of organizational goals in an
effective and efficient manner through planning, organizing,
leading and controlling organizational resources.
 Planning

• Planning is the management function that

involves setting goals, establishing strategies for

achieving those goals and developing plans to

integrate and coordinate activities.

 Organizing

• Organizing involves arranging and structuring

work to accomplish the organization’s goals.

• When managers organize, they determine what

tasks are to be done, who is to do them, how the
tasks are to be grouped, who reports to whom and
where decisions are to be made.
Organizing
 Leading
• Leading involves working with and through people to
accomplish organizational goals.

 Motivating subordinates
 Resolving work group conflicts
 Influencing individuals or teams as they work
Leading  Selecting the most effective communication
channel
 Dealing in any way with employee behavior
issues.
 Controlling

• Controlling involves monitoring, comparing and correcting

work performance.

• To ensure that goals are met and work is done as it should

be, managers monitor and evaluate performance.

• Actual performance is compared with set goals. If those

goals are not achieved, it’s the manager’s job to get work
back on track.
 Management process

Planning Organizing Directing Controlling

Monitoring the
Setting goals
Designing jobs, Leading and deviations from
and identifying
roles, structure, motivating plan and thus
all ways and
and system to people for the evaluating the
methods to
achieve the attainment of level of
achieve them
goals goals attainment of
goals
Use training and development
( immediate ongoing
correction)
Modify jobs, reengineer organization ( Modearte
correction)

Redefine goals with new planning endavour (long-term correction)

 Who is a manager ?
• A manager is someone who coordinates and
oversees the work of other people so organizational
goals can be accomplished efficiently and effectively
• A manager’s job is not about personal achievement –
it’s about helping the others do their job.
• They are found everywhere: large corporations,
medium sized businesses, start-ups, government
departments, hospitals, schools……..
 Why managers are important to
organizations?

“ A great boss can change your life, inspiring you to new

heights both professionally and personally, and energizing
you and your team to together overcome new challenges
bigger than any one of you could tackle alone”

Reference: J. Welch and S. Welch, “An Employee Bill of Rights,” Bloomberg Business Week,
March 16, 2009, p. 72.
 Why managers are important to
organizations?
1. Organizations need their managerial skills and abilities in
uncertain and complex time. Managers play a role in
identifying critical issues and crafting responses.

2. They are critical to getting things done and to ensure that all
employees are getting their duties done.

3. They build high quality relationship with their employees which

has an impact on employees’ productivity.
 Levels of Management

CEO
Top Level Management
COO
CIO

Middle Level Management

General Mgr
Plant Mgr
Regional Mgr

First-Line Management Office Manager

Shift Supervisor
Department Manager
Team Leader
3 Nonmanagerial employees : People who work directly on a job or task
and have no responsibility for overseeing the work of others.
 Levels of Managers job Examples
management
• President
They make organization-wide
• Vice-President
Top Managers decisions and establish the plans and • CEO : Chief
executive offiver….
goals that affect the entire
organization

Middle
Manage the work of first-line managers • Division managers
managers and must coordinate between the top • Regional managers
and the bottom. • Store managers….

First Line
Manage the work of nonmanagerial • Supervisors
managers employees who typically are involved • Department
with producing the organization’s managers
products or servicing the • Office managers…
organization’s customers.
Nonmanagerial employees : People who work directly on a job or task and have
no responsibility for overseeing the work of others.
 7- Mintzberg’s Managerial
https://www.youtube.com/watch?v=3gIquZu1rjQ
Roles
According to Henry Mintzberg, a well-known management
researcher, there are 10 roles classified into three categories:
• Interpersonal roles : Managerial roles that involve people and
other duties that are ceremonial and symbolic in nature.
• Informational roles: Managerial roles that involve collecting,
receiving and disseminating information.
• Decisional roles: Managerial roles that revolve around making
choices. ( § Chap 3: Making decision)
 Mintzberg’s Managerial Roles

Interpersonal Roles
- Figurehead
- Leader
- Liaison
Informational Roles
- Monitor
- Disseminator
- Spokesperson
Decisional Roles
- Entrepreneur
- Disturbance handler
- Resource allocator
- Negotiator
Mintzberg’s Managerial Roles
What Companies Look for in Managers ?

Technical
Technical Skills
Skills Human
Human Skill
Skill

Conceptual
Conceptual Skill
Skill Motivation
Motivation to
to Manage
Manage

5
 Management skills

Technical skills Human skills Conceptual skills

The ability to work well The ability to think and

Job-specific with other people to conceptualize about
individually and in a abstract and complex
knowledge and group. Managers must situations; It’s the ability
Be listeners and good to see the organization
communicators. as a whole, how the
techniques needed Be sensitive to other different parts affect
needs and viewpoints each other and how the
to proficiently Encourage others to company fits into or is
express their thoughts affected by its
environment.
perform work tasks
According to the level …

Conceptual skills

Human skills

Technical skills
 ACTIVITY
Match these manager’s decisions with the management
functions

Managerial decisions Management functions

 
1.When is a performance deviation significant?
 
   
2.How Do I handle employees that appear to be  

unmotivated?
 
 
   
3.How should jobs be designed?
 
 
 
4.What are the organization’s long-term objectives?
 
 
 
5.How much centralization should there be in an
organization?
  
1.Represent the business organization in
all matters of formality, legally and
socially to those inside and outside of the
organization
 
2;Read professional magazines connected
with specificity and selling market of his
enterprise
 
3;Analyze the possibilities of the
company’s development and implement
systematic changes
 
4.Choose where the organization will
expand its efforts, distribute limited
resources
 
5.Improve the organization’s structures,
respond to conflicts, all types of criticism
and complaints that appear in the
company, solve them and counteract new
ones, eliminate disturbances and
negative events in the enterprise
 
6.Reach the organization’s aims by using
specified type of motivation oriented on
employees needs satisfaction
 
7.Transmit and propagate special
information into the organization; work
up and send reports, letters, etc
 CORRECTION

Managerial decisions Management functions

  CONTROLLING
When is a performance deviation significant?  

   
How Do I handle employees that appear to be unmotivated? LEADING
 
 
 

   
How should jobs be designed? ORGANIZING
   

   
What are the organization’s long-term objectives? PLANNING
   

   
How much centralization should there be in an organization? ORGANIZING
 Managerial actions Managerial roles
Represent the business organization in all matters of formality, legally and Figurehead role ( interpersonal role)
socially to those inside and outside of the organization

of his enterprise
Correction
Read professional magazines connected with specificity and selling market Monitor role (informational role)

Analyze the possibilities of company’s development and implements Entrepreneur role (decisional role)
systematic changes

Choose where the organization will expand its efforts, distribute limited Resource allocator role (decisional role)
resources
Improve the organization’s structures, responds to conflicts, all types of Disturbance handler role(decisional role)
criticism and complaints that appear in the company, solves them and
counteracts new ones, eliminates disturbances and negative events in the
enterprise

Reach the organization’s aims by using specified type of motivation Leader role ( interpersonal role)
oriented on employees needs satisfaction

– transmit and propagate special information into the organization; he Disseminator role (informational role)
works up and sends reports, letters, etc
3.DECISION
MAKING
Introduction

Managers often are referred to as decision makers

-Good decision making is a vital part of good management,

because decisions determine how the organization solves its
problems, allocates resources, and accomplishes its goals.
-A decision is a choice made from available alternatives.

Decision making is the process of identifying problems and

opportunities and then resolving them
 1. Types of decisions

Types Characteristics
They involve situations that have occurred often
enough to enable decision rules to be developed and
Programmed
applied in the future. Programmed decisions are
decisions made in response to recurring organizational
problems;

They are made in response to situations that are

Non unique, are poorly defined and largely unstructured
programmed and have important consequences for the
decisions organization.
 1. Types of decisions

Types Characteristics
They are of repetitive nature, do not require much
Routine or analysis and evaluation, are in the context of day-
operational to-day operations of the enterprise and can be
decisions made quickly at middle manage­ment level.

They relate to policy matter, are taken at higher

levels of management after careful analysis and
Strategic
evaluation of various alternatives, involve large
decisions expenditure of funds and a slight mistake in
decision making is injurious to the enterprise.
2. Decision-making steps
2.1 Recognition of decision requirement :
identifying a problem
• Awareness of a problem or opportunity is the first
step in the decision sequence and requires
surveillance of the internal and external environment
for issues that merit executive attention.
Example

Sales manager’s reps started complaining

about their computers because their old ones
are outdated and inadequate for doing their
job so there’s a need for new computers
2.2 Diagnosis and analysis of causes

• Diagnosis is the step in the decision-making

process in which managers analyze underlying
causal factors associated with the decision situation;

• Managers make a mistake here if they jump right into

generating alternatives without first exploring the
cause of the problem more deeply.
 2.3 Development of alternatives

• The next stage is to generate possible alternative

solutions that will respond to the needs of the
situation and correct the underlying causes;
Example

The manager has identified 8 laptops as

possible choices: HP ProBook, Sony Vaio,
Lenovo IdeaPad, Apple MacBook, Toshiba
Satellite, Sony NW, Dell Inspiron, HP Pavillon.
 2.4 Analyze alternatives
• Once alternatives have been identified, a decision
maker must evaluate each one using relevant
decision criteria. These criteria must be weighted
according to their importance for the decision
maker.
Criteria Weighting
Example coefficients
*Memory and 10
To decide what laptop computers to storage,
*Battery life 8
purchase, the manager has identified *Carrying weight 6
the decision criteria and the *Warranty 4
*Display quality 3
weighting coefficients as follows:
 2.4 Selection of an alternative

•Once feasible alternatives are developed, one

must be selected. The decision choice is the
selection of the most promising of several
alternative courses of action.
Example
We must choose the best alternative
that generates the highest total.
 Memory Battery Carrying Warranty Display Total
and storage life weight quality

Weighting coef 10 8 6 4 3

*HP ProBook, 10 3 10 8 5 231

*Sony Vaio, 8 7 7 8 7 231

*Lenovo IdeaPad 8 5 7 10 10 232

*Apple MacBook, 8 7 7 8 7 231

*Toshiba Satellite, 7 8 7 8 7 229

*Sony NW 8 3 6 10 8 204

*Dell Inspiron 10 7 8 6 7 249

HP Pavillon. 4 10 4 8 10 206

In this case, the manager would choose Dell Inspiron because it

scored higher than other alternatives.
2.5 Implementation of chosen
alternative
• The implementation stage involves the use of
managerial, administrative, and persuasive abilities to
ensure that the chosen alternative is carried out;
• Sometimes an alternative never becomes reality
because managers lack the resources or energy
needed to make things happen. Implementation may
require discussion with people affected by the
decision.
 2.6 Evaluation and feedback

• In the evaluation stage of the decision process,

decision makers gather information that tells them
how well the decision was implemented and whether it
was effective in achieving its goals;
• Feedback is important because decision making is a
continuous, never-ending process. Feedback is the
part of monitoring that assesses whether a new
decision needs to be made.
 Making decisions: Rationality and
Bounded rationality
Rationality
-A rational decision maker would be
fully objective and logical.
-The problem faced would be clear
and unambiguous
-The decision maker would have a
clear and specific goal and know
all possible alternatives and
consequences
Decisions are made for the best
interests of the organization (for
managerial decision making).
These assumptions are not realistic
Bounded rationality
The idea that when individuals
make decisions, their rationality is
limited by:
-the tractability of the decision
problem
-the cognitive limitations of their
minds and the time available to
make the decision.
Decision-makers in this view are
seeking a satisfactory solution
rather than an optimal one.
 Towards a participative decision
making

In a participative decision-making process, each team

member has an opportunity to share their perspectives,
voice their ideas and tap their skills to improve team
effectiveness and efficiency.

Individuals who are affected by

decisions influence the making of
those decisions
 The participative decision making : The
pros and the cons

 Groups allow for a richer  Slow decision-making

collection of information process
and the exploitation of more  Risk of domination by
complete knowledge, which one or more members
feeds into the decision-  Ambiguity in terms of
making process. responsibility for
 A greater diversity of collective decision-
opinion making
 More relevant decision  Amount of time
 More accepted adopted required
solutions
 As a procurement manager, you have identified 5 potential suppliers
to buy an equipment and
have gathered these information:
The weighting coefficients are as follows:

Provider Price Quality Warrantee After sale service Delivery time Payment terms

MBT 150 000 3nd 3 years Very good 1 week 6 months

Ben Farhat & Son 140 000 4th 2 years good 3 days 90 days

ROSE Cie 147 000 2nd 30 months bad 1 month At the delivery

GLOBAL 130 000 5th 1 year Medium 2 weeks 1 month

NOMADIS 170 000 1st 3 years Excellent 3 months 3 months

Criteria Coefficient

Which provider will you recommend to Price 3

Quality 6
the CEO ? Justify your answer. Delivery time 2

(Use a five point scale to determine the Warrantee 4

grades related to each provider.

Payment terms 1
After sale service 5
DECISION TREE : Example
Decision alternatives States of nature Outcomes

Growing 40

Stable 45
Declining
Bonds 5
Growing 70
Stocks Stable
30
Declining
-13
Mutual funds Growing
53
Stable
45
Declining
-5

https://www.youtube.com/watch?v=NQ-mYn9fPag
 Some decision criteria (1/2)

Maximax Optimistic approach, the best of the best payoff

Maximin Pessimistic approach, the best of the worst payoff

Regret approach, the minimum of all maximum

Minimax regret
 Some decision criteria (2/2)

The highest average payoff of all

Laplace alternatives

Expected A weighted average of the payoffs for a

Return decision alternative with probabilistic
(EMV) states of nature