Principles of Management

Text Book

Management:A global and entrepreneurial perspective

Heinz Weihrich Mark V Cannice Harold Koontz

12th edition, McGraw Hill

Slide Prepared By: Abdullah Al Yousuf Khan, Faculty, IUBAT—International University of

Business Agriculture and Technology, Dhaka, Bangladesh

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After studying this chapter, you’ll be able to:

1. Explain the nature and purpose of management 2. Understand that management applies to all kind of

organisations3. Recognise that the aim of all managers is to create a surplus

(profit)4. Identify latest information technology and globalisation5. Explain the concepts of productivity, effectiveness, and

efficiency6. Describe the evolution of management and some recent

contribution to management thought7. Describe various approaches to management, their

contributions as well as limitations8. Show how the management process, operational process,

approaches to management theory and science has a basic core of its own

9. Realise that managing requires a system approach and that practice must always take into account SITUATIONS and CONTINGENCIES

10. Define the mangerial functions of planning, organising, leading and controlling

2Slide Prepared By: Abdullah Al Yousuf Khan, Faculty, IUBAT—International University

of Business Agriculture and Technology, Dhaka, Bangladesh

Definition of Management: Its nature and purpose

Management is a process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected goals.

Expended Definition: As managers, people carry out the managerial

functions of planning, organising, leading and controlling.

Management applies to any organisations. It applies to managers at all kind of organisational

levels. The aim of all mangers is the same to create a surplus. Managing is concerned with productivity, which implies

effectiveness and efficiency.

3Slide Prepared By: Abdullah Al Yousuf Khan, Faculty, IUBAT—International University of Business Agriculture and

Technology, Dhaka, Bangladesh

Definition of Management

All do manage organisations. Organisation can be defined as a

group of People working together to create a surplus. In business organisations, this surplus is profit. Universities does

create profit but generate and disseminate knowledge as well as provide service

to the society.



The Functions of Management:

Planning Organising

Staffing Leading

Controlling



PLANNING

Planning involves selecting goals andobjectives and actions to achieve

them, i.e.selecting future courses of actions

fromalternatives. To make any decision asystematic study, an analysis, or a

proposalis needed, and that is planning.



ORGANISING

Organising is that part of management which involvesestablishing an intentional structure of roles for people toFill in an organisation. It is intentional in the sense ofMaking sure that all the tasks necessary to accomplishgoals are assigned and, it is hoped, assigned to people whocan do them best.

The purpose of organisation structure is to help create anenvironment for human performance. It is a managementtool but may not be a easy task.



STAFFING

Staffing involves filling the positions in theorganisation structure. This is done by

identifyingwork-force requirements: inventorying the

peopleavailable: and recruiting, selecting, placing,promoting, appraising, planning the careers of,compensating, and training/developing currentemployees so that tasks are accomplishedeffectively and efficiently.



LEADING

Leading is influencing people so that they will contribute toorganisational and group goals: it has to do predominantlywith the interpersonal aspect of managing. All managerswould agree that they face most problems with peopletheir desires and attitudes as well as their behaviour asindividuals and in groups. And then effective managers

alsoneed to be effective leaders. Since leadership impliesfollower ship and people tend to follow those who offermeans of satisfying their own needs, wishes, and desires, itis understandable that leading involves innovations,leadership styles and approaches, and communication.



CONTROLLING

Controlling is measuring and correcting individual andorganisational performance to ensure that events conformto plans. It involves measuring performance against goalsand plans, showing when deviations from standards exist,and helping to correct deviations from standards. In short,controlling facilitates the accomplishments of plans. Controlactivities generally relate to the measurement ofachievement. Some means of controlling, like the budgetfor expenses, inspection records, and the record of labourhours lost, are generally familiar.



Management as an essential for any organisation

Managers are held responsible for taking actions that will enable individuals to make their best contributions group objectives. Management thus applies to small and large organisations, to profit and non-profit enterprise. To manufacturing as well as service industries. The term enterprise refers to a business, government agency, hospital, university and any other type of organisation-business or non business organisations. Effective management is the concern of the corporation president, the hospital administrator, the university president.



Managerial functions at different organisation levels Managers, administrators, executives and

supervisors are same in terms of taking responsibility.

But situation can be different in various types of organisation.

All managers carry out managerial functions. But time spent for each function may differ.

Top level managers spend more time on planning and organising than do lower-level managers.

Leading, on the other hand, takes a great deal of time for first-line supervisors.



Managerial skills and the organisational hierarchy Skills may differ at various levels in the organisational

hierarchy Technical skills are of the greatest importance at the

supervisory level and human skills are helpful in the frequent interactions with the subordinates.

Conceptual and design skills on the other hand, are not critical for lower-level supervisors.

At the middle management level, the need for technical skills decreases, human skills are still essential, while conceptual skills gain in importance.

At the top management level, conceptual and design abilities and human skills are especially valuable, but there is relatively little need for technical abilities.

In large organisations, CEOs can utilise the technical abilities of their subordinates.

In smaller firms, technical experience may still be quite important.



TopLevel

Managers

Middle-levelmanagers

First-level supervisors

LEADING

ORGANISING



The goals of all managers and organisations The aim of the managers is simply to

make profit In many businesses- to increase

shareholders value in the long term is more important

The aim of all managers should be to create a surplus, by establishing an environment in which people can accomplish group goals with the least amount of time, money, materials, and personal dissatisfaction.



Characteristics of excellent and most admired companies In the US, profitability is an important

measure of company excellence. However, other criteria are also used that

frequently coincide with financial performance

Thomas Peters and Robert Waterman in their book, In Search of Excellence, identified 43 companies that they regarded as excellent.

In choosing firms, they considered factors such as growth of assets and equity, average return on total capital, and similar measures.



The authors identified eight characteristics of excellent enterprises.These firms Were oriented toward action Learned about the needs of their customers Promoted managerial autonomy and entrepreneurship Achieved productivity by paying close attention to the

needs of their people Were driven by a company philosophy often based on

the values of their leaders Focused on the business they knew Had a simple organisational structure with a lean stuff Were centralised as well as decentralised, depending

on appropriateness



Criticism

Two years after In Search of Excellence published, Business Week took a second look at the companies that the writers had considered excellent.

Business Week survey revealed that at least 14 of the 43 companies did not measure up very well to several of the eight characteristics of excellence.

9 companies showed a great decline in earnings.

The performance review of the firms indicated that success may be only transitory and that it demands continuing hard work to adopt to the changes in the environment

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Slide Prepared By: Abdullah Al Yousuf Khan, Faculty, IUBAT—International University of Business Agriculture and Technology, Dhaka, Bangladesh

Advances in technologies, trends in globalisation, and a focus entrepreneurship for adapting to change in the 21st centuryTo be successful in business,

companies must take advantage of the new information technology –especially the internet-globalisation-and entrepreneurship



Technology

Technology, and specially information technology (IT) pervasive (allocable) impact on both organisations and individuals.

The World Wide Web and the Internet connect people and organisations through a global network.

Electronic commerce (e-commerce) is increasingly used for transactions between individuals and companies (B2C) as well as between business (B2B)

Another trend is the use of m-commerce, that is, use of mobile or wireless commerce for buying and selling goods using for example mobile phones or personal digital assistance (PDA)



For example, in Japan, NTT DoCoMo has developed an internet service called i-mode, which has already many million subscribers. This services will increase as soon as third-generation wireless technology making the speedy transmission of data possible (including video).



Globalisation

The second major trend is globalisation Most major corporations has international

presence The WTO, an umbrella organisation, was

established in 1955 to govern international trade.

Gains from globalisation not only benefit Western corporations but also result in higher incomes for people in other countries, such as China.

Clearly, managers must develop an international perspective.



Entrepreneurship

Entrepreneurship is seen by government as a means to increase employment and prosperity among their population, while organisation-large or small find that entrepreneurial innovation and expansion into new markets are essential to their success and survival in increasingly competitive markets that linked globally through sophisticated and ever present communication technologies.



Entrepreneurship

Entrepreneurship is a creative process that is centred in the notion of identifying market opportunities and unmet needs.

It is building solutions that meet these needs and bring value to customers.

Entrepreneurs build organisations that provide products that alleviate people’s pain (e.g. pharmaceutical companies) or provide the means for people to enhance their own lives through sophisticated telecommunications (e.g. information technology companies)



Productivity, effectiveness, and efficiency Definition of productivity; can be

defined as the output-input ratio within the time period with due consideration for quality

Output

Productivity = ------------- (time/quality)Inputs

More output with same input Same output less input



effectiveness, and efficiency

Effectiveness is the achievements of objectives

Efficiency is the achievement of the ends with the least amount of resources



Management: science or art: Managing is simply know-how. It is- doing things in light of the realities

of a situation Managers can work better by using

organised knowledge about management It is this knowledge that constitute a

science Thus, management as practice is an art; The organised knowledge underlying the

practice may be referred to as science



The evolution of management thought Scientific management Modern operational management

theory Behavioural sciences System theory Modern management thought



Scientific management;

Frederick W. Taylor; (1903) acknowledged as the father of scientific management. His primary concern was to raise productivity through greater efficiency in production and increased pay for workers, by applying the scientific method.

His principles emphasise using science, creating group harmony and cooperation, achieving maximum output, and developing workers.



Henry L. Gantt (1901)

Called for scientific selection of workers and “harmonious cooperation” between labour and management. Developed the Gantt chart stressed the need for training.



Frank and Lillian Gilberth (1900) Frank is known primarily time and

motion studies. Lillian, an industrial psychologist,

focused on the human aspects of work and the understanding of workers’ personalities and needs.



Modern operational management theory

Henri Fayol (1916) Referred to as the father of the modern

management theory. Divided industrial activities into six

groups: Technical Commercial Financial Security Accounting and managerial



Modern operational management theory

Recognised the need for teaching management.

Formulated 14 principles of management, such as; Authority and responsibility Unity of command Scalar chain Esprit de crops



Behavioural science

Hugo Munsterbergh (1912) Application of psychology in industry and

management. Walter Dill Scott (1910, 1911)

Application of psychology in advertising, marketing and personnel.

Max Webber (1946, 1947) Theory of bureaucracy.



Behavioural science

Vilfredo Pareto (1896-1917) Referred to as the father of the social

systems approach to organisation and management

Elton Mayo and F.J. Roethlisberger (1933) Famous studies at the Hawthorne plant of

the Western Electric Company on the influence of social attitudes and relationships of work groups on performance



Systems theory

Chester Barnard the functions of the managers (1938) The task of managers is to maintain a

system of cooperative effort in formal organisation. Suggested a comprehensive social systems approach to managing.



Modern management thought Peter F. Drucker (1974)

Very profile writer on many general management topics

W. Edwards Deming Introduced quality control in Japan

Laurence Peter (1969) Observed that eventually people get

promoted to a level where they are incompetent



William Ouchi (1981) Discussed selected Japanese managerial

practices adapted in the U.S. environment

Thomas Peters & Robert Waterman (1982) Identified characteristics of components

they considered excellent.



Patterns of management

The managerial roles approachHenry Mintzberg of McGill University

studied the activities of five CEOs.Executive do not perform the classical

management function Instead they do the following

Interpersonal roles1.The figurehead role (performing

ceremonial and social duties as the organisation’s representative



2. The leader role3. The liaison role

Informational roles4. The recipient role ( receiving information

about the operation of an enterprise)5. The disseminator role (passing

information to subordinates)6. The spokesperson role (transmitting

information to those outside the organisation)



Decision roles

7. The entrepreneurial role8. The disturbance-handler role9. The resource-allocator role10.The negotiator role



Other managerial approaches Empirical or case approach

Studies experience through cases, identifies success and failure

Limitations- situations are all different. No attempt to identify principles. Limited value for developing management theory



Principles of Management

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