THEORETICAL FOUNDATIONS OF

MANAGEMENT

1.1. The concept and essence of management

1.2. Concepts of modern management
 1.1. The concept and essence of management

Management is a complex, capacious and versatile

phenomenon, covering:
⚫ the ability of a person to achieve goals, using labor,
intelligence, motives for the behavior of other people;
⚫ functions, activities related to the management of people in
organizations of various types;
⚫ a field of human knowledge that helps to manage;
⚫ certain category of people in charge.
Main types of management

⚫ socio-political management or public administration;

⚫ socio-economic management or management of
material production;
⚫ socio-cultural management or management of
spiritual production.
Менеджмент
definition given by Meskon M.Kh. in the book Fundamentals of Management

a set of principles, methods and tools of production

management in order to increase production efficiency and
increase profits
Main functions of management

Planning

Control Organizing

Leading
Planning function
It means the development and determination of a resolution, protocol or
oral, that in the case, one or another goal or task will be set before the
management is expected.

Planning can be classified according to several criteria:

by content in the aspect of entrepreneurial activity:
• strategic - search for new opportunities and products
• tactical - preconditions for known features and products
• operational - implementation of this possibility

by areas of operation: by deadline:

• production • short term
• marketing • medium term
• R&D • long-term
• finance
 Forecasting involves identifying alternative conditions in which the
system may find itself in the future (for 5-10 or more years ahead),
the likelihood of these conditions occurring, and possible options for
the system's behavior under these conditions.

extrapolation
formal
modeling
Methods of
forecasting Individual expert
assessments

informal Collective expert

assessments

Script writing
Organizing function
consists in establishing permanent and temporary relationships
between all departments of the organization, determining the
procedure and conditions for its functioning. It is the process of
bringing together people and means to achieve the organization's
goals.
Organization is:
- creation of the system (design and creation of the
structure of both the control object and the control
subsystem itself);
- providing conditions for the operation of the system,
supplying everything necessary for work (materials,
personnel, finances, etc.);
- improvement of the system.
 Leading function
■ it is a program aimed at activating the people working in the organization and encouraging
them to work effectively to achieve the goals set in the plans. To do this, they are provided
with economic and moral stimulation, the very content of labor is enriched, and conditions
are created for the manifestation of the creative potential of workers and their self-
development.

From the late 18th century to the 20th century, it was widely believed
that people would always work better if they had the opportunity
to earn more. Motivation was thus thought to be a simple matter,
which boils down to the offer of appropriate monetary rewards in
exchange for effort.
Management states that motivation is the result of a complex set of
needs that are constantly changing.
 Controlling function
allows you to identify deviations from the normal operation of the
object, to check the actual progress of work.

preliminary current final

• Analysis of • Verification of • Analysis of

readiness for compliance of the deviations of the
work, checking the actual progress of results of work
availability of work with the from the set goals
necessary planned one
resources
■ If the control revealed deviations from the plan,
regulation is required, which consists in making
adjustments, eliminating deviations

Regulation includes a number of typical operations:

• analysis of emerging deviations and their causes,
• elimination of deviations,
• development of measures for their prevention.
Control is based on accounting, which is a process of
recording primary information about business
transactions and grouping data according to strictly
defined characteristics, directions, periods.

Thanks to accounting, the safety of values ​is ensured,

and at the same time, the subject of management has
the opportunity to receive information about the
available resources.

Types of accounting:
🞂 Operational accounting
🞂 Statistical accounting
🞂 Tax accounting
🞂 Accounting
 1.2. Concepts of modern
management
Key provisions of the modern system of
views on management:

1. The problems of flexibility and adaptation to a constantly changing

external environment are put forward in the first place (the success of an
organization depends not only on the management of internal factors)
2. Consideration of the organization in the unity of its constituent parts,
inextricably linked with the outside world (use of systems theory in
management)
3. Representation of the organization within the enterprise as a response to
various external factors.
4. Recognition of the social responsibility of management to society as a
whole and to individuals who work in the organization.
Systems approach
Developed since the late 1950s.

the organization is considered as a system - a kind of integrity,

consisting of interdependent parts, subsystems, each of which,
having a certain autonomy, contributes to the overall
characteristics of the whole.
Systems approach
Organization is a complex, open,
socio-technical system.
Complex, because it consists of many subsystems, elements, for
example, various divisions, departments, services, management
levels and internal factors
Open, because it is part of an even larger system - the external
environment and is under the influence of its direct and indirect
factors.
Socio-technical, since in it the social component (man) interacts
with technology, while it is the man who is the main and most
active component.
 The theory of «7-S»
The most popular systems approach theory

Only organizations in which managers maintain a system consisting

of seven elements in a harmonious state can function and develop
effectively in modern conditions:
● Strategy: this is your organization's plan for
building and maintaining a competitive advantage

ski

gy
over its competitors.

a te
lls
● Structure: this is how your company is organized

str
(how departments and teams are structured,
including who reports to whom).
staff e
● Systems: the daily activities and procedures that structur
staff use to get the job done.
● Shared Values: these are the core values of the sy
ste
organization and reflect its general work ethic.
t yle m
s

states
They were called "superordinate goals" when the
model was first developed.
● Style: the style of leadership adopted.
● Staff: the employees and their general
capabilities.
● Skills: the actual skills and competencies of the
organization's employees.
situational approach
Developed in the late 60s of the twentieth century. and follows
from a systematic approach to management.

The situational approach assumes that the results of the same

management actions in different situations can vary
significantly.
 Situation
-a specific set of circumstances that significantly affect an organization at
a particular time.

External
environment

Circumstances: Internal
environment
 External environment
- a set of elements that are not part of the organization, but have an
impact on the goals and results of its activities.

External environment

Direct impact environment Environment of indirect influence

Competitors International environment

Consumers Political factors

Partners Economic forces

Suppliers Scientific and technical

progress
State (Government)
Socio-cultural factors
 Internal environment
- it is that part of the overall environment that is within the firm. It
has a permanent and most direct impact on the functioning of the
firm.
Elements of the internal environment:
1. production (volume, structure, production rates, product range,
availability of raw materials and materials, stock levels, reserve capacities,
location of production and availability of infrastructure, etc.)
2. personnel (structure, potential, qualifications, number of employees,
labor productivity, staff turnover, labor cost, interests and needs of
employees)
3. organization of management (organizational structure, management
system, level of management, qualifications, top management abilities,
corporate culture, organization of the communication system)
4. marketing (products, their market share, distribution channels,
marketing plans, innovations, image, product reputation, advertising,
pricing)
5. finance and accounting (financial stability and solvency, profitability,
own and borrowed funds and their ratio, an effective accounting system,
including cost accounting, budgeting, profit planning)
The end