MANAGEMENT THEORIES

& PRACTICE
(MBA 631)
2
e
ur
ct
Le

Mekuria Abera (Asst. Pro)

January 2021
 Text & Reference Books:

1. FUNDAMENTALS OF MANAGEMENT: Essential

Concepts & Applications By: Robbins, Decenzo

2. MANAGEMENT: The New Competitive Landscape

By: Bateman, Snell

3. MANAGEMENT 7th Edition By: Robbins,

Coulter

4. MANAGEMENT: A global Perspective

By: Weilrich, Koontz

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 Management Key Concept
 Organizations
 A group of individuals who work together toward
common goals.
 A social entity, which is goal oriented and
deliberately structured.

 Goal
 A desired future condition that the
organization seeks to achieve.

 Management
 The process of using organizational resources
to
achieve the organization’s goals.

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 Management Key Concept
 Process
 Ongoing functions or primary activities
engaged in by managers.
 Resources
 Are organizational assets and include:
 Man
 Machine
 Material
 Money and
 Information
 Manager
 Someone who uses resources efficiently and
effectively to achieve the goals.
 Management Key Concept
 Measuring Managerial Performance
 Efficiency and effectiveness are the measures of
managerial or organizational performance.
 Efficiency – Using the fewest inputs
to generate a given output
 “doing things right”
 Focuses on
 means and
 achieving the objectives in time.
 Effectiveness – Pursuing the appropriate goals and
checking degree to which they are achieved
 “doing right things”
 Focuses on end results and achieving the
objectives on time.

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Measuring Managerial Performance
High
Effective but not Effective & efficient.
efficient.
Goal attainment

Goals are achieved &

Some resource are resource are well
wasted. utilized.

Area of high
productivity
Neither effective nor Efficient but not
efficient. effective.

Goal are not achieve. No resource is

Low wasted but goals are
Resource wasted in not achieved.
the process.
Poor Resource utilization Good 6
 Contexts of Defining Management
 Management can be defined from four different
contexts
 Production-or efficiency-oriented
 Management is the art of knowing what you want
to do and then seeing that it is done in the best
and cheapest way.
 Decision-oriented
 Management is simply the process of decision
making and controlling over the action of human
beings for the expressed purpose of attaining
predetermined goals.
 People-oriented
 Management is the art of getting things done
through and with other people.
 Function-oriented
 To manage is to forecast and to plan, to organize,
to coordinate and to control. 7
 Management: Is it Science or Art?
 Science is a collection of systematic knowledge, truths and
inferences originated from continuous study and
experiments.
 It has a number of mathematically oriented techniques
discovered either within the field or adapted from other
fields.
 Art uses the known rules and principles and uses the skill,
expertise, wisdom, experience to achieve the desired
result.

 Management has got

 scientific principles which constitute the elements of
Science, and
 Skills and talent which are attributes of Art.
 Management has got two faces like a coin;
 on one side it is art, and
 on the other it is science.
Management is both art and science.
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 Importance of Management

 Management is critical element in the critical

growth of the country.
 Management is essential in all organized
effort, be it business activity or any other
activity.
 Management is the dynamic, life giving
element in every organization.

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 Concept of Management

 The term management is used in three ways:

 Management as a discipline
 Refers to a set of management principles,
techniques and functions etc.
 Management as a group of people
 Refers to Individual or a group of people
who performs managerial activities.
 Management as a process.
 consisting of planning, organizing,
actuating and controlling that are
performed to decide the organizational
objectives and achieve the same by the
use of human and other resources.

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 Concept of Management
Management
The process of achieving company goals effectively
and efficiently by engaging in the four major
functions of planning, organizing, Staffing,
Organizing, and controlling of company’s resources.
Resources include: Planning

 Human resources e.g. employees

 Financial resources e.g. bank loan
Management
or investment from shareholders Controlling Organizing

 Physical resources e.g. machinery,

inventory
 Information resources e.g. Leading

knowledge
 Levels of Management
 First-line Managers/ Lower Level Manager
 Direct operating employees only,
 They do not supervise other managers.

 Middle Level Manager

 Direct the activities that implement their organization
policies.
 Balance the demands of their superiors with the
capacity of their subordinates.

 Top Level Manager

 Responsible for the overall
management of the organization.
 Establish operating policies.
 Guides the organization’s interactions
with its environment.

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 Managerial Skill

Managerial Skills

Primary Skills Secondary Skills

• Conceptual Skill • Decision Making Skill
• Human Skill • Communication Skill
• Technical Skill • Leadership Skill

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 Managerial Skill
 Conceptual Skills (Analytical Skills)
 The ability to
 analyze complex situations and
 respond effectively to the challenges faced by the
organization.
 Interpersonal Skill( Human Skill)
 The ability to work effectively
 with members of one’s
workgroup as well as
with other workgroups
within the organization.
 Technical Skills
 The ability to utilize
 tools,
 techniques and
 Procedures that are
specific to a
particular field.
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Skill Requirements at Different Levels

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Importance of Management Functions

Most
Important

Controlling
Organizing

Controlling

Controlling
Organizing

Organizing
Directing
Planning

Directing

Directing
Planning

Planning
Staffing
Staffing

Staffing
Least
Important
Top Middle First-Line
Managers Managers Managers

 Staffing
 The process of filling the positions in the organization and
keeping them filled.
 The process of recruiting and selecting the right person for
the right job at the right time in the right place.
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 Managerial Roles
 A set of expectation for a manager’s behaviors.
 In 1960, Henry Mintzberg conducted a study to understand about the
managerial roles.
 He identified 10 managerial roles that are common to all managers.
 These 10 managerial roles are grouped under
 Interpersonal,
 decisional, and
 informational roles.

Roles of Manager

Decisional Informational
Interpersonal
• Entrepreneur
• Figurehead • Monitor
• Disturbance handler
• Leader • Disseminator
• Resource allocator
• Liaison • Spokesperson
• Negotiator

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Mintzberg’s Managerial Roles
 Managerial Roles
 Interpersonal Roles
 Help the managers in managing the organization
smoothly.
 Figurehead
 Managers may have to appear at community
function, attend social events and signing legal
documents
 Leader
 Responsibility for the success/failure of their
work groups.
 A person responsible for hiring, training and
motivating subordinates in organization.
 Liaison
 A person who perform and interacts with other
people outside the organizations.

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 Managerial Roles
 Informational Roles
 Responsible for ensuring that the people with
whom they work have sufficient information to do
their jobs effectively.
 Monitor
 Managers seek out information from their
subordinates.
 Disseminator
 Information receive internally/externally
will be transmitted to the subordinates.
 Spokesperson
 Transmits information to the people who are
external to the organization, i.e., government,
media etc.
 Mustoften communicate individuals outside
their information to units andtheir organizations.
 Managerial Roles
 Decisional Roles
 Managers’ responsibility for processing information
and reaching conclusions.
 Entrepreneur
 Managers initiates projects that capitalize on
opportunities.
 Disturbance Handler
 Managers is responsible for corrective actions
when the organizations faces important and
unexpected disturbances.
 Resources Allocator
 Managers is responsible in allocating the
resources of the organizations.
 Negotiator
 Managers may negotiate with employees,
suppliers, customers or other workgroups.
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Managerial Roles
 Kinds of Managers

 Top managers:
Executives responsible for the overall direction of the
organization. Responsible for creating:
 Context for change
 Employee buy-in
 Positive organizational culture via language and action.
 Middle managers
Responsible for:
 Setting objectives consistent with top management’s goals
 Planning and implementing subunit strategies for
achieving the objectives
 Coordinating and linking groups
 Monitoring and managing subunits
 Implementing strategies developed by top managers

Plant manager, regional manager, or divisional manager

 Kinds of Managers
 First-Line managers
Responsible for:
Managing performance of entry-level employees
Train/teach, encourage, monitor, and reward
Scheduling
Office manager, shift supervisor, department manager

 Team Leaders
Responsible for:
Facilitating team activities toward goal accomplishment
Help team members:
Plan and schedule work
Learn problem-solving methods
Work effectively with each other
Foster internal and external relationships

Team leader, team contact, group facilitator

 Mistakes Managers Make

1. Insensitive to others: abrasive, intimidating, bullying style

2. Cold, aloof, arrogant
3. Betray trust
4. Overly ambitious: thinking of next job, playing politics
5. Specific performance problems with the business
6. Overmanaging: unable to delegate or build a team
7. Unable to staff effectively
8. Unable to think strategically
9. Unable to adapt to boss with different style
10.Overdependent on advocate or mentor
 Competitive Advantage Through People: Management
Practices

 Employment security
 Ultimate form of commitment company can make to
employees.
 Employees can innovate and increase the profitability
of an organization without the fear of losing their job
 Selective hiring
 Companies need to hire the best talent due to the
presence of employment security
 Self-managed teams
 Produce high productivity through increased employee
commitment and creativity
 …Management Practices

 Decentralization
 Allows employees closest to problems, production, and
clients to make timely decisions
 High wages contingent on organizational performance
 High remuneration helps an organization attract
talented employees and retain existing employees
 High wages indicates the organization values its
employees
 Employees who share in financial success more likely
to see long-run view of organization
 …Management Practices

 Training and skill development

 Companies need to invest resources in the training
employees to ensure skill development
 Reduction of status differences
 Leads to employees concentrating on work related
issues rather than biases and prejudices of the
management
 Sharing information
 Helps employees participate in the decision making
process
 Functions of Management
Planning
 A process of setting the organization goals
and charting out the best way of action for
achieving the same.
 Includes determination of
 what is to be done,
 how, and where it is to be done,
 who will do it, and
 how result are to be evaluated.
 This function
 is expected to be carried out throughout
the organization.
 should be performed by the managers at
all levels.
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 Functions of Management
Organizing
 According to Allen, organizing refers to a systematic
process of structuring, integrating, coordinating task
goals, and activities to resources in order to attain
objectives.
 Organizing includes
 identifying and grouping the activities,
 defining and delegating responsibility and authority,
and
 establishing relationships.
 To organize a business is to provide it with everything
useful to its functioning i.e. personnel, raw materials,
machineries, capital etc.
 Once objectives are set, manager has to develop a
plan to achieve them with help of human resources as
well as material resources.
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 Functions of Management

 Staffing
It is the function of manning the organization structure
and keeping it manned.
 Recruiting, selecting, appointing the employees,
assigning duties, maintaining cordial relationship
and taking care of grievances of employees.
 Training and Development of employees, deciding
their remuneration, promotion and increments.
 Evaluating performance.
 Functions of Management
Directing
 Directing involves communication, leadership
and motivation.
 Communication
 The process of passing the information
from one person to other personal
understanding it.
 Leadership
 The function whereby the person or
manager guides and influences the work
of his subordinates.
 The ability to influence people towards
the attainment of organization goals.
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 Functions of Management
Directing/Leadership
 Leadership is of three types:
 Autocratic Leadership
 Leader retains full authority for decision making
 Democratic /Participative Leadership
 The leader accept some employees input but usually use
their authority to make decision
 The leader
 delegates authority to others,
 encourages participation and
 relies on expert and referent power to influence
subordinates
 Free –rein Leadership
 The leader delegates much authority to employees.
 Motivation
 The process of creating organizational condition that will
result in employees’ striving and working toward the company
goals.
 It means motivating the employee to give their best to the
organization
 Functions of Management
 Controlling
 The controlling involves
 Establishing standards of performance.
 Measuring current performance and comparing it
against the established standard to identify the
deviation.
 Taking corrective action that does not meet the
standard.
 Control compels the events to confirm to plans.
 Innovation and Representation
 These are also two important managerial
additional functions.
 Innovation means crating new ideas which may either
result in the development of new products or finding new
uses for older ones.
 It is necessary to grow better.
 The manger has to represent himself for the
organization.
 A manger must win support effectively from different
groups (either internal or external). 15
 Functions of Management

Manager therefore makes use of a company’s resources

to efficiently and effectively achieve the company goals.

Human
Resources

Financial
Resources
Manager Planning→ Organizing→ Directing → Controlling Goals
Physical
Resources

Information
Resources
 Activity 1 – Class Discussion

 Can you suggest any company goals of an

online game development company to achieve?
 Activity 1 – Solution

Examples of company’s goals:

 Become the leader of the industry.
 Integrate different elements from novels, comics,
movies and music in order to create outstanding
games.
 Maintain a market share of 20% in the industry.
 Introduce a new product next year.
 Achieve a 10% growth in sales in a year.
 Keep cost of goods no more than 50% of sales.
 Achieve a net profit of $2 million in next year. …
 Planning

Define the nature and purposes of planning.

Classify the types of goals organizations

might have and the plans they use.

Compare and contrast approaches to goal-

setting and planning.

Discuss contemporary issues in planning.

 Planning

 Planning involves setting goals of the company

and establishing a plan or strategy to achieve
these goals.
 How to set goals? Be SMART!

SMART Goals are

Specific – goals are clearly defined and
focused.
Measurable – outcome of the goal can be
measured.
Achievable – goals should be realistic and
are able to accomplish.
Relevant – goals are relevant to the business
operation.
Time-bound – a specific period of time must
be set for achieving the goal.
The use of SMART goal setting can help
managers save time and resources by
making the planning process more efficient
and effective.
 SMART Goals

Specific:
To set a specific goal, there are some questions to ask.
 Who is involved?
 What to accomplish?
 When to start/end?
 Where to start?
Example: setting the goal as “to achieve $3 million
sales for product A in the next year” is more
meaningful than “to get more business”.
Measurable:
establish concrete criteria for measuring outcomes.
 The criteria should be quantifiable so that the
outcome can be easily measured.
 Examples: to achieve $1 million net profit in the
next year or to obtain 20% market share in the
industry.
 SMART Goals

Achievable:
It is important to ensure the goals are realistic and be
attainable with consideration of the abilities and financial
capacity of the company.
Example: it is not appropriate for a small company to set a
goal of earning billions dollars in one year.
Relevant:
the goals should be set for business operation and based
on current economic climate.
Example: a business can set a goal of increasing 20% in sales
for its product A in the next year which is relevant to the goal
of obtaining 20% market share in the industry.
Time-bound:
a goal should be bound within a time frame.
Example: it is not appropriate to set a goal of $30 million
sales without time limit or it will never be achieved as there
is no sense of urgency.
 Planning process
 Once managers understand the
goals of the company, they can
take steps to implement the
planning process in their
company.

 Implementation of planning
process is important because if
the planning cannot be
transformed into action, it will not
be able to generate benefits to
the company.
 Planning process

2. Listing 3. Selecting best

1. Setting company
alternative ways of way to achieve the
goals
achieving the goals goals

4. Developing plans
5. Putting plans into
to pursue chosen
action
alternative
 Why Do Managers Plan?

Four reasons for planning

– Provides direction
– Reduces uncertainty
– Minimizes waste and redundancy
– Sets the standards for controlling
 Planning and Performance

Formal planning is associated with:

– Positive financial results - higher profits,
higher return on assets, and so forth
– The quality of planning and implementation
affects performance more than the extent of
planning
– The external environment can reduce the
impact of planning on performance
– The planning-performance relationship seems
to be influenced by the planning time frame
 Goals and Plans

• Goals (objectives) - desired

outcomes or targets
• Plans - documents that outline how
goals are going to be met
 Types of Goals
• Financial Goals - related to the expected internal
financial performance of the organization.
• Strategic Goals - related to the performance of
the firm relative to factors in its external
environment (e.g., competitors).
• Stated goals - official statements of what an
organization says, and what it wants its various
stakeholders to believe, its goals are
• Real goals - goals that an organization actually
pursues, as defined by the actions of its members
Types of Plans
 Types of Plans

• Strategic plans - plans that apply to the

entire organization and establish the
organization’s overall goals
• Operational plans - plans that
encompass a particular operational area of
the organization
 Types of Plans (cont.)

• Long-term plans - plans with a time frame

beyond three years
• Short-term plans - plans covering one year or
less
• Specific plans – plans that are clearly defined
and leave no room for interpretation
• Directional plans - plans that are flexible and
set out general guidelines
 Types of Plans (cont.)

• Single-use plan - a one-time plan

specifically designed to meet the needs of
a unique situation
• Standing plans ongoing plans that
provide guidance for activities performed
repeatedly
Downside of Traditional Goal-Setting
Planning and Organizational Level
 Contemporary Issues in Planning

Criticisms of planning:
Critics have some of the basic assumptions of planning:
1) Planning may create rigidity
2) Plans can’t developed for a dynamic environment
3) Formal plans can’t replace intuition and creativity
4) Planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival
5) Formal planning reinforces success, which may lead
to failure
6) Just planning isn’t enough.
THANK YOU SO MUCH

Q&A
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