UNIT I

INTRODUCTION TO MANAGEMENT
AND ORGANIZATIONS
 Syllabus
•  
• UNIT I INTRODUCTION TO MANAGEMENT AND
ORGANIZATIONS 9
• Definition of Management – Science or Art – Manager Vs
Entrepreneur - types of managers -managerial roles and skills –
Evolution of Management – Scientific, human relations ,
system and contingency approaches – Types of Business
organization - Sole proprietorship, partnership, company-
public and private sector enterprises - Organization culture
and Environment – Current trends and issues in Management.
•  
Introduction
• What Is Management?
Managerial Concerns
– Efficiency
• “Doing things right
• Getting the most output for the least inputs
– Effectiveness
• “Doing the right things”
– Attaining organizational goals
Definition of Management
Definition of Management
• According to Harold Koontz,
“Management is an art of getting things done through and
with the people in formally organized groups. It is an art of
creating an environment in which people can perform and
individuals and can co-operate towards attainment of group
goals”.
According to F.W. Taylor,
“Management is the art of knowing what you want to do
and then seeing that is done in the best and cheapest way.”
According to Henry Fayol ,
“To manage is to forecast and to plan, to organise ,to
command, to coordinate and to control.”
“The art of getting things done through people.”
- Mary Parker Follet
“Management is the process of planning, organising, leading
and controlling the efforts of organisation members and of
other organisational resources to achieve slated
organisational goals.”
- James A.F. Stoner
• Directing the actions of a group to achieve a
goal in most efficient manner
• Getting things done through people
• Process of achieving organizational goals by
working with and through people and
organizational resources
Management Science or Art?
 Management – As Science

Science:Any branch of knowledge to be considered a science (like – physics, chemistry,

biology etc.) should fulfill the following conditions:

• The existence of a systematic body of knowledge encompassing a wide array of

principles

• The principle must explain a phenomenon by establishing cause – effect relationship

• Management involves getting things done through people

• The behaviour of human beings cannot be accurately predicted

• The output also varies

 Management – As Art
• Effective practice of any art requires a
thorough understanding of the science
underlying it. The executives who attempt to
manage without the conceptual understanding
of management principles and techniques
have to depend on luck or intuition.
• Therefore, management is both a science and
an art.
 Comparison :
Management as

As An art As a Science

• Based on Practice and • Based on Experimentation.

creativity.
• It is a systematized body of
• It is a theoretical body of knowledge.
knowledge.
• Has Universal Application.
• Has Personalized
Application.
MANAGER VS ENTREPRENEUR

SIMILARITIES

BOTH NEED TO PLAN, ORGANIZE AND CONTROL THEIR ACTIVITIES

DIFFERENCES

• TENDS TO BE SHORT-TERM ORIENTED TOWARDS ACCOUNTING PERIODS

• TENDS TO BE LONG-TERM
PROBLEM ORIENTED
• LOW RISKTAKER, TRIES TO AVOID MAKING MISTAKES

• EXTERNAL STANDARDS, ORIENTED TOWARDS REWARDS

• HIGHER ANDTRIES TO
RISKTAKER,
PUNISHMENTS IN THE ORGANIZATION LEARN FROM MISTAKES MADE

• INTERNAL STANDARDS,
REWARDS HIMSELF OR HERSELF
THREE ”POSITIONS” IN THE NEW ECONOMIC ERA:

• MANAGEMENT IS A PROFESSION. MANAGERS NEED ”TECHNICAL” SKILLS.

THEY RELATE TO THEIR EMPLOYERS AND ARE JUDGED BY THEM.

• LEADERSHIP IS A ROLE. LEADERS NEED SOCIAL SKILLS. THEY RELATE TO

THEIR FOLLOWERS AND ARE JUDGED BY THEM.

• ENTREPRENEURSHIP IS AN ATTITUDE IN APPLICATION (A LIFE FORM).

ENTREPRENEURS NEED MENTAL SKILLS. THEY RELATE TO THE USERS OF
THEIR INNOVATIONS AND ARE JUDGED BY THEM.
 1 2
ENTREPRENEURIAL MANAGERIAL
GROWTH GROWTH

LEADERSHIP MANAGEMENT

RELATIONSHIP TRANSACTIONAL
MARKETING MARKETING

IMAGINARY FOCAL
ORGANIZATIONS ORGANIZATIONS

EXPLORATIVE EXPLOITATIVE
LEARNING LEARNING

VALUE STARS VALUE CHAINS

Levels of management
• Top management
• Middle level management
• Low level management
 Who Are Managers?
• Manager
– Someone who coordinates and oversees the
work of other people so that organizational goals
can be accomplished.

1–16
Classifying Managers
• First-line Managers
– Individuals who manage the work of non-managerial
employees.
• Middle Managers
– Individuals who manage the work
of first-line managers.
• Top Managers
– Individuals who are responsible for making organization-
wide decisions and establishing plans and goals that
affect the entire organization.
1–17
 What Managers Do?
• Three Approaches
Functions they perform.
Roles they play.
Skills they need.

1–18
 Top Managers

 Responsible for providing the overall direction of an

organization
 Develop goals and strategies for entire organization
 Spend most of their time planning and leading
 Communicate with key stakeholders—stockholders,
unions, governmental agencies, etc., company
policies
 Use of multicultural and strategic action
competencies to lead firm is crucial
 First-line Managers

 Directly responsible for production of goods or services

 Employees who report to first-line managers do the
organization’s work
 Spend little time with top managers in large organizations
 Technical expertise is important
 Rely on planning and administration, self-management,
teamwork, and communication competencies to get work
done
 Middle Managers

 Responsible for setting objectives that are consistent with

top management’s goals and translating them into specific
goals and plans for first-line managers to implement
 Responsible for coordinating activities of first-line managers

 Establish target dates for products/services to be delivered

 Need to coordinate with others for resources

 Ability to develop others is important

 Rely on communication, teamwork, and planning and
administration competencies to achieve goals
Management Level and Skills
Functions of Management
•Planning: Selecting missions and objectives.
Requires decision making.

•Organizing: Establishing the structure for the

objective.

•Staffing: Keeping filled

the organization structure

•Leading: Influencing people to achieve the

objective

•Controlling: Measuring and correcting the activities

 Managerial Roles and skills
Interpersonal roles

Leader
Figurehead

Negotiator Managerial Monitor

Resource roles
Allocator
Disturbance
handler Spokesperson
Entrepreneur Informational roles
Decisional roles
 Interpersonal Roles

• Roles that involve interacting with other people

inside and outside the organization

• Interpersonal roles:
– Figureheads: Greet visitors, Represent the company at
community events

– Leader: Influence, motivate, and direct others as well

as strategize, plan, organize, control, and develop
 Informational Roles

• Collecting, Processing
• Roles: Monitor, and
spokesperson
 Decisional Roles
• Whereas interpersonal roles deal with people and informational
roles deal with knowledge, decisional roles deal with action
• Decisional roles:
– Entrepreneur: Managers must make sure their
organizations innovate, change, develop, and adopt
– Disturbance handler: Addressing unanticipated problems
as they arise and resolving them.
– Resource allocator: How best to allocate resources
– Negotiator: Negotiation is continual for managers
• interpersonal roles deal with people

• informational roles deal with

knowledge,

• decisional roles deal with action

1–28
 Introductory Concepts: What Are
Managerial Competencies?

 Competency – a combination of knowledge,

skills, behaviors, and attitudes that contribute to
personal effectiveness

 Managerial Competencies – sets of knowledge,

skill, behaviors, and attitudes that a person
needs to be effective in a wide range of positions
and various types of organizations
 Six Core Managerial Competencies:
What It Takes to Be a Great Manager

 Communication Competency

 Planning and Administration Competency

 Teamwork Competency

 Strategic Action Competency

 Multicultural Competency

 Self-Management Competency
 Communication Competency
 Ability to effectively transfer and exchange information
that leads to understanding between yourself and others
 Informal Communication
 Used to build social networks and good
interpersonal relations
 Formal Communication
 Used to announce major events/decisions/
activities and keep individuals up to date
 Negotiation
 Used to settle disputes, obtain resources,
and exercise influence
 Deciding what tasks need to be done, determining how
they can be done, allocating resources to enable them
to be done, and then monitoring progress to ensure
that they are done
 Information gathering, analysis, and problem solving
from employees and customers
 Planning and organizing projects with agreed
upon completion dates
 Time management
 Budgeting and financial management
 Accomplishing tasks through small groups of
people who are collectively responsible and
whose job requires coordination
 Designing teams properly involves having
people participate in setting goals

 Creating a supportive team environment gets

people committed to the team’s goalsc

 Managing team dynamics involves settling

conflicts, sharing team success, and assign tasks
that use team members’ strengths
 Strategic Action Competency

 Understanding the overall mission and values of

the organization and ensuring that employees’
actions match with them

 Understanding how departments or divisions of

the organization are interrelated

 Taking key strategic actions to position the firm

for success, especially in relation to concern of
stakeholders
 Multicultural Competency

 Understanding, appreciating and responding to

diverse political, cultural, and economic issues
across and within nations

 Cultural knowledge and understanding of the

events in at least a few other cultures

 Cultural openness and sensitivity to how others

think, act, and feel

 Respectful of social etiquette variations

 Accepting of language differences

 Self-Management Competency

 Developing yourself and taking responsibility

 Integrity and ethical conduct

 Personal drive and resilience

 Balancing work and life issues

 Self-awareness and personal development

activities
1–37
 Historical Background of Management
• Ancient Management
– Egypt (pyramids) and China (Great Wall)
– Venetians (floating warship assembly lines)
• Adam Smith
– Published “The Wealth of Nations” in 1776
• Advocated the division of labor (job specialization) to increase
the productivity of workers
• Industrial Revolution
– Substituted machine power for human labor
– Created large organizations in need of management
Copyright © 2005 Prentice Hall, Inc. All
2–38
rights reserved.
Major Approaches to Management
• Scientific Management
• General Administrative Theory
• Quantitative Management
• Organizational Behavior
• Systems Approach
• Contingency Approach
 Scientific Management
• Fredrick Winslow Taylor
– The “father” of scientific management
– Published Principles of Scientific Management
(1911)
• The theory of scientific management:
– Using scientific methods to define the “one best way” for a
job to be done
» Putting the right person on the job with the correct tools
and equipment
» Having a standardized method of doing the job
» Providing an economic incentive to the worker
 Scientific Management (cont’d)
• Frank and Lillian Gilbreth
– Focused on increasing worker productivity through the
reduction of wasted motion
– Developed the microchronometer to time worker
motions and optimize performance.
• How Do Today’s Managers Use Scientific
Management?
– Use time and motion studies to increase productivity
– Hire the best qualified employees
– Design incentive systems based on output
 General Administrative Theorists
• Henri Fayol
– Believed that the practice of management was
distinct from other organizational functions
– Developed fourteen principles of management that
applied to all organizational situations
• Max Weber
– Developed a theory of authority based on an ideal
type of organization (bureaucracy)
• Emphasized rationality, predictability, impersonality,
technical competence, and authoritarianism.
Quantitative Approach to Management

• Quantitative Approach
– Also called operations research or management
science
– Evolved from mathematical and statistical methods
developed to solve WWII military logistics and
quality control problems
– Focuses on improving managerial decision making
by applying:
• Statistics, optimization models, information models, and
computer simulations
Understanding Organizational Behavior

• Organizational Behavior (OB)

– The study of the actions of people at work; people
are the most important asset of an organization
• Early OB Advocates
– Robert Owen
– Hugo Munsterberg
– Mary Parker Follett
– Chester Barnard
 The Hawthorne Studies
• A series of productivity experiments conducted at
Western Electric from 1927 to 1932.
• Experimental findings
– Productivity unexpectedly increased under imposed
adverse working conditions.
– The effect of incentive plans was less than expected.
• Research conclusion
– Social norms, group standards and attitudes more
strongly influence individual output and work behavior
than do monetary incentives.
 The Systems Approach
• System Defined
– A set of interrelated and interdependent parts arranged
in a manner that produces a unified whole.
• Basic Types of Systems
– Closed systems
• Are not influenced by and do not interact with their
environment (all system input and output is internal)
– Open systems
• Dynamically interact to their environments by taking in inputs
and transforming them into outputs that are distributed into
their environments
 Implications of the Systems Approach
• Coordination of the organization’s parts is essential
for proper functioning of the entire organization.
• Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
• Organizations are not self-contained and,
therefore, must adapt to changes in their external
environment.
 Systems approach
• understanding the organisation as an open
system that transforms inputs into outputs
• It focusses on organisation as a whole, its
interaction with the environment and its need
to achieve its equulibrium
 The Contingency Approach
• Contingency Approach Defined
– Also sometimes called the situational approach.
– There is no one universally applicable set of
management principles (rules) by which to
manage organizations.
– Organizations are individually different, face
different situations (contingency variables), and
require different ways of managing.
Contigency approach
• It focuses on applying management principles and processes
as dictated by the unique characteristics of each situation.

• It emphasizes that there is no one best way to manage and

that it depends on various situational factors, such as the
external environment, technology, organizational
characteristics, characteristics of the manager, and
characteristics of the subordinates.

• Contingency theorists often implicitly or explicitly criticize the

classical approach for its emphasis on the universality of
management principles;
II. Modern Operational Management Theory
14 Principles of Henri Fayol
 DIVISION OF WORK OR SPECIALIZATION
 AUTHORITY AND RESPONSIBILITY
 DISCIPLINE
 UNITY OF COMMAND
 UNITY OF DIRECTION
 SUBORDINATION OF INDIVIDUAL TO GENERAL
 REMUNERATION
 CENTRALIZATION
 LINE OF COMMAND/SCALAR CHAIN
 ORDER
 EQUITY
 STABILITY OF TENURE
 INITIATIVE
 ESPRIT DE CORPS
 1. DIVISION OF WORK or SPECIALIZATION

Division of work makes a man specialist. The reason is that

division of work helps to specialize in an activity which increases
the output with perfection. It also avoids wastage of time.
Division can be applied to both technical and managerial kind of
work.
• Authority & Responsibility.

• Managers must be able to give orders. Authority

gives them this right. Note that responsibility
arises wherever authority is exercised.
Discipline.

Employees must obey and respect the rules that

govern the organization.
• Unity of command.

• Every employee should receive orders from only one

superior.
• Unity of direction.

• Each group of
organizational activities
that have the same
objective should be
directed by one
manager using one
plan.
 Subordination of individual
• The individual should
subordinate self-interest
to the general good. It
is incumbent upon
management to reduce
conflict between the
individual and the
general well being
wherever possible.
• Remuneration

• Workers must be paid a fair

wage for their services.
 Means the wages and salaries paid
to employee. It should be fair &
must be paid on time.
 It satisfy both employee &
employer
 It should be decided on-Work
allotted.
 cost of living.
 • CENTRALIZATION

• Fayol thought centralization of authority to be

desirable, at least for overall control. Certainly, both
formulation of policy and the generation of basic rules
and procedures ought to be centralized
• Scalar chain

• The line of authority from

top management to the
lowest ranks represents the
scalar chain.
Communications should
follow this chain.
• Order

• People and materials

should be in the right
place at the right time.
• Equity

• Managers should be kind

and fair to their
subordinates.
• Stability of tenure of personnel

• High employee turnover is inefficient. Management should

provide orderly personnel planning and ensure that
replacements are available to fill vacancies.
Initiative.

The power of
thinking out,
proposing and
executing.
Management should
encourage
employees to
originate and carry
out plans.
• Esprit de corps
• It means that create a
team spirit or union is
strength.
• Developed an atmosphere
of mutual trust and
understanding.
• Create a sense of belonging
employees
• It bring a loyalty,
dedication and
commitment to the group.
Behavioural theory
 Organizational Behavior
• Human behavior in organizations is complex.
• The field of organizational behavior draws
from a broad, interdisciplinary base of
psychology, sociology, anthropology,
economics, and medicine.
• There are two theories on how employees
behave:

2 - 68
 Behavioral Theory on How
Employees Behave Toward Work
Theory X Assumptions:
– Employees dislike work.
– Employees are
irresponsible.
– Employees lack ambition.
– Employees resist change.
Another Theory on How Employees Behave

Theory Y Assumptions:
– Employees are willing to
work.
– Employees are self
directed.
– They accept responsibility.
– Employees are creative.
– They are self-controlled.
 What Is An Organization?
• An Organization Defined
– A deliberate arrangement of people to accomplish
some specific purpose (that individuals independently
could not accomplish alone).
• Common Characteristics of Organizations
– Have a distinct purpose (goal)
– Composed of people
– Have a deliberate structure

1–71
1–72
 What Managers Do?
• Skills Managers Need
– Technical skills
• Knowledge and proficiency in a specific field
– Human skills
• The ability to work well with other people
– Conceptual skills
• The ability to think and conceptualize about abstract
and complex situations concerning the organization

1–73
Skills Needed at Different Management Levels

1–74
How The Manager’s Job Is Changing
• The Increasing Importance of Customers
– Customers: the reason that organizations exist
• Managing customer relationships is the responsibility of
all managers and employees.
• Consistent high quality customer service is essential for
survival.
• Innovation
– Doing things differently, and taking risks
• Managers should encourage employees to be aware of
and act on opportunities for innovation.

1–75
Difference between
Administration and
Management

1–76
 Objectives
Management Administration
• Stated as broad • Stated in general terms
strategic aims and reviewed or
changed infrequently
 Success Criteria
Management Administration
• Performance mostly • Mistake avoiding
measurable • Performance difficult to
measure
 Resource Use
Management Administration
• Primary task • Secondary task
 Decision Making
Management Administration
• Many decisions • Few decisions
• Decisions affect few • Decisions affect many
• Decisions must be made • Decisions take time to
quickly be made
 BUSINESS
ORGANIZATION
 BUSINESS
• A business (also called a company,
enterprise or firm) is a legally
recognized organization designed to
provide goods and/or services to
consumers.

1–82
 Forms of Business Organization
• sole proprietorship or sole trader
• partnership
• corporation
• share of stock
• board of directors
• dividends

Slide 83
 Sole Proprietorship/ sole trader

– It is a type of business entity which is

owned and run by one individual
Advantages of a Sole Proprietorship

•Easiest and least expensive form of ownership to

organize.
• Sole proprietors are in complete control, within the
law, to make all decisions.
• Sole proprietors receive all income generated by the
business to keep or reinvest.
• Profits from the business flow-through directly to the
owner's personal tax return.
• The business is easy to dissolve, if desired.t
• Owners keep all profit
• Flexibility
 Disadvantages of Sole proprietorships

•Unlimited liability and are legally responsible for all debts

against the business.

• Their business and personal assets are 100% at risk.

• Has almost been ability to raise investment funds.

• Are limited to using funds from personal savings or consumer

loans. It
 Partnership
– a business owned by two or more people
Disadvantages of a partnership:

– Responsibilities, profits, and losses are shared

– can be held liable for errors of partners
– unlimited liability for business expenses
– responsible for all money or services owned.
– business income is taxed as personal income
Advantages of a partnership :

– easy to establish
– multiple sources of capital
– risks are spread among partners

Slide 89
 Corporation
– a business that has the legal rights of a
person but is independent of its owners
 Company- Public and Private sector
enterprises
• Private limited company: This type company can be formed by two
or more persons. The maximum number of member ship is limited
to 50. In this transfer of shares is limited to members only. The
government also does not interfere in the working of the
company.

• Public Limited Company: Its is one whose membership is open to

general public. The minimum number required to form such
company is seven, but there is no upper limit. Such company’s can
advertise to offer its share to genera public through a prospectus.
These publiclimited companies are subjected to greater control &
supervision of control.
 Merits
• These are expected to provide better working conditions to
the employees & supported to be better managed.

• Quick decisions can be possible, because of absence of

bureaucratic control.

• More Flexibility as compared to departmental organization.

Since the management is in the hands of experienced &
capable directors & managers, these ate managed more
efficiently than that of government departments.
 Demerits
• Any alteration in the power & Constitution of
Corporation requires an amendment in the
particular Act, which is difficult & time
consuming.
• Public Corporations possess monopoly & in the
absence of competition, these are not interested
in adopting new techniques & in making
improvement in their working
Organization Culture &
the Environment

1–94
Organizational
Culture

1–95
 Definition
• The general pattern of behaviour, shared
beliefs and values that organization members
have in common.

1–
96
 ELEMENTS
six elements are:

Stories: The past events and people talked

about inside and outside the company.
Rituals and Routines: The daily behavior and
actions of people that signal acceptable
behavior.

1–97
Symbols: The visual representations of the
company including logos
Organizational Structure: This includes both
the structure defined by the
organization chart, and the unwritten lines
of power.
Control Systems: The ways that the
organization is controlled.
Power Structures: involve one or two key
senior executives, a whole group of
executives, or even a department
1–98
MANAGING CULTURAL DIVERSITY
• Setting a good example
• Communicate in writing
• Training programs
• Recognize individual differences
• Differences in cultural background
• Flexible work environment
• Continuous monitoring

1–99
External and Internal Environment

General Internal
The Manager
Environment Environment

1–100
The External Environment

3–101
 Internal & External Environment classification:
Internal Environment
1.Resources
2.Capabilities
3.Culture
External Environment:
4.specific environment
a. Customers b. Suppliers
c. Competitors d. Pressure Groups
2. General Environment
a. Economic conditions b. Political/Legal Conditions
c. Socio-cultural Conditions d. Demographic Conditions
e. Technological Conditions f. Global conditions
 External environment
• External environment refers to force and
institutions outside organization that
potentially affect an organizations
performance

• General and Specific Environment

External environment- Specific Environment

• Specific Environment that is directly relevant

to achievement of an org’s goal
• Customers,competitors,suppliers,pressure
groups
• Economic conditions,political/legal
conditions,socio cultural conditions,
demographic conditions,technological and
Global conditions
 Specific Environment
Customers

Customers:customers who absorbs

organizational outputs
They represent potential uncertainty to an
organization,Their taste can change,they can
become dissatisfied with organization’s
product or service
 Specific Environment Competitors:

• Competitors: Organizations cannot afford to

ignore its competitors.
Managers must be prepared to respond to
competitors policies regarding pricing new
products,services offered and other
incentives it is giving to customers
 Specific Environment-Suppliers

• Suppliers:Any party that provides input for the

business. E.g financial institutions are provider
of money, colleges are suppliers of human
resources
• Managers need to have steady and and reliable
flow of inputs to meet the goals
 Specific Environment- Pressure groups
• Pressure groups: Managers must recognize
the special interest groups that attempt to
influence organization
General Environment Economic conditions:

• Economic conditions: It includes the impact of

economic factors like Interest rates, changes in
disposable income and the stage of general
business cycle
• e.g : when consumer’s incomes fall their
confidence about job security declines,they
will postpone purchasing any thing that is not
necessary
 General Environment Political/legal
conditions:
• Political/legal conditions: Federal,state and
local government influence what org can and
cannot do
• Managers must adapt their practices to the
changing expectations of the society and their
life style
 General Environment Demographic
Conditions:
• Demographic Conditions: Trends in the
physical characteristics of population such as
gender,age,level of
education,income,geographical location
• Technological:It is changing the ways the org
are operating,so businesses must address this
issue and its impact on performance of org.
General Environment- Socio-cultural
Conditions

• Managers must adapt their practices to

the changing expectations of the
society in which they operate.

112
 General Environment- Technological
Conditions
• The whole area of technology is radically
changing the fundamental ways that
organizations are structured and the way that
managers manage.

113
General Environment- Global conditions

• Globalization is one of the major factors

affecting managers and organizations

114
CURRENT TRENDS AND ISSUES
IN MANAGEMENT

115
• Workforce diversity
• Changing employee expectation
• International environment
• Building organizational capabilities
• Job design & organizational structure
• Changing psycho-social system
• Technological advance
• Management of human relations
• Changes in legal environment
• Expanding globalisation

116
 1.Workforce diversity
Changing the Way You Do Business
• It refers to the way in which people in a
workplace are similar & different from one
another. in addition to the characteristics
protected by law, other similarities &
differences commonly cited include
background, education, language skills,
personality & work role.

117
Advantages of Workforce diversity
• IMPROVE DECISION MAKING
• IMPROVE TEAM PERFORMANCE
• BETTER CONSUMER SERVICES
• ENHANCE COMMUNICATION SKILLS
• CREATIVITY & INNOVATION

118
 2.Changing employee expectation
• The managers has then to redraw new
methods of motivation such as job design.
• Ex: motivation of workers to deliver their
contribution towards the accomplishment of
organizational goals.

119
 3.INTERNATIONAL ENVIRONMENT

The Environment which

includes all the factors
and forces which are
external to the Business
organization such as
economic, socio-cultural,
legal demographic etc.
are known as
International
environment.
120
 In simple word International Environment
means the growth and expansion of business
to a larger
extent.
i.e. global all over the world.

121
4. Building organizational capabilities
• To acquire new skills, knowledge & to evaluate
environmental changes to evaluate business
strategies.
5. Job design & organizational structureDesign
with foreign concepts ex: quality circle,TQM
etc
i. Task Approach
ii. People Approach

122
6.Changing Psycho-Social System
• Management designed to perform its work
function.
• But in future Human Participation will be
required.
7.Technological Advance
• New jobs will be created and many old jobs
will become redundant
123
8.Management of human relations
• New generation of workforce comprising
educated will ask for higher degree of
participation.
9.CHANGING IN LEGAL ENVIRONMENT
Increases changes in legal environment
necessary adjustments have to be made.

124
Strategies for
International
Business

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 Multinational Corporation (MNC)
• Multinational Corporations have their
headquarters in one country but operate in
many countries.
International Management
• Focuses on the operations of international
firms in host countries.
• International businesses engage in
transactional across national boundaries.

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 Orientations
• Ethnocentric Orientation – The style of the foreign
operations is based on that of the parent company.
• Polycentric Orientation – The foreign subsidiaries are given
a great deal of managerial freedom.
• Regiocentric Orientation – The foreign operations are staffed
on a regional basis.
• Geocentric Orientation – The entire organization is viewed
as an interdependent system operating in many countries.

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 Strategies
• Multinational corporations must give
weightage to two important factors
 The need to make optimum economic
decisions on a global basis
 Responsive to host country differences

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In order to fulfil the above two criteria the
MNCs may opt for any of the four strategy
 Worldwide integration / Globalisation
Strategy
 National responsiveness strategy
 Regional responsiveness strategy
 Multifocal strategy

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 Forms of International Business
 Exportation – Exportation of goods and services from
parent country to host country.
 Licensing agreement – Licensing agreement for
producing goods in another country.
 Management contracts – The company can engage
in management contracts for
operating in foreign companies.
 Joint Venture and Strategic Alliances
o One form of interaction is a joint venture with the firm
in the host country.
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 Wholly Owned Subsidiaries
o A wholly owned subsidiary is an operation on
foreign soil that is totally owned and
controlled by a company with headquarters
outside the host country.
o In wholly owned subsidiary, the production
facilities are totally owned by one
company.

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Challenges of Management in Global
Scenario
 Language barriers
 Selling and Marketing in foreign markets
 Attitudes of host governments
 Communication and coordination between
subsidiaries
 Current Trends and Issues
• Globalization
• Ethics
• Workforce Diversity
• Entrepreneurship
• E-business
• Knowledge Management
• Learning Organizations
• Quality Management
Current Trends and Issues (cont’d)
• Globalization
– Management in international organizations
– Political and cultural challenges of operating in a
global market
• Ethics
– Increased emphasis on ethics education in college
curriculums
– Increased creation and use of codes of ethics by
businesses
Current Trends and Issues (cont’d)
• Workforce Diversity
– Increasing heterogeneity in the workforce
• More gender, minority, ethnic, and other forms of
diversity in employees
– Aging workforce
• Older employees who work longer and not retire
• The cost of public and private benefits for older
workers will increase
• Increased demand for products and services related to
aging
Current Trends and Issues (cont’d)
• Entrepreneurship Defined
– The process whereby an individual or group of
individuals use organized efforts to create value and
grow by fulfilling wants and needs through
innovation and uniqueness.
• Entrepreneurship process
– Pursuit of opportunities
– Innovation in products, services, or business methods
– Desire for continual growth of the organization
 Current Trends and Issues (cont’d)
• E-Business (Electronic Business)
– The work preformed by an organization using electronic
linkages to its key constituencies
– E-commerce: the sales and marketing component of an
e-business
• Categories of E-Businesses
– E-business enhanced organization
– E-business enabled organization
– Total e-business organization
Current Trends and Issues (cont’d)
• Knowledge Management
– The cultivation of a learning culture where
organizational members systematically gather and
share knowledge with others in order to achieve
better performance.
• Learning Organization
– An organization that has developed the capacity to
continuously learn, adapt, and change.
Current Trends and Issues (cont’d)
• Quality Management
– A philosophy of management driven by continual
improvement in the quality of work processes and
responding to customer needs and expectations
– Inspired by the total quality management (TQM)
ideas of Deming and Juran
– Quality is not directly related to cost.