INTRODUCTION TO BUSINESS

DR. TUĞBA KARABOĞA

General Management-1
 Course Plan
1. Management Functions
a. Planning
b. Organizing
c. Leading
d. Coordinating
e. Controlling
2. Who Are Managers?
3. Managerial Levels
4. Managerial Skills
5. Management Theories
Managers
 Defining Managers
Managers wear many hats and
must bring with them an entire
toolkit of skills—conceptual skills,
human skills, and technical skills—
in order to reach organizational
goals and objectives effectively.
 Who Are Managers?
Good Managers;
 Are responsible for effective and efficient business performance
 Effectiveness — do the right things; achieve goals
 Efficiency — do the right things; achieve goals with least
amount of resources

 Are accountable to all key stakeholders

 Develop strategic plans and tactical plans
 Analyze their competitive environments and plan, organize,
direct, and control day-to-day operations

• Chief Executive Officer;Chief Financial Officer;Executive

Vise President; Governor, Chancellor, Mayor

• Regional Manager;Division Head;Director, Dean

• Supervisor;Group Leader;Section Chief

Managerial Levels
• Top Managers
• Set organizational objectives and goals
• Scan external environment for opportunities
• Help develop long-range plans
• Make critical decisions that affect the entire organization
• Middle Managers
• Allocate resources to achieve the goals and objectives set by top
managers
• Oversee first-line managers
• First-Line Managers
• Coordinate activities developed by middle-managers
• Supervise non-managerial employees and report back to middle-
managers
Managerial Skills
Robert Katz identified three critical skill sets for successful managers
•Technical Skills
• A learned capacity in any given field of work, study, or play
• Front-line managers often need to use technical skills on a daily basis
•Conceptual Skills
• Ability to generate ideas creatively and intuitively and show
comprehensive understanding of contexts and topics
• Requires conceptual thinking – an ability to formulate ideas or mental
abstractions
• Often viewed as critical success factors for upper-managerial functions
•Human Skills
• A combination of social, interpersonal, and leadership skills
• Evaluate inefficiencies and make unpopular choices, but also create a
healthy work environment conducive to development and constructive
criticism
The Importance of Managerial Skills at
Different Management Levels
Management Theory
Management Theories
 Frederick Taylor’s scientific management theory
 Contributions of Frank and Lillian Gilbreth to scientific management
 Weber’s Bureaucratic management
 Henri Fayol’s contributions to the field of management theory
 Key functions of management today
Frederick Taylor’s Scientific Management
Theory
• Scientific management is a management
theory that analyzes work flows to improve
economic efficiency, especially labor
productivity
• “Taylorism” is:
• The first form of scientific management
• Sometimes called the “classical perspective”
• Still observed for its influence but no longer
practiced exclusively
• Taylor was concerned with reducing process
time and worked with factory managers on
scientific time studies
Four Principles of Taylor’s Scientific Management

1. Look at each job or task scientifically to determine the “one best way”
to perform the job. This is a change from the previous “rule of
thumb” method where workers devised their own ways to do the job.
2. Hire the right workers for each job, and train them to work at
maximum efficiency.
3. Monitor worker performance, and provide instruction and training
when needed.
4. Divide the work between management and labor so that
management can plan and train, and workers can execute the task
efficiently.
Frank and Lillian Gilbreth
• The Gilbreths used scientific insights to develop
a study method based on the analysis of work
motions
• They filmed the details of a worker’s activities
while recording the time it took for them to
complete those activities
• Philosophical divide between Taylor and the
Gilbreths’
• Taylor focused on reducing process time
• Gilbreths tried to make overall process more
efficient by reducing the motions involved, and
felt they were more concern for workers’
welfare then Taylor
 Bureaucratic Management
• According to Max Weber, the Bureaucratic management
approach emphasized the necessity of organizations to
operate in a rational way instead of following the “arbitrary
whims” or irrational emotions and intentions of owners and
managers.
• He found different characteristics in
bureaucracies that would effectively conduct decision-making
, controlling resources, protecting workers and
accomplishment of organizational goals.
• Bureaucratic management approach developed by Max
Weber is not suitable for business organizations but may be
suitable for government organizations.
 6 Principles of Bureaucratic Management Approach
1. Proper Division of Labor
Division of labor specialization should be fixed and there should be a balance
between power and responsibilities.
2. Chain of Command
The chain of command or
organizational hierarchy should be constructed in a way that information rela
ted to decisions and works can flow effectively from top to bottom
.
3. Separation of personal and official property
Owners and organization’s assets are separate and can to be treated as same
by the owner or the organization.
 6 Principles of Bureaucratic Management Approach
4. Application of Consistent and Complete Rules
There should be proper rules and regulations in the organization for running
the organization.
These rules should be followed in every step of the organization and they are
equally applicable to every member of the organization.
5. Selection and Promotion Based on Qualifications
The selection and promotion of workers should be based on equalization like;
skills, experience, age. It should not be influenced by personal relations and
benefits.
6. Training in Job Requirements and Skills
Training in job requirements and skills. There is a difference between
management and other parts of organization and training and improving
skills of management is important.
 Features of Bureaucratic Organization
From the principles of bureaucratic organization, we can find these
characteristics or features of Bureaucratic Organization are as follows:-
•The high degree of Division of Labor and Specialization.
•There is a well-defined chain of command.
•It follows the principle of Rationality, Objectively and Consistency.
•The relationship among the member of the organization is Formal and
Impersonal relations. And it’s based on positions and not on personalities.
•Rules and Regulations are well defined and it indicates the duties and rights
of the employees. These rules apply to everyone from to bottom of the
organization and must be strictly followed.
•Selection and Promotion are based on Technical qualifications.
•Only Bureaucratic or legal power is given importance.
Henri Fayol
Henri Fayol worked as a mining
engineer and began his work on
management structures after an event
he perceived to be a failure of
management structure. When a horse
broke its leg and nobody at the mine
had the authority to purchase a new
one, the mine was shut down.

Fayol’s book General and Industrial

Management describes five duties of
management and fourteen principles
Fayol felt could guide management.
Fayol’s Five Functions of Management
1. Foresight/Plan: Create a plan of action for the
future.
2. Organization: Provide resources to implement
the plan.
3. Command: Select and lead the best workers
through clear instructions and orders.
4. Coordinate: Make sure the diverse efforts fit
together through clear communication.
5. Control: Verify whether things are going
according to plan and make corrections where
needed.
Fayol’s 14 Principles
Fayol also proposed a set of fourteen principles that he felt could guide management
behavior, but he did not think the principles were rigid or exhaustive. Some of Fayol’s
principles are still included in management theory and practice, including the
following:

1.Division of Work. When employees are specialized, output can increase because
they become increasingly skilled and efficient.

2.Authority. Managers must have the authority to give orders, but they must also
keep in mind that with authority comes responsibility.

3.Discipline. Discipline must be upheld in organizations, but methods for doing so

can vary.

4.Unity of Command. Employees should have only one direct supervisor.

5.Unity of Direction. Teams with the same objective should be working under the
direction of one manager, using one plan. This will ensure that action is properly
coordinated.
 Fayol’s 14 Principles
6. Subordination of Individual Interests to the General Interest. The interests of one employee
should not be allowed to become more important than those of the group. This includes managers.

7. Remuneration. Employee satisfaction depends on fair remuneration for everyone. This includes
financial and non-financial compensation.

8. Centralization. This principle refers to how close employees are to the decision-making process. It is
important to aim for an appropriate balance.

9. Scalar Chain. Employees should be aware of where they stand in the organization’s hierarchy, or
chain of command.

10. Order. The workplace facilities must be clean, tidy and safe for employees. Everything should have
its place.
11. Equity. Managers should be fair to staff at all times, both maintaining discipline as necessary and
acting with kindness where appropriate.
12. Stability of Tenure of Personnel. Managers should strive to minimize employee turnover.
Personnel planning should be a priority.
13. Initiative. Employees should be given the necessary level of freedom to create and carry out plans.
14. Esprit de Corps. Organizations should strive to promote team spirit and unity.
Key Functions of Management Today
● Planning

● Organizing

● Leading/directing

● Coordinating

● Controlling/monitoring

https://www.youtube.com/watch?v=d1jOwD-CTLI
 MANAGERIAL FUNCTIONS
1. Planning is a key managerial function and planning activities extend into
each of the other functions; GOALS, PLANS, DECISION MAKING

2. Organizing involves the means by which managers blend human and

material resources through a formal structure of tasks and authority;
DIVISION OF WORK, CHAIN OF COMMAND, DEPARTMENTALIZATION

3. Leading involves guiding and motivating people to accomplish

organizational objectives; LEADERSHIP, MOTIVATION, COMMUNICATION

4. Controlling is the function of evaluating an organization’s performance

to determine whether it is accomplishing its objectives; MANAGEMENT
CONTROL SYSTEMS, FINANCIAL CONTROL SYSTEMS
 The Management Functions
 Management
The process of planning, organizing, leading, and controlling a firm’s
financial, physical, human, and information resources to achieve its goals

Planning
Planning
Setting Goals
Setting
SettingGoals
Goals

Inputs
Controlling
Controlling Organizing
Organizing Outputs
Monitoring Performance
Monitoring
MonitoringPerformance
Performance Structuring
Structuring
Structuring

Leading
Leading
Guiding and Motivating
Guiding
Guidingand
andMotivating
Motivating
Planning
Understanding Planning

Planning is a process of thinking

about and organizing the
activities needed to achieve a
desired goal.

The business plan provides the

foundation for ongoing planning
activities.

A business without solid

strategic, operational, and
contingency plans will have a hard
time meeting its organizational
goals.
Vision and Mission Statements
• Vision Statement
• Gives employees something to rally behind and can
let the world know where the company is going
• Mission Statement
• Outlines how the business will turn its vision into
reality and becomes the foundation for establishing
specific goals and objectives
• The mission is the “what” and the “how,” and the vision is the
“why.”
• Until a business has determined what its mission is, planning
cannot begin
 Vision and Mission Examples
Tesla
•Mission statement: To create the most compelling car
company of the 21st century by driving the world’s transition to
electric vehicles.
•Vision statement: To accelerate the world’s transition to
sustainable energy.
IKEA
•Mission statement: Offer a wide range of well-designed,
functional home furnishing products at prices so low that as
many people as possible will be able to afford them.
•Vision statement: To create a better everyday life for the many
people.
 Vision and Mission Examples
Amazon
•Mission statement: We strive to offer our customers the lowest
possible prices, the best available selection, and the utmost
convenience.
•Vision statement: To be Earth’s most customer-centric
company, where customers can find and discover anything they
might want to buy online.
 Goals and Plans
• Goals are the expected future state of the organization. These serve as
guides for the future actions. Characteristics of goals:
• Specific, measurable and quantitative
• Cover the key result areas
• Challenging
• Time period
• Linked to specific rewards
Planning Process
 TYPES OF PLANS
ACCORDING ACCORDING TO ACCORDING TO
TO TIME THEIR USE IN THE THEIR PLACE IN
PERIOD ORGANIZATION THE
ORGANIZATIONAL
HIERARCHY
LONG RANGE STANDING PLANS STRATEGIC PLANS
PLANS(>5 YEARS) (POLICY, PROCEDURE, (TOP MANAGEMENT)
RULE)
MEDIUM RANGE TACTICAL PLANS
PLANS(1-5 YEARS) SINGLE-USE PLANS (MIDDLE MANAGEMENT)
(PROGRAM,PROJECT,
SHORT RANGE BUDGET) OPERATIONAL PLANS
PLANS(<1 YEAR)
(FIRST-LINE MANAGERS)
Types of Business Plans

• Strategic Plans translate the company mission into a set of

long-term goals and short-term objectives
• Tactical Plans translate high-level strategic plans into specific
plans for actions that need to be taken up and down the
layers of an organization
• Operational Plans establish detailed standards that guide
the implementation of tactical plans and establish the
activities and budgets for each part of an organization
Types of Decisions
Decision Process
Organizing
What is Organizing?
• Organizing is a process for grouping and structuring activities, assigning duties
and coordinating the efforts of personnel in their attainment of organizational
goals.
• Organizing harmonizes employees’ individual goals with the overall objectives of
the firm
• A good organizational structure is essential for expansion of business activities,
helps business determine the resources it needs to grow
• Organizing aids business efficiency and helps reduce waste
• Organizing makes “chain of command” clear so employees know whose
directions they should follow
 Organizing in General Context
• Physical organization:
Locations, layouts, designs, decoration
• Social organization
Division of work; Departmentalization;Chain of Command
Authority,Responsibility,Delegation;Span of
management;Centralization/Decentralization;Formalization
• Human organization
Recruitting, selecting, assigning the people into positions
• Legal organization
Appropriate type of legal business structures
ORGANIZING(Social Organinizing)
PROCESS OF GROUPING AND STRUCTURING ACTIVITIES, ASSIGNING
DUTIES, COORDINATING THE EFFORTS IN ATTAINMENT OF
ORGANIZATIONAL GOALS

FUNDAMENTALS OF ORGANIZING(Social
Organizing)
• SPECIALIZATION /DIVISION OF WORK
• CHAIN OF COMMAND
• AUTHORITY
• DELEGATION
• SPAN OF CONTROL
• FORMALIZATION
• CENTRALIZATION / DECENTRALIZATION
FACTORS AFFECTING THE ORGANIZATION
STRUCTURE

• GOALS AND STRATEGY

• ENVIRONMENT (Mechanic structure or organic
structure)
• TECHNOLOGY
• DEPARTMENTAL INTERDEPENDENCE
 TYPES OF DEPARTMENTALIZATION

TRADITIONAL
• FUNCTIONALDEPARTMENTALIZATION
• DIVISIONAL DEPARTMENTALIZATION

MODERN
• MATRIX STRUCTURE

CONTEMPORARY
• TEAM-BASED STRUCTURES
• NETWORK STRUCTURES
Functional Structure
• The organization is divided into smaller groups by areas of specialty
• Company’s top management team typically consists of several
functional heads
• Communication generally occurs within each department and is
transmitted across departments through department heads
• Allows for increased specialization
• Functional groups may not communicate with one another which can
decrease flexibility and innovation; may be susceptible to tunnel
vision with each function seeing the organization only within the
frame of its own operation
• May be more effective for larger corporations that produce relatively
homogenous goods
Divisional Structure
• Each organizational function has its own division
• Each division contains all necessary resources and functions within it to
support that particular product line of geography
• Product Departmentalization - the various activities related to the
product or service are under the authority of one manager
• Geographic Departmentalization - grouping activities based on
geography such as Asia/Pacific or Latin American division, important if
tastes or brand response differs across regions
 FUNCTIONAL
DEPARTMENTALIZATION

Operations Finance Marketing

Territory 1 Territory 2
of of
Division 1
of
Division 2
of
DIVISIONAL
Product 1 Product 2 DEPARTMENTALIZATION
Operations Finance Marketing Operations Finance Marketing
Matrix Structure
• Individuals grouped by two different operational
perspectives at the same time; generally best for
companies large enough to justify the increased complexity
• Company is organized by both function and product
• Product lines managed horizontally and functions managed
vertically
• Matrix allows for both communication across task
boundaries and allows for specialization
• Increased complexity in chain of command when
employees are assigned to both functional and product
managers
• Can increase costs
• Can lead to conflicting employee loyalties
• Blurred authority in a matrix can hamper decision making
and conflict resolution
 Matrix Departmentalization;
Two-Boss Employee
CEO

Account. Marketing Prod.

A Prod./Proj. Empl. Proj.authority

B Prod./Proj.

Line authority

©2004 S.K.Mirze
 Team-based Departmentalization
Teams replaces departments to accomplish
specific tasks and to coordinate major
departments

Hum.Res

Network Departmentalization Fin. &Account. Mark.

Organization becomes small central
hub and disaggregates
major functions into seperate, Core Company
independent expert companies
Prod.
Logistics
©2004 S.K.Mirze
Leading
Defining Leading
Regardless of their position within an organization, managers need to act as
leaders. A manager can take a number of different approaches to leading
and overseeing an organization.
 LEADING
USE OF INFLUENCE TO DIRECT AND MOTIVATE THE EMPLOYEES TO ACCOMPLISH
THE ORGANIZATIONAL GOALS

Why Human Issues Are Important

In Organizations
•To effectively and efficiently lead the employees
•To be more competitive through improving human
capabilities

KEY VARIABLES OF LEADERSHIP

• LEADER
• TASK / GOAL
• FOLLOWERS
• SITUATION
Leading
The function that involves the use of influence over people to direct their behaviours for the
attainment of organizational goals…
…This function focuses on people

• Understanding the people; Their personality, Attitudes,

Capabilities, Emotions
• Understanding the people;Satisfaction, Conflicts and Stresses
• Leadership styles for the people(followers)
• Motivating the people
• Proper communication

©2004 S.K.Mirze
 Effective Manager concerns
Individual behavior Organizational context
•Social perception •Creating corporate culture
•Personality •Developing creativity and innovation
•Feelings and work-related •Developing change
attitudes •Reducing stress
•Job satisfaction •Resolving conflicts
•What motivates people •Creating learning organization
•What creates stress

Group behavior Global context

•Issues in leadership •Managing in international organizations
•Group dynamics and teamwork •Differences in national culture
•Effective communication •Developing supra-cultural perceptiveness
 Leadership
Ability to influence people toward the attainment of goals

Leadership;
• Occurs between people
• Is used to attain goals
• Involves the use of power and influence

Management power comes from organizational structure

Leadership power comes from personal sources

 THEORIES OF LEADERSHIP

• TRAIT THEORY OF LEADERSHIP

• BEHAVIORAL(STYLES) THEORIES OF LEADERSHIP

* AUTHORITARIAN-DEMOCRATIC BEHAVIOR IN A CONTINUUM
* TWO-DIMENSIONAL LEADERSHIP BEHAVIOR

• CONTINGENCY THEORIES OF LEADERSHIP

 Evolution of Leadership Theories
Trait Behavioral Situational
Theory Theories Theories
Great
Person •Intelligence •Task oriented •Leader
Theory
•Dependability •People oriented •Follower
•Initiative •Situation

• TRAIT THEORY OF LEADERSHIP

• BEHAVIORAL(STYLES) THEORIES OF LEADERSHIP
* AUTHORITARIAN-DEMOCRATIC BEHAVIOR IN A CONTINUUM
* TWO-DIMENSIONAL LEADERSHIP BEHAVIOR
• SITUATIONAL THEORIES OF LEADERSHIP
 Trait Theory of Leadership
• Trait theory of leadership suggests that the success of leaders
is undoubtedly due to their personal qualities.
Behavioral Theories of Leadership
1. Autocratic/Authoritarian

2. Participative/Democratic
Management Styles:
Autocratic/Authoritarian
• Decision-making power is concentrated in the manager.
• Managers do not take any suggestions or consider initiatives
from subordinates.
• Is effective for quick decision making but is generally not
successful in fostering employee engagement or maintaining
worker satisfaction.
• Can be useful in crisis situations, when it’s impractical to
solicit employee input.
• If the workforce is comprised of low-skill workers, employee
input isn’t traditionally encouraged because it’s considered to
be of low value
Management Styles:
Participative/Democratic
• Manager shares the decision-making authority with group
members.
• Can help employees feel more invested in decisions,
outcomes, or the choices they’ve made, because they have a
say in them.
• Effective during a transitional period when managers need to
guide the workforce through the change.
• Seeking input from employees at many levels within the
organization can uncover people with invaluable experience,
advice, and solutions.
 Contingency Theory of Leadership
• Argue that there is no one best leadership behavior that fits every other
business situation.
Fiedler’s Theory of Leadership
 Motivating People in Organizations
Influencing the people in order to make them more willing and committed for the task
accomplishment to attain the organizational goals

Rewards
Needs Behavior
(Intrinsic/Extrinsic)

THEORIES OF MOTIVATION
CONTENT THEORIES
• MASLOW’S HIERARCHY OF NEEDS
• HERZBERG’S TWO-FACTOR THEORY

PROCESS THEORIES
• VROOM’S EXPECTANCY THEORY
• ADAM’S EQUITY THEORY
 Content Theories
• Content theories of motivation attempt to determine what generally
motivates people at work. These theories are concerned with the study of
needs that motivate people.

• Maslow’s Hierarchy of Needs Theory: According to Maslow, individuals

are motivated by unsatisfied needs. As each of these needs is significantly
satisfied, it drives and forces the next need to emerge.

• Herzberg’s Two-Factor Theory: Herzberg extented Maslow’s work. His

hygiene factors are roughly equal to Maslow’s lower level needs such as
physiological, safety and social. Motivators are roughly equal to Maslow’s
higher level needs such as esteem and self-acualization.
 Process Theories
• Process theories are concerned with how to direct behavior at work. They
explain how workers choose behavioral actions to satisfy their needs.

• Victor Vroom’s Expactancy Theory: This theory suggests that motvation

depends on people’s expectation about their ability to perform tasks that
will be followed by a desired outcome.
 Process Theories
• Adam’s Equity Theory: This theory focuses on an individual’s perception
of how fairly he is treated relative to other people in similar jobs. It says
that the level of reward we receive, compared to our own sense of our
contribution, affects our motivation. The theory considers the concept of
equality and fairness, as well as the importance of comparison to others.
• An individual will evaluate equity by a ratio of input to outcome. Inputs
are effort, experience, eduaction, ability and etc. Outcomes are pay,
recognition, promotions, status, benefits, etc. An individual’s outcome-to-
input ratio will be compared with the other individuals’ outcome-to-input
ratios. The managers should note that an increase in salary, a promotion
or some other reward would have no motivational effect on employees if
they perceive any inequities exist among the peers within the
organization.
Coordinating
 Coordinating
• Organizations are interdependent systems and need coordination among
different departments to stay in sync and targeted on the plan. Manager’s
biggest responsibility is to "harmonize" all required activities across
different functions to facilitate and ensure organizational success as per
the agreed plan.
• Managers need good Communication Skills to ensure that the
coordinating mechanism is working effectively. Managers are needed to
synchronize the elements of the organization and must take into account
the delegation of authority and responsibility and span of control within
units.
Process of Communication
Factors Affecting Communication
Types of General Communication
Types of Organizational Communication
• Formal Communication
• Informal Communication
Controlling
• In a business context, control is the activity of observing a
given organizational process, measuring performance
against a previously established metric, and improving it
where possible
• Upper-level manager – setting strategic objectives for the
short and long term and measuring overall organizational
success
• Mid-level manager –measure success within their span of
control (division, region, or particular product)
• Line manager – responsible for controlling actions of
workers
The Control Process
The process of control usually consists of the following five cyclical
steps:
1. Setting standards and goals
2. Measuring performance
3. Compare actual performance to established performance
standards
4. Take corrective action
5. Use information gained from process to set up future
performance standards
•The controlling function in business is a process of repeatedly checking
in and correcting, resembling the continuous process of navigation
•The controlling functions is meant to be proactive
The Control Process Figure
Why is Controlling Important?
 Some Forms of Controlling
Input Feedback
Production
Control

Concurrent
Input Output
Control

Feedforward
Control Production Output

• Feedback Control
Traditional;Output control
• Feedforward Control
Input control
• Concurrent Control
Contemporaray;Controlling through various processes
 Goal Identifiction

Establish standarts of performance

Measure actual performance

Compare performance to standarts

Adequate Inadequate
Do nothing Make corrective action

Feedback Control Model

©2004 S.K.Mirze
 CONTROLLING IN ORGANIZATIONS
• MANAGEMENT CONTROL SYSTEMS
RETURN ON INVESTMENT(ROI), MARKET SHARE ANALYSIS, CUSTOMER RELATIONS,
GROWTH, PROFIT ETC.

• OPERATIONAL CONTROL SYSTEMS

BREAK-EVEN ANALYSIS, PERT

• FINANCIAL CONTROL SYSTEMS

BUDGETS, FINANCIAL ANALYSIS (LIQUIDITY,LEVERAGE,PROFITABILITY,ACTIVITY
RATIO ANALYSIS)
Financial Control Systems
 Changing Paradigm in Controlling
• Decentralized Control Systems
• Total Quality Management