Unit - I Introduction to Management.docx

8/12/2019 Unit - I Introduction to Management.docx

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PRINCIPLES OF MANAGEMENT

Unit I - Introduction to Management

Learning Objectives & Outcomes

Topic Learning Objectives

Analyze the importance of organizations and management. Identify the different roles of a manager at different levels of management. Evaluate the early management approaches with modern management approaches. Understand why managers need to be concerned with organizational & natural

environment, ethics & social responsibility and globalization & management.

Topic Learning Outcomes

Define the four principal activities of the management process. Demonstrate the different skills that managers must have and the roles they can fill. Discuss the ways in which a management theory can be useful in organizations. Understand the historical context in which the systems and contingency approach to

management theory have been developed.

Definitions of Management

Management is an art of getting things done through people. - Mary Parker Fallett Management is a process of planning, organizing, staffing, directing and controlling to

accomplish organizational objectives through the coordinated use of human and material

skills.Prof. Moore

Management is the process of designing and maintaining an environment in whichindividuals working together in groups, accomplish their aims efficiently and effectively.

- Koontz

Organization Management

Organization Management is an art of knowing what to do, when to do and see that it is done

in the best and cheapest way. It refers to the art of getting people together on a common

platform to make them work towards a common predefined goal. It enables the optimum use

of resources through meticulous planning and control, at the workplace. It also gives a sense

of direction to the employees so that, they are well aware of their roles and responsibilities

and know what they are supposed to do in the organization.

Need for Organization Management


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Organization management gives a sense of security and oneness to the employees. An

effective management is required for better coordination among various departments.

Employees accomplish tasks within the stipulated time frame as a result of effective

organization management, stay loyal towards their job and do not treat work as a burden.

Effective organization management also leads to a peaceful and positive ambience at the

workplace.

Study of Organizations and Management

In a world where organizations are everywhere, there are three compelling reasons for

studying them and the practice of management. In each case - involving the past, present, and

future - the effects of people collaborating as an organization, under the guidance of

managers, can be far-reaching.

Living in the present: First, organizations contribute to the present standards of living of

people worldwide. We rely on organizations daily for food, shelter, clothing, medical care,

communications, amusement and employment. The Red Cross, for example, is an

organization that is particularly focused on the present as it offers assistance to specific

groups of people in times of need.

Building the future:Organizations build toward a desirable future and help individuals do

the same. New products and practices are developed as a result of the creative power that can

emerge when people work together in organizations. Organizations have an impact - positive

or negative - on the future status of natural environment, on the preventive and treatment of

disease, and on war around the globe. A number of organizations are addressing concerns

about the future in their products and practices such as Toms of Maine which produces a line

of all natural personal care products with environmentally sensitive packaging.

Remembering the Past: Third, organizations help connect people to their pasts.

Organizations can be thought of as patterns of human relationships. Every day that we work

with others adds to the history of the organization and to our own history. We often define

ourselves in terms of the organizations we have been a part of - whether schools, teams,

political groups, or businesses. In addition, organizations maintain records and value their

own history, keeping traditions alive in our minds.

Management as a speciality in Time

1. Management is an attempt to create a desirable future, keeping the past and the present inmind.

2. It is practiced in and is a reflection of a particular historical era.3. It is a practice that produces consequences and effects that emerge over time.


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Management as a speciality in Human Relationships

1. Mangers act in relationships that two way streets; each party is influenced by the other.2. They also act in relationships that have spill over effects for other people, for better and

for worse.

3. Managers juggle multiple simultaneous relationships.Some Key Concepts

Managerial performance is the measure of how efficient and effective a manager is; i.e.,

how well he or she determines and achieves appropriate objectives.

Organizational performance is the measure of how efficient and effective an organization

is; i.e., how well it achieves appropriate objectives.

Efficiency (resource usages) is the ability to minimize the use of resources in achieving

organizational objectives - doing things right.

Effectiveness (goal attainment)is the ability to determine appropriate objectives - doing the

right thing.

The Management Process

Management has been described as a social process involving responsibility for economical

and effective planning & regulation of operation of an enterprise in the fulfillment of given

purposes. It is a dynamic process consisting of various elements and activities. These

activities are common to each and every manger irrespective of his level or status. The

management process also refers to a series of inter-related functions. It is the process by

which management creates, operates and directs purposive organization through systematic,

coordinated and co-operated human efforts. As a process, management consists of three

aspects:

1. Management is a social process:Since human factor is the most important among theother factors, management is concerned with developing relationship among people. It is

the duty of management to make interaction between people, productive and useful for

obtaining organizational goals.

2. Management is an integrating process: Management undertakes the job of bringingtogether human, physical and financial resources so as to achieve organizational purpose.

Hence, this is an important function to bring harmony between various factors.

3. Management is a continuous process:It is a never ending process. It is concerned withconstantly identifying the problem and solving them by taking adequate steps.

This management process consists of four main management activities.


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1. PlanningIt is the basic function of management. It deals with chalking out a future course of action

and deciding in advance the most appropriate course of actions for the achievement of pre-

determined goals. According to Koontz, Planning is deciding in advance - what to do, when

to do & how to do. It bridges the gap from where we are & where we want to be. It is an

exercise in problem solving & decision making. Thus, planning is a systematic thinking about

ways & means for accomplishment of pre-determined goals. It is necessary to ensure proper

utilization of human & non-human resources. It is all pervasive, an intellectual activity and

also helps in avoiding confusion, uncertainties, and risks.

2. OrganizingIt is the process of bringing together physical, financial and human resources and developing

productive relationship amongst them for achievement of organizational goals. According to

Henry Fayol, To organize a businessis to provide it with everything useful or its functioning

i.e. raw materials, tools, capital and personnel. To organize a business, it involves

determining & providing human and non-human resources to the organizational structure.

Organizing as a process involves:

Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.3. StaffingIt is the function of manning the organization structure and keeping it manned. Staffing has

assumed greater importance in the recent years due to advancement of technology, increase in

size of business, complexity of human behavior etc. The main purpose of staffing is to put the

right man on to the right. According to Koontz & ODonnell, Managerial function of

staffing involves manning the organization structure through proper and effective selection;

appraisal & development of personnel to fill the roles designed in the structure.

Staffing involves:

Manpower planning. Recruitment, selection & placement. Training & development. Remuneration.


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Performance appraisal. Promotions & transfer.4. LeadingIt is that part of managerial function which actuates the organizational methods to workefficiently for achievement of organizational purposes. It is considered as the life-spark of the

enterprise which sets, it in the motion, the action of people because planning, organizing and

staffing are the mere preparations for doing the work. Leading is that inert-personnel aspect

of management which deals directly with influencing, guiding, supervising, motivating sub-

ordinates for the achievement of organizational goals.

Leading has following elements:

Supervision Motivation Leadership CommunicationSupervision -implies overseeing the work of subordinates by their superiors. It is the act of

watching & directing work & workers.

Motivation -means inspiring, stimulating or encouraging the sub-ordinates with zeal to

work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership -may be defined as a process by which manager guides and influences the work

of subordinates in desired direction.

Communication - is the process of passing information, experience, opinion etc. from one

person to another. It is a bridge of understanding amongst people.

5. ControllingIt implies measurement of accomplishment against the standards and correction of deviation

if any, to ensure achievement of organizational goals. The purpose of controlling is to ensure

that everything occurs in conformities with the standards. An efficient system of control helps

to predict deviations before they actually occur. According to Koontz & ODonnell ,

Controlling is the measurement & correction of performance activities of subordinates in

order to make sure that the enterprise objectives and plans desired to obtain, are as being

accomplished.

Controlling has following steps:

Establishment of standard performance. Measurement of actual performance.


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Comparison of actual performance with the standards and finding out deviation if any. Corrective action.Management as an Activity - Managerial Roles

1.

Informational activities:In the functioning of business enterprise, the managerconstantly has to receive and give information orally or in written. A communication link

has to be maintained with subordinates as well as superiors for effective functioning of an

enterprise.

2. Decisional activities: -Practically all types of managerial activities are based on one orthe other types of decisions. Therefore, managers are continuously involved in decisions

of different kinds since the decision made by one manager becomes the basis of action to

be taken by other managers.

3. Inter-personal activities:Management involves achieving goals through people.Therefore, managers have to interact with superiors as well as the sub-ordinates. They

must maintain good relations with them.

Types of Managers

The term manager is to mean anyone who is responsible for carrying out the four main

activities of management in relationships over time. This is practiced at different levels in an

organization and with different ranges of organizational activities.

Management Levels

First-Line Managers

First-Line / Lower level Management is also known as supervisory / operative level of

management. It consists of supervisors, foreman, section officers, superintendent etc.

Supervisory management refers to those executives whose work has to be largely with

personal oversight and direction of operative employees. In other words, they are concerned

with direction and controlling function of management. Their activities include:

Assigning of jobs and tasks to various workers. They guide and instruct workers for day to day activities. They are responsible for the quality as well as quantity of production. They communicate workers problems, suggestions, and recommendatory appeals etc to

the higher level and higher level goals and objectives to the workers.

Middle Managers

The branch managers and departmental managers constitute middle level. They are


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responsible to the top management for the functioning of their department. They devote more

time to organizational and directional functions. In small organization, there is only one layer

of middle level of management but in big enterprises, there may be senior and junior middle

level management. Their role can be emphasized as:

They execute the plans of the organization in accordance with the policies and directivesof the top management.

They participate in employment & training of lower level management. They are responsible for coordinating the activities within the division or department. They are also responsible for inspiring lower level managers towards better performance.Top Managers

It consists of board of directors, chief executive or managing director. The top management is

the ultimate source of authority and it manages goals and policies for an enterprise. It devotes

more time on planning and coordinating functions. The role of the top management can be

summarized as follows:

Top management lays down the objectives, strategic plans and broad policies of theenterprise.

It issues necessary instructions for preparation of department budgets, procedures,schedules etc.

It controls & coordinates the activities of all the departments. The top management is also responsible towards the shareholders for the performance of

the enterprise.

Management Skills

Every manager needs three skills, namely Technical skill, Human skill and Conceptual skill.

Technical skill is the ability to use the procedures, techniques and knowledge of a


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specialized field. Surgeons, engineers, musicians and accountants all have technical skills in

their respective field.

Human skillis the ability to work with, understand and motivate other people as individuals

or in groups.

Conceptual skill is the ability to coordinate and integrate all of an organizations interests

and activities. It involves seeing the organization as a whole, understanding how its parts

depend on one another, and anticipating how a change in any of its parts will affect the

whole.

Although all three of these skills are essential to a manager, their relative importance depends

mainly on the managers rank in the organization. Technical skill is most important in the

lower levels. Human skill, although important for managers at every level, is the primary skill

needed by middle managers; their ability to tap the technical skills of their subordinates is

more important than their own technical proficiency. Finally, the importance of conceptual

skill increases as one rises through the ranks of a management system. At higher

organizational levels, the full range of relationships and the organizations place in time are

important to understand. This is where a manager must have a clear grasp of the big picture.

The Challenge of ManagementWe are studying management in a time and place where many people are rethinking what

management is all about. The impetus for this re-evaluation comes from the increasing pace

of change both in organizations and in the larger world. In this complex and dynamic

environment, managers must continually adjust to changing conditions. It should come as no

surprise, then, that todays managers look at change as a constant in their lives. Thus the

overview of management practice can be concluded with three concurrent challenges that

confront managers as they deal with a changing world on the doorstep of the twenty first

century.


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The need for vision. The need for ethics. The need for responsiveness to cultural diversity.Early Thinking About ManagementPeople have been shaping and reshaping organizations for many centuries. Looking back

through world history, we can trace the stories of people working together in formal

organizations such as the Greek and Roman armies, the Roman Catholic Church, the East

India Company and the Hudson Bay Company. People have also long been writing about

how to make organizations efficient and effective since long before terms such as

management came to common usage. Two prominent and instructive examples are the

writings left for Managements to follow:

An organization is more stable if members have the right to express their difference andsolve their conflicts within it.

While one person can begin an organization, it is lasting when it is left in the care ofmany and when many desire to maintain it.

A weak manager can follow a strong one, but not another weak one, and maintainauthority.

A manager seeking to change an established organization should retain at least a shadowof the ancient customs.

The Evolution of Management Theory

Management is as old as human civilization:Ex: Egyptian pyramids, Great Wall of China.

During 1400s:Venetian business enterprises and their management practices

During 1776:Adam Smith described the advantages of division of labor and specialization.

Beginning of 18th

century: Industrial Revolution resulted in the advent of machine power,

mass production and efficient transportation.

Evolution of management thought can be studied in two broad categories:

Early management approaches (Scientific management, administrative management theory

and human relations movement) and Modern management approaches (behavioral,

quantitative, systems and contingency approaches).


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The Scientific Management School

Scientific Management theory arose in part from the need to increase productivity. In the

United States especially labor was in short supply at the beginning of the twentieth century.

The only way to expand productivity was to raise the efficiency of workers. Therefore

Frederick W Taylor Henry L Gantt and Frank and Lillian Gilberth devised the body of

principles known as scientific management theory.

Frederick W Taylor (1856-1915) rested his philosophy on four basic principles:

The development of a true science of management, so that the best method for performingeach task could be determined.

The scientific selection of workers, so that each worker would be given responsibility forthe task for which he or she was best suited.

The scientific education and development of the worker. Intimate, friendly cooperation between management and labor.Taylor contended that the success of these principles required a complete mental revolution


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on the part of management and labor. In short Taylor believed that management and labor

had a common interest in increasing productivity.

Taylor based his management system on production-line time studies. Instead of relying on

traditional work methods, he analyzed and timed steel workers movements on a series of

jobs. Using time study as his base, he broke each job down into components and designed the

quickest and best methods of performing each component. In this way he established how

much workers should be able to do with the equipments and materials at hand. He also

encouraged employers to pay more productive workers at a higher rate than others using a

scientifically correct rate that would benefit both company and worker. Thus, workers were

urged to surpass their previous performance standards to earn more pay. Taylor called his

plan the differential rate system.

Limitations of Scientific Management Theory:

Although Taylors methods led to dramatic increases in productivity and to higher pay in a

number of instances, workers and unions began to oppose his approach because they feared

that working harder or faster would exhaust whatever work was available, causing layoffs.

Moreover, Taylors system clearly meant that time was of the essence. His critics objected to

the speed up conditions that placed undue pressures on employees to perform at faster and

faster levels. The emphasis on productivity and, by extension, profitability led some

managers to exploit both workers and customers. As a result, more workers joined unions and

thus reinforced a pattern of suspicion and mistrust that shaded labor-management relations

for decades.

Classical Organization Theory School

Scientific management was concerned with increasing the productivity of the shop and the

individual worker. Classical organization theory grew out of the need to find guidelines for

managing such complex organizations as factories.

Henri Fayol

Henri Fayol (1841-1925) is generally hailed as the founder of the classical management

school not because he was the first to investigate managerial behavior, but because he was the

first to systematize it. Taylor was basically concerned with organizational functions;

however, Fayol was interested in the total organization and focused on management which he

felt had been the most neglected of business operations. Fayol listed 14 principles of

management most frequently to be applied. Before Fayol, it was generally believed that

managers are born, not made. Fayol insisted, however, that management was a skill like any

other one that could be taught once its underlying principles were understood.


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1. Division of labor:The most people specialize, the more efficiently they can perform

their work. This principle is epitomized by the modern assembly line.

2. Authority:Managers must give orders so that they can get things done. While their

formal authority gives them the right to command, managers will not always compel

obedience unless they have personal authority (such as relevant expertise) as well.

3. Discipline:Members in an organization need to respect the rules and agreements that

govern the organization. To Fayol, discipline results from good leadership at all levels of the

organization, fair agreements (such as provisions for rewarding superior performance), and

judiciously enforced penalties for infractions.

4. Unity of Command: Each employee must receive instructions from only one person.

Fayol believed that when an employee reported to more than one manager, conflicts in

instructions and confusion of authority would result.

5. Unity of Direction: Those operations within the organization that have the same

objective should be directed by only one manager using one plan. For example, the personnel

department in a company should not have two directors, each with a different hiring policy.

6. Subordination of individual Interest to the Common Good: In any undertaking,

the interests of employees should not take precedence over the interests of the organization as

a whole.

7. Remuneration:Compensation for work done should be fair to both employees and

employers.

8. Centralization: Decreasing the role of subordinates in decision making is

centralization; increasing their role is decentralization. Fayol believed that managers should

retain final responsibility, but should at the same time give their subordinates enough

authority to do their jobs properly. The problem is to find the proper degree of centralization

in each case.

9. The Hierarchy:The line of authority in an organizationoften represented today by

the neat boxes and lines of the organization chart runs in order of rank from top management

to the lowest level of the enterprise.

10. Order:Materials and people should be in the right place at the right time. People, in

particular should be in the jobs or positions they are most suited to.

11. Equity:Managers should be both friendly and fair to their subordinates.

12. Stability of the staff: A high employee turnover rate undermines the efficient

functioning of an organizing.

13. Initiative:Subordinates should be given the freedom to conceive and carry out their


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plans, even though some mistakes may result.

14. Esprit de corps:Promoting team spirit will give the organization a sense of unity. To

Fayol, even small factors should help to develop the spirit. He suggested for example, the

user of verbal communication instead of formal, written communication whenever possible.

Max Weber

Reasoning that any goal-oriented organization consisting of thousands of individuals would

require the carefully controlled regulation of its activities, the German sociologist Max

Weber (1864-1920) developed a theory of bureaucratic management that stressed the need for

a strictly defined hierarchy governed by clearly defined regulations and lines of authority. He

considered the ideal organization to be a bureaucracy whose activities and objectives were

rationally thought out and whose divisions of labor were explicitly spelled out. Weber also

believed that technical competence should be emphasized and that performance evaluations

should be made entirely on the basis of merit. Like the scientific management theorists,

Weber sought to improve the performance of socially important organizations by making

their operations predictable and productive.

Mary Parker Follett

Mary Parker Follett (1868-1933) was among those who built on the basic framework of the

classical school. However, she introduced many new elements, especially trends that would

be further developed by the emerging behavioral and management science schools. Follett

was convinced that no one could become a whole person except as a member of a group;

human beings grew through their relationships with others in organizations. In fact, she called

management the art of getting things done through people. She took for granted Taylors

assertion that labor and management shared a common purpose as members of the same

organization, but she believed that the artificial distinction between managers (order givers)

and subordinates (order takers) obscured this natural partnership. Moreover, Folletts holistic

model of control took into account not just individuals and groups, but the effects of such

environmental factors as politics, economics, and biology.

The Behavioral School

The behavioral school emerged partly because the classical approach did not achieve

sufficient production efficiency and workplace harmony. To managers frustration, people

did not always follow predicted or expected patterns of behavior. Thus there was increased

interest in helping managers deal more effectively with the people side of their

organizations. Several theorists tried to strengthen classical organization theory with the

insights of sociology and psychology.


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Relations TheoryThe Human Relations Movement

Human relations are frequently used as a general term to describe the ways in which

managers interact with their employees. When employee management stimulates more and

better work, the organization has effective human relations; when morale and efficiency

deteriorate, its human relations are said to be ineffective. The human relations movement

arose from early attempts to systematically discover the social and psychological factors that

would create effective human relations.

The Hawthorne Experiments:The human relations movement grew out of a famous series

of studies conducted at the Western Electric Company from 1924 to 1933. These eventually

became known as the Hawthorne Studies because many of them were performed at

Western Electricity Hawthorne plant near Chicago. The Hawthorne Studies began as an

attempt to investigate the relationship between the level of lighting in the workplace and

worker productivity.

In some of the early studies, the Western Electric researchers divided the employees in to test

groups, who were subjected to deliberate changes in lighting, and control groups whose

lighting remained constant throughout the experiments. The results of the experiments were

ambiguous. When the test groups lighting was improved, productivity tended to increase,

although erratically. But when lighting conditions were made worse, there was also a

tendency for productivity to increase in the test group. To compound the mystery, the control

groups output also rose over the course of the studies, even though it experienced no changes

in illumination. Obviously, something besides lighting was influencing the workers

performance.

In a new set of experiments, a small group of workers was placed in a separate room and a

number of variables were altered: Wages were increased; rest periods of varying length were

introduced; the work day and work week were shortened. The researchers who now acted as

supervisors, also allowed the groups to choose their own rest periods and to have a say in

other suggested changes. Again, the results were ambiguous. Performance tended to increase

over time, but it also rose and fell erratically.

In these and subsequent experiments, Mayo and his associates decided that a complex chain

of attitudes had touched off the productivity increases. Because they had been singled out for

special attention, both the test and the control groups had developed a group pride that

motivated them to improve their work performance. Sympathetic supervision had further

reinforced their motivation. The researchers concluded that employees would work harder if

they believed management was concerned about their welfare and supervisors paid special


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attention to them. This phenomenon was subsequently labeled the Hawthorne Effect. Since

the control group received no special supervisory treatment or enhancement of working

conditions but still improved its performance, some people (including Mayo himself)

speculated that the control groups productivity gains resulted from the special attention of

the researchers themselves.

The researchers also concluded that informal work groups the social environment of

employees have a positive influence on productivity. Many of Western Electrics employees

found their work dull and meaningfulness, but their associations and friendships with co-

workers, sometimes influenced by a shared antagonism toward the bosses, imparted some

meaning to their working lives and provided some protection from management. For these

reasons, group pressure was frequently a stronger influence on worker productivity than

management demands.

To Mayo, then, the concept of social man motivated by social needs, wanting rewarding on

the job relationships, and responding more to work group pressures than to management

control was necessary to complement the old concept of rational man motivated by

personal economic needs.

The Management Science School

At the beginning of World War II, Great Britain desperately needed to solve a number of

new, complex problems in warfare. With their survival at stake, the British formed the first

operational research (OR) teams. By pooling the expertise of mathematicians, physicists, and

other scientists in OR teams, the British were able to achieve significant technological and

tactical breakthroughs. When the Americans entered the war, they formed what they called

operations researchteams based on the successful British model to solve similar problems.

The teams used early computers to perform the thousands of calculations involved in

mathematical modeling.

When the war was over, the applicability of operations research to problems in industry

gradually became apparent. New industrial technologies were being put into use and

transportation and communication were becoming more complicated. These developments

brought with them a host of problems that could not be solved easily by conventional means.

Increasingly, OR specialists were called on to help managers come up with answers to these

new problems. Over the years, OR procedures were formalized into what is now more

generally called the management science school.

Today the management science approach to solving a problem begins when a mixed team of

specialists from relevant disciplines is called in to analyze the problem and propose a course


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terms, synergy means that as separate departments within an organization cooperate and

interact, they become more productive than if each were to act in isolation, For example, in a

small firm, it is more efficient for each department to deal with one Finance department than

for each department to have a separate finance department of its own.

Open and Closed Systems:A system is considered an open system if it interacts with its

environment; it is considered a closed system if it does not. All organizations interact with

their environment, but the extent to which they do so varies. An automobile plant, for

example, is a far more open system than a monetary or a prison.

System Boundary:Each system has a boundary that separates it from its environment. In a

closed system, the system boundary is rigid; in an open system, the boundary is more

flexible. The system boundaries of many organizations have become increasingly flexible in

recent years. For example, managers at oil companies wishing to engage in offshore drilling

now consider public concern for the environment.

Flow:A system has flows of information, materials and energy (including human energy).

These enter the system from the environment as inputs (raw materials for example), undergo

transformation processes within the system (operations that alter them) and exit the system as

outputs (goods and services).

Feedback: Feedback is the key to system controls. As operations of the system proceed,

information is fed back to the appropriate people, and perhaps to a computer, so that the work

can be assessed and, if necessary corrected.

Systems theory calls attention to the dynamic and interrelated nature of organizations and the

management task. Thus, it provides a framework within which we can plan actions and

anticipate both immediate and far reaching consequences while allowing us to understand

unanticipated consequences as they develop. With a systems perspective, general managers

can more easily maintain a balance between the needs of the various parts of the enterprises

and the needs and goals of the whole firm.


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The Contingency Approach

The contingency approach (sometimes called the situational approach) was developed by

managers, consultants, and researchers who tried to apply the concepts of the major schools

to real life situations. When methods highly effective in one situation failed to work in other

situations, they sought an explanation. Advocates of the contingency approach had a logical

answer to all such questions: Results differ because situations differ, a technique that works

in one case will not necessarily work in all cases.

According to the contingency approach, the managers task is to identify which techniques

will, in particular situation, under particular circumstances and at a particular time, best

contribute to the attainment of management goals. Where workers need to be encouraged to

increase productivity, for example the classical theorist may prescribe a new work

simplification scheme. The behavioral scientist may instead seek to create a psychologically

mutating climate and recommend some approach like job enrichment the combination of

tasks that are different in scope and responsibility, and allow the workers greater autonomy in

making decisions. But the manager trained in the contingency approach will ask which

method will work best here? If the workers are unskilled and training opportunities and

resources are limited, work simplification would be the best solution. However, with skilled

workers driven by pride in their abilities, a job-enrichment program might be more effective.

The contingency approach represents an important turn in modern management theory,

because it portrays each set of organizational relationships in its unique circumstances.

Organizational and Natural Environments

In the 1970s the world reeled from the shock of quadrupled process for petroleum, and


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organizations from General Motors to the Post Office had to decide how to reconfigure

themselves to take this eternal event into account. The 1980s saw a dramatic shift from a

local to a global playing field as strong organizations from Japan, Korea, Europe, and other

areas intensified competition for markets across the world. In the 1990s new technologies for

communications and information processing (ranging from inexpensive fax machines and

notebook computers to super powerful new computers) and geopolitical upheavals have

revolutionized the way we think about organizations. Indeed, all of these factors and many

others are part of the organizational environment that managers must take into account.

At the same time worldwide concern about the natural environment has emerged, spurred by

environmental disasters, the discovery of a hole in the ozone layer that covers the earth, and

an increase in pollution and other forms of environmental degradation. A new

environmentalism has swept the globe symbolized by the 1992 Earth Summit in Rio de

Janeiro which drew unprecedented attention to the environmental problems that we all share.

Traditional ways of thinking about management pay little detailed attention to either

organizational or natural environments for good reasons. And there was little concern about

the natural environmental; citizens of the world simply assumed that the earths resources

were inexhaustible. Today, the world is very different. External groups with particular

agendas are often organized and powerful and many organizations depend on them for

support. Technological, political, economic and social trends can have major effects on

whether or not organizations are successful. And finally, todays managers must pay attention

to the natural environment if we are to preserve the world for future generations. It is difficult

to separate organizational and natural environments because they are ultimately

connected.

To understand organizational environments we must borrow some concepts from systems

theory. One of the basic assumptions of systems theory is that organizations are either self

sufficient or self contained. Rather, they exchange resources with and are dependent upon the

external environment, defined as all elements outside an organization that are relevant to its

operations. (Some of these elements connect the organizations to the physical world).

Organizations take inputs (raw materials, money, labor and energy) from the external

environment, transform them into products or services and then send them back as outputs to

the external environment.

The external environments have both direct action and indirect action elements. Direct action

elements also called stakeholders include shareholders, unions, suppliers and many others

who directly influence an organization. Indirect action elements such as the technology,


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economy, and politics of a society, affect the climate in which an organization operates and

have the potential to become direct action elements.

Ethics and Social Responsibility

Ethics and Social Responsibility are concepts that are fundamentally about the quality of our

relationships over time. Many organizational decisions involve knotty problems where

organizational interests affect the interests of others. The stock market scandals in the United

States and Japan, the corruption between business and government in Italy, the possibilities

and consequences of new technologies, and the increasing interplay of different cultures are

just some of the issues that have brought questions about the social responsibility and ethics

of business to the forefront.

Companies and managers that ignore moral concerns are saying to those affected, "we dont

want to invest in making this relationship better. And, even tough unethical behavior may

sometimes pay today; those who ignore ethical issues are heading for trouble over the long

run. From the 60-year-old Credo of Johnson & Johnson to AT&Ts new statement of values,

called our common bond, companies are using their past experiences and values and the

concerns of the present in setting new moral visions for the future.

Today there are many examples of how people can manage with corporate social

responsibility and ethics in mind.

San Francisco bakery instituted a practice of hiring ex-convicts to fulfill the responsibilityof business which has to play a large role in changing our society. Business people

especially those in smaller companies know how to get things done.

In response to the homeless situation, one of Ben & Jerrys answers was to open a store inHarlem and employ homeless people to serve ice cream.

For every UPC code mailed in by consumers, Scott Paper donates five cents to RonaldMcDonald Houses.

Paul Newman earmarks all of the profits from Newmans Own food products for variouscharities such as the Hole in the Wall Gang, a camp for children with terminal cancer.

The Campbell Soup Company has sponsored a long running program; Labels forEducations, that involves supplying equipment for schools based on the number of

Campbell and Swanson labels sent in by consumers during the school year.

Burger King, along with IBM, operates a similar program. Through Burgers and Bytes,computers are donated to schools according to the number of cash register receipts

generated. Burger king also operates Burger King Academy to provide education and


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social services for dropouts and truants.

Colgate-Palmolive kicked off its Partners in Education program, which doubled as amarketing endeavor and a philanthropic measure. In return for retailers putting up their

display, the company gave the retailers Map Playground Kits, which included materials

for students to paint their own maps. The stores then dispersed the kits to local grade

schools.

Reebok ended up launching a new product in 1991 the Black Top line of outdoorbasketball shoes. Part of the profits from the shoes are used to renovate basketball courts,

such as a court in South Dade County, Florida, devastated by Hurricane Andrew and

renovated in 1993.

Some Key Concepts

Corporate social responsibility focuses on what an organization does that affects the society

in which it exists.

Corporate social responsiveness is a theory of social responsibility that focuses on how

companies respond to issues, rather than trying to determine their ultimate social

responsibility.

Corporate social performance is a single theory of corporate social action encompassing

social principles, processes and policies.

Ethics is the study of peoples rights and duties, the moral rules that people apply in making

decisions, and the nature of the relationships among people.

In business, most ethical questions fall into one or more of four categories: societal,

stakeholder, internal policy, or personal (the individual).

The Tools of Ethics

Values: Relatively permanent desires that seem to be good in people, like peace or goodwill.

Rights: Claims that entitle a person to take a particular action.

Duties: Obligations to take specific steps or obey the law.

Moral Rules: Rules for behavior that often become internalized as moral values.

Globalization and Management

Globalization refers to the process of integration across societies and economies. The

phenomenon encompasses the flow of products, services, labor, finance, information, and

ideas moving across national borders. The frequency and intensity of the flows relate to the

upward or downward direction of globalization as a trend.

Rationale


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A primary economic rationale for globalization is reducing barriers to trade for the

enrichment of all societies. The greater good would be served by leveraging comparative

advantages for production and trade that are impeded by regulatory barriers between

sovereignty entities. In other words, the betterment of societies through free trade for

everyone is possible as long as each one has the freedom to produce with a comparative

advantage and engage in exchanges with others.

This economic rationale for global integration depends on supporting factors to facilitate the

process. The factors include advances in transportation, communication, and technology to

provide the necessary conduits for global economic integration. While these factors are

necessary, they are not sufficient. Collaboration with political parties, through international

relations, is required to leverage the potential of the supporting factors.

Complexities and Controversies

The increase of globalization surfaced many complex and controversial issues as economies

and societies became more interdependent with greater frequency of interactions between one

another. A number of important trends make up globalization including:

location of integration activities impact upon poorer societies flow of capital migration of labor and work diffusion of technology sustainability of the natural environment reconfiguration of cultural dynamics development of organizational strategies for global competitionCompeting in Global Economy

Globalization entails both opportunities and threats for creating and sustaining competitive

strategies. Emerging economies offer resources in terms of labor, as well as expanding

market opportunities.

Globalization entails both opportunities and threats for creating and sustaining competitive

strategies. Emerging economies offer resources in terms of labor, as well as expanding

market opportunities.

Global managers have a wide range of options to deal with globalization. Organizational

strategies for international operations involve two related demands; the need for local

orientation and the need for integration. Firms with low need for local orientation, but high


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need for integration require a global strategy that centralizes core operations with minor

modifications for local adaptation. However, firms with a need for high local orientation, but

low need for integration, require a multinational strategy that decentralizes significant

operations to respond to local market conditions. Firms integrating a high need for both local

orientation and organizational integration should strive for a transnational strategy.

In addition to selecting a strategy for global competition, managers also need to make

decisions regarding the internationalization process. First, the development of innovations in

the home market and then as the products move along the product life cycle stages, firms can

take products entering into the plateau of a mature stage to new international markets. Often,

the flow moves from developed to developing countries.

Basically, globalization into the twenty-first century creates a fundamentally different

competitive environment that shifted from incremental internationalization processes to

almost simultaneous deployment of innovations. This internationalization process also shifts

the work of global managers from managing a field of expatriates to collaborating with

strategic partners across national borders and managing global off-shore outsourcing vendors

in multiple geographical locations.

Unit - I Introduction to Management.docx

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