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Introduction to Management Principles

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The document provides an overview of management principles, defining management as the process of achieving objectives through collective efforts in various organizational contexts. It outlines key managerial functions—planning, organizing, staffing, leading, and controlling—along with types of managers and management theories, including scientific and administrative management. Furthermore, it discusses the evolution of management thought and the importance of communication and systems in the management process.

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PRINCIPLES OF MANAGEMENT INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS
12/11/2024 2 Definition of Management  Management is the art of getting things done through others.  Harold Koontz defines as “Management is the process of designing and maintaining an environment in which individuals working together in groups, efficiently accomplish selected aims.
12/11/2024 3 The Basic definition needs to be expanded  As Managers, people carry out the Managerial functions of planning, Organizing, staffing, leading and Controlling  Management applies to any kind of organization [Business, Governmental Agency, Hospital, University]  It applies to managers at all organizational levels
12/11/2024 4 Nature and Characteristics of Management Multidisciplinary Continuous process Universal activity Science as Well as an Art Dynamic and not Static Profession Group activity Aims at obtaining wealthy results Skills and Experience in getting things done through people System of authority Intangible Good Leadership
12/11/2024 5 Functional areas of Management  Financial Management  Human Resource Management  Marketing Management  Production Management  Material Management  Purchasing Management  Maintenance Management  Office Management
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12/11/2024 7 Objective of Management  Getting maximum results with minimum efforts.  Increasing the efficiency of factors of production  Maximum prosperity for employer and employees  Human betterment & Social Justice  Reduces Cost  Establishes Equilibrium  Establishes Sound Oragnization
12/11/2024 8 Function of Management  According to George & Jeery  Planning, Organizing, Actuating, & Controlling  According to Henry Fayol  Plan, Organize, Command & Control  Luther Gullick (POSDCORB)  Planning, Organizing, Staffing, Direction, Coordinating , Reporting, & Budgeting  Koontz & O’DONNEL  Planning, Organizing, Staffing, Directing, & Controlling
12/11/2024 9 Function of Management Controlling Directing Staffing Organising Planning
12/11/2024 10 Planning  What to Do? When to Do? How to Do? Who is to Do?  The planning process involves the following activities  Determination of the goal of the Organization  Formulating policies, rules, procedures etc. for the organization  Forecasting the future based on past and present activities
12/11/2024 11 Organising  Identification and analysis of activities required for the attainment organisational objective  Assignment of duties to the individuals concerned  Follow up the activities
12/11/2024 12 Staffing  Selecting candidate for position  Fixing salary  Training  Developing them for effective organization function  Performance Appraisal  Promotions & Transfer
12/11/2024 13 Directing/Leading  Guiding  Supervising  Motivation  Leadership  Communication
12/11/2024 14 Controlling  Establishing standard  Measuring current performance  Comparing this performance to the established standards  Taking corrective actions of deviation are detected
12/11/2024 15 Administration Vs Management Attributes Management Administration Definition Art of getting things done through others by directing their efforts towards achievement of predetermined goals. Formulation of broad objective, plans & Policies. Nature Executing function, doing function Decision Making function, Thinking function Scope Decisions within the framework set by the administration. Major decisions of an enterprise as a whole. Levels of Authority Middle Level activity Top level activity Status Group of managerial personnel who use their specialized knowledge to full fill the objective of an enterprise. Consists of owners who invest capital in and receive profits from an enterprise.
12/11/2024 16 Administration Vs Management Attributes Management Administration Usage Used in business enterprise Popular with government, military, education, and religious organization Influence Decisions are influenced by the values, opinions, beliefs and decisions of the managers Influenced by public opinion, government policies, customs etc. Main functions Motivating and controlling Planning and Organizing Abilities Handles the employees. Handles the business aspects such as finance.
12/11/2024 17 Administration Vs Management
12/11/2024 18 Levels of Management
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12/11/2024 20 Manager Vs Entrepreneur ENTREPRENEUR • An Entrepreneur is a person who organize and manages a business undertaking, assuming the risk for the sake of profit MANAGER • A manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary.
12/11/2024 21 Difference Between Manager and Entrepreneur CHARACTERISTIC ENTREPRENEUR MANAGER Behaviour characterized by Desire for control Delegation of authority Management style One man show Management team Driving force Creativity-innovation Establish & preserve the status Quo Organizational growth Rapid reaction Strategic planning Organization structure Informal, Flexible Organized Decision making Intuitive Collect information & seek advice
12/11/2024 22 Difference Between Manager and Entrepreneur CHARACTERISTIC ENTREPRENEUR MANAGER Definition of Aims In terms of “Vision” In commercial Terms Attitude to Money A By-Product Measure of Success Attitude to risk Calculated Risks Avoidance of Risks Organizational Culture “Entrepreneurial Culture” “Management Culture”
12/11/2024 23 Types of Manager  Purchase manager- Who is responsible for procuring the raw materials in a company  Production manager- Who is responsible for managing the manufacturing process.  IT manager- Who is responsible for supervising all computing and IT communication related issues.  Marketing manager- Who is responsible for supervising the promotion and advertising of the company’s products/services.
12/11/2024 24 Types of Manager  Sales manager- Who looks after the sales department and sets targets for sales personnel and appraises their performance on the basis of the extent of target achievement  Finance manager- Who is responsible for the financial management of the organization.  Human resources manager- Who is responsible for the HR department and oversees all human resource management functions  Product development manager- Who is authorized with the management of the technical division of new product design and product innovation.
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12/11/2024 28 Managerial Skills
12/11/2024 29 Role of Manager Henry Mintzberg (1973)
12/11/2024 30 Interpersonal  Figurehead  Symbolic head, obliged to perform a number of routine duties of a legal or social nature  Leader  Responsible for the motivation and activation of subordinates; responsible for staffing, training and associated duties  Liaison (Link)  Maintains self-developed network of outside contacts and informers who provide favors and information.
12/11/2024 31 Informational  Monitor  Seeks and receives wide Varity of special information to develop thorough understanding of organization and environment; emerges as nerve internal and external information of the organization.  Disseminator  Transmits information received from outsiders or from other subordinates to members of the organization.  Spokesperson  Transmit information to outsiders on organization’s plans, policies, actions, results, etc.,
12/11/2024 32 Decisional  Entrepreneur  Searches organization and it environment for opportunities and initiates :improvement projects” to bring about change; supervises design of certain projects as well.  Disturbance handler  Responsibility for corrective action when organization faces important, unexpected disturbance.  Negotiator  Responsible for representing the organization at major negotiations
12/11/2024 33 Evolution of Management Thought  Pre Scientific Management Era (Before 1880)  Classical Management Era (1880 – 1930)  Neo Classical Management Era (1930 – 1950)  Modern Management Era (1950 on word)
12/11/2024 34  Classical Management Era (1880 – 1930)  Scientific Management School  Administration Management School  Bureaucracy Management  Neo Classical Management Era (1930 – 1950)  Human Relational School  Behavioral Management School  Modern Management Era (1950 on word)  Social System School  Decision Theory School  Quantitative Man Management School  System Management School  Contingency Management School
12/11/2024 35 Scientific Management School Frederick Winslow Taylor 1856 – 1915  Father of Scientific Management  Midvale steel, Simonds Rolling Machine Bethleham steel (Apprentice Machinist, Chief Engineer)  It is an Art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way.
12/11/2024 36 Principles of Scientific Management 1. Replacing rules of thumb with science (Enquire, investigation, data collection, analysis and framing a rule) 2. Obtaining harmony in group action, rather than discord 3. Achieving cooperation of human beings, rather than chaotic individualism 4. Working for max. output rather than restricted output 5. Developing all workers to the fullest extent possible for their own and their company’s highest prosperity
12/11/2024 37 Techniques of Scientific Management  Time Study  Fair Day’s Work = Standard Time + Working Hours  Motion Study  Standardization  Differential Piece Wage Plan
12/11/2024 38 Criticism WORKER’S VIEWPOINT  Unemployment  Weakening of trade union  Monotony  Over speeding EMPLOYER’S VIEWPOINT  Expensive  Time consuming
12/11/2024 39 Administrative Management  Father of modern operational management theory  Worked in French mining and metallurgical company Henri Fayol (1841 – 1925)
12/11/2024 40 14 Principles 1. Division of labour – Divided & Subdivided and allotted to various persons according to their expertise in a particular area. 2. Authority and Responsibility 3. Discipline – Sincerity, Obedience, Diligence, Correct attitude 4. Unity of Command – receive order from one superior 5. Unity of direction – similar activities should be grouped 6. Subordination of Individual’s interest to the common goal 7. Remuneration – Fair and equitable
12/11/2024 41 14 Principles 8. Centralization & Decentralization– balance between concentration and dispersal of authority 9. Scalar Chain – Chain of authority from top to bottom 10. Order – ‘A place for everything and everything in its place’ 11. Equity – Sense of fair play and justice 12. Stability of tenure of personnel – too much of turnover of staff/job rotation interfere the stability 13. Initiative – Subordinate initiatives 14. Esprit de crops – Team spirit should be fostered and administrated
12/11/2024 42 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration EMPIRICAL OR CASE APPROACH Studies experience through cases. Identifies successes and failures Situations are all different. No attempt to identify principles
12/11/2024 43 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration MANAGERIAL ROLES APPROACH 10 roles were identified 1. Figure head role 2. Leader role 3. Liason role 4. Recipient role 5. Disseminator role 6. Spoken person role 7. The entrepreneurial role 8. The disturbance handler role 9. Resource allocator role 10. Negotiator role Some activities are not managerial. Some activities were left out (e.g. Appraising Managers)
12/11/2024 44 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration CONTINGENCY OR SITUATIONALAPPROACH Management practice depends on Circumstances There is no best way to do things. Difficulty in determining all the relevant contingency factors and showing their relationships
12/11/2024 45 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration MATHEMATICAL OR MANAGEMENT SCIENCE APPROACH Management is seen as the mathematical process, concepts, symbols & models Many aspects of managing cannot be modeled
12/11/2024 46 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration DECISION THEORY APPROACH Decision making as a spring board to study all enterprise activities There is more to managing than decision making. The focus is at the same time too narrow and too wide
12/11/2024 47 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration REENGINEERING APPROACH Fundamental rethinking Process analysis Radical redesign Dramatic results. Neglect external environment ignoring customer needs neglect human needs. Ignores total Management systems
12/11/2024 48 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration SYSTEMS APPROACH Systems have boundaries but they also interact with external environment It is a new approach to Management
12/11/2024 49 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration SOCIO TECHNICAL SYSTEMS APPROACH Technical system has great effect on social system Emphasis only on blue collar and lower level office work
12/11/2024 50 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration COOPERATIVE SOCIAL SYSTEMS APPROACH Concerned with interpersonal and group behavioral aspects leading to a system of Co- operation Too broad a field for the study of Management
12/11/2024 51 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration GROUP BEHAVIOR APPROACH Emphasis on behavior of people in groups. Based on sociology and social psychology Often not integrated with management concepts, Principles, theory and techniques
12/11/2024 52 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration INTERPERSONAL BEHAVIOR APPROACH Focus on interpersonal behavior, human relations, leadership and motivation. Based on individual psychology Ignores planning, Organizing and Controlling. Psychological training is not enough to be an effective manager
12/11/2024 53 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration McKINSEY’S FRAME WORK APPROACH 7 SKILLS 1. Systems 2. Style 3. Staff 4. Shared Values 5. Skills 6. Strategy 7. Structure The terms used are not precise and topics are not discussed in depth
12/11/2024 54 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration TOTAL QUALITY MANAGEMENT APPROACH Dependable satisfying products & services (Deming) Product or services that is fit for use (Juran) Conformance to quality requirements (Crosby) • Continuous improvement • Team Work • Quality education No complete agreement of what TQM is
12/11/2024 55 The Management Process or Operational Approach  This approach draws together the pertinent knowledge of management by relating it to the managerial job-- what managers do  It tries to integrate the concepts, principles, and techniques that underlie the task of managing
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12/11/2024 57 The Systems Approach to The Management Process  A model of process or operational management that indicates how the various inputs are transformed through the managerial functions of planning, organizing, staffing, leading, and controlling.
12/11/2024 58 The Systems Model of Management
12/11/2024 59 Inputs and Claimants The inputs from the external environment may include people, capital, managerial skills, as well as technical knowledge and skills.
12/11/2024 60 The Managerial Transformation Process  The task of managers is to transform the inputs, in an effective and efficient manner, into outputs.
12/11/2024 61 The Communication System  Communication integrates the managerial functions. It is through communication that one determines whether events and performance conform to plans. It is communication that makes managing possible.
12/11/2024 62 External Variables Effective managers regularly scan the external environment.
12/11/2024 63 Outputs Products, services, profits, satisfaction, integration of the foals of claimants to the enterprise.
12/11/2024 64 Reenergizing the System In the systems model of the management process, some of the outputs become inputs again.
12/11/2024 65 Types of Organization (Business Organization) Business Organization Proprietorship Partnership Corporation
12/11/2024 66 Individual Proprietorship  Single person owns the capital  He has taken the decision, uses his own skill , Knowledge and experience  All profits belong to him  He bear all the losses  His decision is final in employment, purchase production and sale  Small establishments Started easily Closed down easily
12/11/2024 67 Individual Proprietorship  The area of operation is limited, the owner can develop cordial relationship with workers, supplier of inputs and buyers.  Capital base is small and narrow  Small business promotes fair distribution of income and wealth.
12/11/2024 68 Partnership  Formed by a simple contract  Each party of the contract becomes the general agent of the business  Sharing their duties responsibility on one hand & profit / losses on the other hand  Minimum two persons  In the absence of any agreement to the contrary , all partners have equal right to participate the business  Written agreement is signed by all partners and stamped it becomes partnership deed  Registered firms enjoy many benefits  Unregistered firms cannot sue other partners of the firm.
12/11/2024 69 ADVANTAGES OF Partnership  Raising Additional Finance  Specialized experiences of various partners  Bankers provide easy credit  Liability is unlimited
12/11/2024 70 DISADVANTAGES of Partnership  Partners become responsible for acts of each & every other  It suffers uncertain continuity, lesser public confidence, restricted right to transfer of capital and liability of partner even after his retirement from the firm.
12/11/2024 71 JOINT STOCK COMPANIES o Corporation has been defined as an artificial person o Recognized by law, it is a legal entity o Distinctive name, a common seal o Common capital o Transferable shares of fixed value, limited liability o Share holders may come & go, but company goes o Share holders cannot participate the working of a company o Board of directors, assisted by professional Mangers o Memorandum of Association is prepared o Classified as Pvt Ltd & Public Ltd
12/11/2024 72 Pvt. Ltd Company  Registered by 2 or more persons  But limits to 50  Restriction on transfer of shares  General public cannot participate in the capital  Limited liability  Keep their business as private as possible
12/11/2024 73 PUBLIC LIMITED COMPANY  Membership is open to all  Minimum no is 7, but there is no ceiling  To collect capital, through the selling of shares
12/11/2024 74 FORMATION  Group of persons conceive an idea of a successful business, called promoters  Registration to Registrar of companies with name and fee, accompanied by Memorandum of Association (MOA) & Article of Association (AOA)  MOA defines objectives, powers of the company, the name clause, situation clause, objective clause, capital clause and liability clause
12/11/2024 75 FORMATION  AOA  Rules & Regulations governing internal management (Power & duties of directors and other officers, borrowing powers, power to hold meetings etc)  After the meeting of directors, Chairman, Bankers, auditors, brokers etc are appointed  Then they raise the capital from general public  Then registrar issues commencement certificate
12/11/2024 ADVANTAGES of PUBLIC LIMITED COMPANY  Liability is limited as per the face value of shares  Easily raise the capital from public and lending institutions  Avail the services of experts 76
12/11/2024 DRAWBACKS of PUBLIC LIMITED COMPANY  Long drawn process  More legal formalities  Larger amount of initial expenditure  Ownership is diverted from control 77
12/11/2024 CO - OPERATIVES  Voluntary association of eleven or more members  They are in same locality carrying on business not for profit  It is based self help through mutual aid  The membership is open to all  Value of the share is kept low  In India we have credit cooperatives, marketing cooperatives, housing cooperatives etc.  In rural India, cooperatives are controlled by rural rich 78
12/11/2024 PUBLIC SECTOR UNDERTAKINGS Government departmental organizations Public Corporations Mixed ownership Corporations 79
12/11/2024 Government Department Organization  Postal & Telegraphs, railways,highways, defence industries etc.  They are financed by appropriations from the treasury  It is subject to budget accounting and audit controls  Civil servants are the in charge of such enterprises  It cannot be sued without the consent of the government  They ensure maximum degree of control  Transactions are approved by appropriate agencies 80
12/11/2024 DRAWBACKS of Government Department Organization  Absence of flexibility in its operations  Immediate decisions depending on the business environment cannot be made  Delay, red tapism, inadequate services etc are in this organizations 81
12/11/2024 PUBLIC CORPORATIONS  It is wholly owned by the state  Greater freedom in making contracts, acquiring & disposing of property than government departments  They obtain funds from treasury, public and revenues from sale of goods and services  They are not subject to budget accounting & audit loss  Employees are recruited and remunerated under the terms and conditions of the corporation  It enjoy the freedom of govt. regulation & control  High degree of operating & financial flexibility  Expansion programmes can be finance without delays by the use of revenues or borrowed funds  Ex: Industrial Financial Corporation of India, LIC, UTI & RBI 82
12/11/2024 MIXED ENTERPRISES  Capital owned by the Govt. & Pvt. share holders  Directors are nominated by both of them  It can enter into contract and acquire property in their own name  Own legal entity  They can be sued and they can sue  Exempted from budget accounting  Permission from GOI is necessary 83
12/11/2024  If no foreign participation, state Govt. or SIDC – 26% Private Individual - 25% Lending Institutions - 49% MIXED ENTERPRISES 84  If foreign Participation State – 25% Indian entrepreneurs – 20% Foreign Investor – 20% & Investing public – 35%
12/11/2024 GLOBALIZATION It means internationalization of trade, Particularly financial product transactions and the integration of economic and capital markets throughout the world  Trade exists freely among the countries  World economy becomes a single market or single economy  In globalization, there is no restriction of quota, license, tariff and other adminstrative barriers for trade 85
12/11/2024 Trade can be of products and factors Trade of product means goods, commodities and services Trade of factors means transfer of technology, finance and labour Currencies of the country should be freely exchangeable Uniformity of laws and rules GLOBALIZATION 86
12/11/2024 Benefits of Globalization 1. Improves efficiency – >Glob. leads to specialization in production 2. Improve factor income –>the factor mobility is free (factor incomes among the trading countries will get equalized) 3. Improves finance –> need for growth and industrialization of country 4. Gain from migrations * For developed countries migration fulfills the need of manpower in the form of skilled person * For developing countries migration solves the problem of unemployment 87
12/11/2024 International Management /Managing Globally  It is the process of Planning, Organizing, leading and controlling in organizations engaged in international Business  Now a days Managers engage in international business are like to face competition from international organizations or to deal with them either suppliers or customers 88
12/11/2024 Multinational Corporations (MNC)  It is an organization that is engaged in production or services through its own association in several countries, manages and control the overall activities from a global perspective  They are large in size and are engaged in substantial amount of business throughout the world 89
12/11/2024  MNC is a business that has its head quarters (domicile) in one country but which operates in many  The BOD (Board of Directors) might comprise a two tier system Strategic board which determines global policy One or more national boards responsible for implementing this policy in particular countries Multinational Corporations (MNC) 90
12/11/2024 Major Differences between MNC & one country Firm a) Market segment is more for MNC b) Recruitment, training, appraisal and promotion procedures must be drafted on international scale c) Greater amount of diversification  Choice of national market for final products  Location of production facilities  Sources of raw materials  Buy and import (products) from rest of the world d) MNC can afford more risk than domestic rivals. A loss in one country can be offset against profits elsewhere. 91
12/11/2024 Categories Horizontally Integrated Multinational  MNC Seeks to produce the same product in different countries. The primary objective is to achieve growth by expanding into new markets Vertically Integrated Multinational  MNC Undertakes the various stages of production in different countries for a core business. Ex: Oil companies like shell and Exxon (ESSO) Conglomerate Multinational  MNC will produce a range of different products in different countries 92
12/11/2024 Type of International Management  Ethocentric  Polycentric  Regiocentric  Geocentric 93
12/11/2024 Ethnocentric International Management are home country oriented. Here, Managers assume that practices that work in home country must necessarily work elsewhere 94
12/11/2024 95 Polycentric International Management are host country oriented
12/11/2024 Regiocentric International Management are region oriented. Managers believe that the company problems related to that region are generally best solved by individuals from the region. 96
12/11/2024 Geocentric International Management are world oriented. Here Managers believe that global view is needed in both the head quarters of the company and its various subsidiaries that the best individuals regardless of host or home country, should be utilized to solve company problems anywhere in the world. 97
12/11/2024 Entry to International Business 1. Exporting : It is the process of making a product in the home country and sending it overseas. It requires very small capital. 2. Licensing : It is an agreement in which one organization gives limited rights to another to use certain assets (expertise, patents, copyrights or eqpt.) for an agreed upon fee or royalty  Licensing allows to use assets within specific territory and for a specific period 98
12/11/2024 3. Establishing Strategic alliances: A joint venture is an agreement involving two or more organizations that arrange to produce a product or service through a jointly owned enterprises 4.Operating wholly owned subsidiaries: A wholly owned subsidiary is an operation on foreign soil that is totally owned and controlled by a company with headquarter outside the host country. Entry to International Business 99
12/11/2024 MNC STRATEGIES  MNC must give weightage to two important factors. i. The need to make optimum economic decisions on global basis. ii. Responsive to host country differences MNC opt for any of the four strategy a. Worldwide integration / globalization strategy b. National responsiveness strategy c. Region responsiveness strategy d. Multifocal strategy 100
12/11/2024 Challenges of Management in Global Scenario a) Language Barriers – Less in developed country - More in developing countries (Africa or Latin America) b) Selling and Marketing in Foreign Markets Selling at home might fail overseas because of wide social and cultural differences. Ex: McDonald’s, Cocacola 101
12/11/2024 c) Attitudes of host governments Govt. insisting on part ownership in the subsidiary of tight rules and regulations governing the MNC’s behavior or harsh tax regimes d) Communication and Co-ordination between subsidiaries For expanding global business, lines of communication become longer and more complex. Challenges of Management in Global Scenario 102
12/11/2024 Advantages of MNC Investment Employment The Balance of Payment Technology Transfer Taxation 103
12/11/2024 Disadvantages of MNC Investment Uncertainty Control Transfer Pricing The Environment 104
12/11/2024 Japanese Management They combine structure and people with Japanese culture to create a highly productive and efficient organization. 105
12/11/2024 Characteristics of Japanese management or Theory Z 1. Human Resources : Japanese Management prefers human resource than financial resources 2. Job Security : It results in employees with high morale 3. Team work : team efforts & Team spirit leads to effective management 4. Promotion : Promotion are based on seniority 106
12/11/2024 5. Appraisal System : Employee performance in the long run is given more importance than short run. 6. Communication : It is designed to foster open communication. It facilitates extensive face to face communication. 7. Decision Making : Japanese management encourages the lower level employees ideas, Knowledge & Experience. Lower level employees also take part in decision making 107 Characteristics of Japanese management or Theory Z
12/11/2024 Weakness of Japanese Management 1. It suppressed individual talents 2. Promotion policy is not encouraging outstanding younger employees 3. Decision making process is time consuming process 108
12/11/2024 Japanese Management USA Management It involves long term planning It Involves short term planning More people involved in decision making process Only top executives involved in decision making process More favor for decentralization More favor for centralization Participative Management Not a Participative Management Here informal and democratic organization structure Formal and bureaucratic organization structure Training is important activity Training is not an important Job Security Job Insecurity 109
12/11/2024 Japanese Management USA Management Leader is not a important role Leader is a important role It enhances self control and peer control All Managerial activities controlled by superiors Execution of all the process in the organization is very fast Execution of all the process in the organization is not fast Given more benefits to the employees Employees benefits less compared to Japan Appraisal process is not consider immediately Appraisal process is consider immediately It enhances group performance It enhances individual performance Promotion, demotion and termination process are less Promotion, demotion process is often Communication system is poor Communication is effectively 110
12/11/2024 German Management  German Management is autocratic  The Managers expect obedience from their subordinates  Labour suggestions also accepted  One of the labour director is elected as a member of the executive committee.  Managerial decisions are taken by the executive committee in consultation with labour director  Labour director is represented the employee’s problems also 111
12/11/2024 ORGANIZATIONAL CULTURE 112
12/11/2024 113 Importance of Organizational Culture  Talent Attractor  Talent Retainer  Engage People  Creates Energy and Momentum  Changes the View of Work  Creates Greater Synergy  Makes Everyone More Successful
12/11/2024 114 CHARACTERISTICS OF ORGANIZATIONAL CULTURE Organizational Culture Attention in Detail Outcome Orientation People Orientation Team Orientation Aggressiveness Stability Innovation and Risk Taking Degree to which employee are expected to exhibit precision analysis and attention to detail Degree to which managers focus on results or outcomes rather than on ho these outcomes are achieved Degree to which management decisions take into account the effects on people in the organization Degree to which work is organized around teams rather than individuals Degree to which employees are aggressive and competitive rather than cooperative Degree to which organizational decisions and actions emphasize maintaining the status quo Degree to which employee are encouraged to be innovative and take risk
12/11/2024 ELEMENTS OF ORGANIZATIONAL CULTURE 115 Artefacts Language, Technology, Products, Style of dressing, Physical Environment, Manners, Myths, stories Espoused Values Conscious Strategies, goals and philosophies Basic Assumptions and Values Norms, Unwritten rules, shared assumptions, taken for granted beliefs, values existing at unconscious level
12/11/2024 STRONG vs WEAK CULTURE Strong culture  Strong culture-key values are deeply held and widely shared.  Employees in such organizations are more committed  Increased organizational performance. Weak culture  Weak Culture-do not make clear what is important and what is not  Lack of clarity in organization 116
12/11/2024 HOW AN ORGANIZATION’S CULTURE IS ESTABLISHED AND MAINTAINED? 117
12/11/2024 HOW EMPLOYEES LEARN CULTURE 118
12/11/2024 ORGANIZATION AND ENVIRONMENTAL FACTORS Organization environment factors Internal environment External environment General environment or Macro environment. Task environment or micro environment 119
12/11/2024 Internal Environment factors  Management  Organizational culture  Employee  Financial changes 120
12/11/2024 External Environment factors Macro Environment  Technology  Economic conditions  Political conditions  Socio-cultural factors Micro Environment  Suppliers  Customers  Competitors  Distributor 121
12/11/2024 Current trends and Issues in Management Work force diversity Changing demographics of workforce Internal environment Changing employee expectations Building organizational capabilities Technological advances Changing psycho-social system Job design and organizational capabilities Management of human relations Change in legal environment and industrial relation Globalisation 122

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Introduction to Management Principles

  • 1. PRINCIPLES OF MANAGEMENT INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS
  • 2. 12/11/2024 2 Definition of Management  Management is the art of getting things done through others.  Harold Koontz defines as “Management is the process of designing and maintaining an environment in which individuals working together in groups, efficiently accomplish selected aims.
  • 3. 12/11/2024 3 The Basic definition needs to be expanded  As Managers, people carry out the Managerial functions of planning, Organizing, staffing, leading and Controlling  Management applies to any kind of organization [Business, Governmental Agency, Hospital, University]  It applies to managers at all organizational levels
  • 4. 12/11/2024 4 Nature and Characteristics of Management Multidisciplinary Continuous process Universal activity Science as Well as an Art Dynamic and not Static Profession Group activity Aims at obtaining wealthy results Skills and Experience in getting things done through people System of authority Intangible Good Leadership
  • 5. 12/11/2024 5 Functional areas of Management  Financial Management  Human Resource Management  Marketing Management  Production Management  Material Management  Purchasing Management  Maintenance Management  Office Management
  • 7. 12/11/2024 7 Objective of Management  Getting maximum results with minimum efforts.  Increasing the efficiency of factors of production  Maximum prosperity for employer and employees  Human betterment & Social Justice  Reduces Cost  Establishes Equilibrium  Establishes Sound Oragnization
  • 8. 12/11/2024 8 Function of Management  According to George & Jeery  Planning, Organizing, Actuating, & Controlling  According to Henry Fayol  Plan, Organize, Command & Control  Luther Gullick (POSDCORB)  Planning, Organizing, Staffing, Direction, Coordinating , Reporting, & Budgeting  Koontz & O’DONNEL  Planning, Organizing, Staffing, Directing, & Controlling
  • 10. 12/11/2024 10 Planning  What to Do? When to Do? How to Do? Who is to Do?  The planning process involves the following activities  Determination of the goal of the Organization  Formulating policies, rules, procedures etc. for the organization  Forecasting the future based on past and present activities
  • 11. 12/11/2024 11 Organising  Identification and analysis of activities required for the attainment organisational objective  Assignment of duties to the individuals concerned  Follow up the activities
  • 12. 12/11/2024 12 Staffing  Selecting candidate for position  Fixing salary  Training  Developing them for effective organization function  Performance Appraisal  Promotions & Transfer
  • 13. 12/11/2024 13 Directing/Leading  Guiding  Supervising  Motivation  Leadership  Communication
  • 14. 12/11/2024 14 Controlling  Establishing standard  Measuring current performance  Comparing this performance to the established standards  Taking corrective actions of deviation are detected
  • 15. 12/11/2024 15 Administration Vs Management Attributes Management Administration Definition Art of getting things done through others by directing their efforts towards achievement of predetermined goals. Formulation of broad objective, plans & Policies. Nature Executing function, doing function Decision Making function, Thinking function Scope Decisions within the framework set by the administration. Major decisions of an enterprise as a whole. Levels of Authority Middle Level activity Top level activity Status Group of managerial personnel who use their specialized knowledge to full fill the objective of an enterprise. Consists of owners who invest capital in and receive profits from an enterprise.
  • 16. 12/11/2024 16 Administration Vs Management Attributes Management Administration Usage Used in business enterprise Popular with government, military, education, and religious organization Influence Decisions are influenced by the values, opinions, beliefs and decisions of the managers Influenced by public opinion, government policies, customs etc. Main functions Motivating and controlling Planning and Organizing Abilities Handles the employees. Handles the business aspects such as finance.
  • 20. 12/11/2024 20 Manager Vs Entrepreneur ENTREPRENEUR • An Entrepreneur is a person who organize and manages a business undertaking, assuming the risk for the sake of profit MANAGER • A manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary.
  • 21. 12/11/2024 21 Difference Between Manager and Entrepreneur CHARACTERISTIC ENTREPRENEUR MANAGER Behaviour characterized by Desire for control Delegation of authority Management style One man show Management team Driving force Creativity-innovation Establish & preserve the status Quo Organizational growth Rapid reaction Strategic planning Organization structure Informal, Flexible Organized Decision making Intuitive Collect information & seek advice
  • 22. 12/11/2024 22 Difference Between Manager and Entrepreneur CHARACTERISTIC ENTREPRENEUR MANAGER Definition of Aims In terms of “Vision” In commercial Terms Attitude to Money A By-Product Measure of Success Attitude to risk Calculated Risks Avoidance of Risks Organizational Culture “Entrepreneurial Culture” “Management Culture”
  • 23. 12/11/2024 23 Types of Manager  Purchase manager- Who is responsible for procuring the raw materials in a company  Production manager- Who is responsible for managing the manufacturing process.  IT manager- Who is responsible for supervising all computing and IT communication related issues.  Marketing manager- Who is responsible for supervising the promotion and advertising of the company’s products/services.
  • 24. 12/11/2024 24 Types of Manager  Sales manager- Who looks after the sales department and sets targets for sales personnel and appraises their performance on the basis of the extent of target achievement  Finance manager- Who is responsible for the financial management of the organization.  Human resources manager- Who is responsible for the HR department and oversees all human resource management functions  Product development manager- Who is authorized with the management of the technical division of new product design and product innovation.
  • 30. 12/11/2024 30 Interpersonal  Figurehead  Symbolic head, obliged to perform a number of routine duties of a legal or social nature  Leader  Responsible for the motivation and activation of subordinates; responsible for staffing, training and associated duties  Liaison (Link)  Maintains self-developed network of outside contacts and informers who provide favors and information.
  • 31. 12/11/2024 31 Informational  Monitor  Seeks and receives wide Varity of special information to develop thorough understanding of organization and environment; emerges as nerve internal and external information of the organization.  Disseminator  Transmits information received from outsiders or from other subordinates to members of the organization.  Spokesperson  Transmit information to outsiders on organization’s plans, policies, actions, results, etc.,
  • 32. 12/11/2024 32 Decisional  Entrepreneur  Searches organization and it environment for opportunities and initiates :improvement projects” to bring about change; supervises design of certain projects as well.  Disturbance handler  Responsibility for corrective action when organization faces important, unexpected disturbance.  Negotiator  Responsible for representing the organization at major negotiations
  • 33. 12/11/2024 33 Evolution of Management Thought  Pre Scientific Management Era (Before 1880)  Classical Management Era (1880 – 1930)  Neo Classical Management Era (1930 – 1950)  Modern Management Era (1950 on word)
  • 34. 12/11/2024 34  Classical Management Era (1880 – 1930)  Scientific Management School  Administration Management School  Bureaucracy Management  Neo Classical Management Era (1930 – 1950)  Human Relational School  Behavioral Management School  Modern Management Era (1950 on word)  Social System School  Decision Theory School  Quantitative Man Management School  System Management School  Contingency Management School
  • 35. 12/11/2024 35 Scientific Management School Frederick Winslow Taylor 1856 – 1915  Father of Scientific Management  Midvale steel, Simonds Rolling Machine Bethleham steel (Apprentice Machinist, Chief Engineer)  It is an Art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way.
  • 36. 12/11/2024 36 Principles of Scientific Management 1. Replacing rules of thumb with science (Enquire, investigation, data collection, analysis and framing a rule) 2. Obtaining harmony in group action, rather than discord 3. Achieving cooperation of human beings, rather than chaotic individualism 4. Working for max. output rather than restricted output 5. Developing all workers to the fullest extent possible for their own and their company’s highest prosperity
  • 37. 12/11/2024 37 Techniques of Scientific Management  Time Study  Fair Day’s Work = Standard Time + Working Hours  Motion Study  Standardization  Differential Piece Wage Plan
  • 38. 12/11/2024 38 Criticism WORKER’S VIEWPOINT  Unemployment  Weakening of trade union  Monotony  Over speeding EMPLOYER’S VIEWPOINT  Expensive  Time consuming
  • 39. 12/11/2024 39 Administrative Management  Father of modern operational management theory  Worked in French mining and metallurgical company Henri Fayol (1841 – 1925)
  • 40. 12/11/2024 40 14 Principles 1. Division of labour – Divided & Subdivided and allotted to various persons according to their expertise in a particular area. 2. Authority and Responsibility 3. Discipline – Sincerity, Obedience, Diligence, Correct attitude 4. Unity of Command – receive order from one superior 5. Unity of direction – similar activities should be grouped 6. Subordination of Individual’s interest to the common goal 7. Remuneration – Fair and equitable
  • 41. 12/11/2024 41 14 Principles 8. Centralization & Decentralization– balance between concentration and dispersal of authority 9. Scalar Chain – Chain of authority from top to bottom 10. Order – ‘A place for everything and everything in its place’ 11. Equity – Sense of fair play and justice 12. Stability of tenure of personnel – too much of turnover of staff/job rotation interfere the stability 13. Initiative – Subordinate initiatives 14. Esprit de crops – Team spirit should be fostered and administrated
  • 42. 12/11/2024 42 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration EMPIRICAL OR CASE APPROACH Studies experience through cases. Identifies successes and failures Situations are all different. No attempt to identify principles
  • 43. 12/11/2024 43 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration MANAGERIAL ROLES APPROACH 10 roles were identified 1. Figure head role 2. Leader role 3. Liason role 4. Recipient role 5. Disseminator role 6. Spoken person role 7. The entrepreneurial role 8. The disturbance handler role 9. Resource allocator role 10. Negotiator role Some activities are not managerial. Some activities were left out (e.g. Appraising Managers)
  • 44. 12/11/2024 44 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration CONTINGENCY OR SITUATIONALAPPROACH Management practice depends on Circumstances There is no best way to do things. Difficulty in determining all the relevant contingency factors and showing their relationships
  • 45. 12/11/2024 45 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration MATHEMATICAL OR MANAGEMENT SCIENCE APPROACH Management is seen as the mathematical process, concepts, symbols & models Many aspects of managing cannot be modeled
  • 46. 12/11/2024 46 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration DECISION THEORY APPROACH Decision making as a spring board to study all enterprise activities There is more to managing than decision making. The focus is at the same time too narrow and too wide
  • 47. 12/11/2024 47 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration REENGINEERING APPROACH Fundamental rethinking Process analysis Radical redesign Dramatic results. Neglect external environment ignoring customer needs neglect human needs. Ignores total Management systems
  • 48. 12/11/2024 48 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration SYSTEMS APPROACH Systems have boundaries but they also interact with external environment It is a new approach to Management
  • 49. 12/11/2024 49 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration SOCIO TECHNICAL SYSTEMS APPROACH Technical system has great effect on social system Emphasis only on blue collar and lower level office work
  • 50. 12/11/2024 50 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration COOPERATIVE SOCIAL SYSTEMS APPROACH Concerned with interpersonal and group behavioral aspects leading to a system of Co- operation Too broad a field for the study of Management
  • 51. 12/11/2024 51 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration GROUP BEHAVIOR APPROACH Emphasis on behavior of people in groups. Based on sociology and social psychology Often not integrated with management concepts, Principles, theory and techniques
  • 52. 12/11/2024 52 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration INTERPERSONAL BEHAVIOR APPROACH Focus on interpersonal behavior, human relations, leadership and motivation. Based on individual psychology Ignores planning, Organizing and Controlling. Psychological training is not enough to be an effective manager
  • 53. 12/11/2024 53 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration McKINSEY’S FRAME WORK APPROACH 7 SKILLS 1. Systems 2. Style 3. Staff 4. Shared Values 5. Skills 6. Strategy 7. Structure The terms used are not precise and topics are not discussed in depth
  • 54. 12/11/2024 54 Patterns of Management Analysis A Management Theory Jungle? APPROACHES TO MANAGEMENT Characteristics Limitations Illustration TOTAL QUALITY MANAGEMENT APPROACH Dependable satisfying products & services (Deming) Product or services that is fit for use (Juran) Conformance to quality requirements (Crosby) • Continuous improvement • Team Work • Quality education No complete agreement of what TQM is
  • 55. 12/11/2024 55 The Management Process or Operational Approach  This approach draws together the pertinent knowledge of management by relating it to the managerial job-- what managers do  It tries to integrate the concepts, principles, and techniques that underlie the task of managing
  • 57. 12/11/2024 57 The Systems Approach to The Management Process  A model of process or operational management that indicates how the various inputs are transformed through the managerial functions of planning, organizing, staffing, leading, and controlling.
  • 59. 12/11/2024 59 Inputs and Claimants The inputs from the external environment may include people, capital, managerial skills, as well as technical knowledge and skills.
  • 60. 12/11/2024 60 The Managerial Transformation Process  The task of managers is to transform the inputs, in an effective and efficient manner, into outputs.
  • 61. 12/11/2024 61 The Communication System  Communication integrates the managerial functions. It is through communication that one determines whether events and performance conform to plans. It is communication that makes managing possible.
  • 62. 12/11/2024 62 External Variables Effective managers regularly scan the external environment.
  • 63. 12/11/2024 63 Outputs Products, services, profits, satisfaction, integration of the foals of claimants to the enterprise.
  • 64. 12/11/2024 64 Reenergizing the System In the systems model of the management process, some of the outputs become inputs again.
  • 65. 12/11/2024 65 Types of Organization (Business Organization) Business Organization Proprietorship Partnership Corporation
  • 66. 12/11/2024 66 Individual Proprietorship  Single person owns the capital  He has taken the decision, uses his own skill , Knowledge and experience  All profits belong to him  He bear all the losses  His decision is final in employment, purchase production and sale  Small establishments Started easily Closed down easily
  • 67. 12/11/2024 67 Individual Proprietorship  The area of operation is limited, the owner can develop cordial relationship with workers, supplier of inputs and buyers.  Capital base is small and narrow  Small business promotes fair distribution of income and wealth.
  • 68. 12/11/2024 68 Partnership  Formed by a simple contract  Each party of the contract becomes the general agent of the business  Sharing their duties responsibility on one hand & profit / losses on the other hand  Minimum two persons  In the absence of any agreement to the contrary , all partners have equal right to participate the business  Written agreement is signed by all partners and stamped it becomes partnership deed  Registered firms enjoy many benefits  Unregistered firms cannot sue other partners of the firm.
  • 69. 12/11/2024 69 ADVANTAGES OF Partnership  Raising Additional Finance  Specialized experiences of various partners  Bankers provide easy credit  Liability is unlimited
  • 70. 12/11/2024 70 DISADVANTAGES of Partnership  Partners become responsible for acts of each & every other  It suffers uncertain continuity, lesser public confidence, restricted right to transfer of capital and liability of partner even after his retirement from the firm.
  • 71. 12/11/2024 71 JOINT STOCK COMPANIES o Corporation has been defined as an artificial person o Recognized by law, it is a legal entity o Distinctive name, a common seal o Common capital o Transferable shares of fixed value, limited liability o Share holders may come & go, but company goes o Share holders cannot participate the working of a company o Board of directors, assisted by professional Mangers o Memorandum of Association is prepared o Classified as Pvt Ltd & Public Ltd
  • 72. 12/11/2024 72 Pvt. Ltd Company  Registered by 2 or more persons  But limits to 50  Restriction on transfer of shares  General public cannot participate in the capital  Limited liability  Keep their business as private as possible
  • 73. 12/11/2024 73 PUBLIC LIMITED COMPANY  Membership is open to all  Minimum no is 7, but there is no ceiling  To collect capital, through the selling of shares
  • 74. 12/11/2024 74 FORMATION  Group of persons conceive an idea of a successful business, called promoters  Registration to Registrar of companies with name and fee, accompanied by Memorandum of Association (MOA) & Article of Association (AOA)  MOA defines objectives, powers of the company, the name clause, situation clause, objective clause, capital clause and liability clause
  • 75. 12/11/2024 75 FORMATION  AOA  Rules & Regulations governing internal management (Power & duties of directors and other officers, borrowing powers, power to hold meetings etc)  After the meeting of directors, Chairman, Bankers, auditors, brokers etc are appointed  Then they raise the capital from general public  Then registrar issues commencement certificate
  • 76. 12/11/2024 ADVANTAGES of PUBLIC LIMITED COMPANY  Liability is limited as per the face value of shares  Easily raise the capital from public and lending institutions  Avail the services of experts 76
  • 77. 12/11/2024 DRAWBACKS of PUBLIC LIMITED COMPANY  Long drawn process  More legal formalities  Larger amount of initial expenditure  Ownership is diverted from control 77
  • 78. 12/11/2024 CO - OPERATIVES  Voluntary association of eleven or more members  They are in same locality carrying on business not for profit  It is based self help through mutual aid  The membership is open to all  Value of the share is kept low  In India we have credit cooperatives, marketing cooperatives, housing cooperatives etc.  In rural India, cooperatives are controlled by rural rich 78
  • 79. 12/11/2024 PUBLIC SECTOR UNDERTAKINGS Government departmental organizations Public Corporations Mixed ownership Corporations 79
  • 80. 12/11/2024 Government Department Organization  Postal & Telegraphs, railways,highways, defence industries etc.  They are financed by appropriations from the treasury  It is subject to budget accounting and audit controls  Civil servants are the in charge of such enterprises  It cannot be sued without the consent of the government  They ensure maximum degree of control  Transactions are approved by appropriate agencies 80
  • 81. 12/11/2024 DRAWBACKS of Government Department Organization  Absence of flexibility in its operations  Immediate decisions depending on the business environment cannot be made  Delay, red tapism, inadequate services etc are in this organizations 81
  • 82. 12/11/2024 PUBLIC CORPORATIONS  It is wholly owned by the state  Greater freedom in making contracts, acquiring & disposing of property than government departments  They obtain funds from treasury, public and revenues from sale of goods and services  They are not subject to budget accounting & audit loss  Employees are recruited and remunerated under the terms and conditions of the corporation  It enjoy the freedom of govt. regulation & control  High degree of operating & financial flexibility  Expansion programmes can be finance without delays by the use of revenues or borrowed funds  Ex: Industrial Financial Corporation of India, LIC, UTI & RBI 82
  • 83. 12/11/2024 MIXED ENTERPRISES  Capital owned by the Govt. & Pvt. share holders  Directors are nominated by both of them  It can enter into contract and acquire property in their own name  Own legal entity  They can be sued and they can sue  Exempted from budget accounting  Permission from GOI is necessary 83
  • 84. 12/11/2024  If no foreign participation, state Govt. or SIDC – 26% Private Individual - 25% Lending Institutions - 49% MIXED ENTERPRISES 84  If foreign Participation State – 25% Indian entrepreneurs – 20% Foreign Investor – 20% & Investing public – 35%
  • 85. 12/11/2024 GLOBALIZATION It means internationalization of trade, Particularly financial product transactions and the integration of economic and capital markets throughout the world  Trade exists freely among the countries  World economy becomes a single market or single economy  In globalization, there is no restriction of quota, license, tariff and other adminstrative barriers for trade 85
  • 86. 12/11/2024 Trade can be of products and factors Trade of product means goods, commodities and services Trade of factors means transfer of technology, finance and labour Currencies of the country should be freely exchangeable Uniformity of laws and rules GLOBALIZATION 86
  • 87. 12/11/2024 Benefits of Globalization 1. Improves efficiency – >Glob. leads to specialization in production 2. Improve factor income –>the factor mobility is free (factor incomes among the trading countries will get equalized) 3. Improves finance –> need for growth and industrialization of country 4. Gain from migrations * For developed countries migration fulfills the need of manpower in the form of skilled person * For developing countries migration solves the problem of unemployment 87
  • 88. 12/11/2024 International Management /Managing Globally  It is the process of Planning, Organizing, leading and controlling in organizations engaged in international Business  Now a days Managers engage in international business are like to face competition from international organizations or to deal with them either suppliers or customers 88
  • 89. 12/11/2024 Multinational Corporations (MNC)  It is an organization that is engaged in production or services through its own association in several countries, manages and control the overall activities from a global perspective  They are large in size and are engaged in substantial amount of business throughout the world 89
  • 90. 12/11/2024  MNC is a business that has its head quarters (domicile) in one country but which operates in many  The BOD (Board of Directors) might comprise a two tier system Strategic board which determines global policy One or more national boards responsible for implementing this policy in particular countries Multinational Corporations (MNC) 90
  • 91. 12/11/2024 Major Differences between MNC & one country Firm a) Market segment is more for MNC b) Recruitment, training, appraisal and promotion procedures must be drafted on international scale c) Greater amount of diversification  Choice of national market for final products  Location of production facilities  Sources of raw materials  Buy and import (products) from rest of the world d) MNC can afford more risk than domestic rivals. A loss in one country can be offset against profits elsewhere. 91
  • 92. 12/11/2024 Categories Horizontally Integrated Multinational  MNC Seeks to produce the same product in different countries. The primary objective is to achieve growth by expanding into new markets Vertically Integrated Multinational  MNC Undertakes the various stages of production in different countries for a core business. Ex: Oil companies like shell and Exxon (ESSO) Conglomerate Multinational  MNC will produce a range of different products in different countries 92
  • 93. 12/11/2024 Type of International Management  Ethocentric  Polycentric  Regiocentric  Geocentric 93
  • 94. 12/11/2024 Ethnocentric International Management are home country oriented. Here, Managers assume that practices that work in home country must necessarily work elsewhere 94
  • 96. 12/11/2024 Regiocentric International Management are region oriented. Managers believe that the company problems related to that region are generally best solved by individuals from the region. 96
  • 97. 12/11/2024 Geocentric International Management are world oriented. Here Managers believe that global view is needed in both the head quarters of the company and its various subsidiaries that the best individuals regardless of host or home country, should be utilized to solve company problems anywhere in the world. 97
  • 98. 12/11/2024 Entry to International Business 1. Exporting : It is the process of making a product in the home country and sending it overseas. It requires very small capital. 2. Licensing : It is an agreement in which one organization gives limited rights to another to use certain assets (expertise, patents, copyrights or eqpt.) for an agreed upon fee or royalty  Licensing allows to use assets within specific territory and for a specific period 98
  • 99. 12/11/2024 3. Establishing Strategic alliances: A joint venture is an agreement involving two or more organizations that arrange to produce a product or service through a jointly owned enterprises 4.Operating wholly owned subsidiaries: A wholly owned subsidiary is an operation on foreign soil that is totally owned and controlled by a company with headquarter outside the host country. Entry to International Business 99
  • 100. 12/11/2024 MNC STRATEGIES  MNC must give weightage to two important factors. i. The need to make optimum economic decisions on global basis. ii. Responsive to host country differences MNC opt for any of the four strategy a. Worldwide integration / globalization strategy b. National responsiveness strategy c. Region responsiveness strategy d. Multifocal strategy 100
  • 101. 12/11/2024 Challenges of Management in Global Scenario a) Language Barriers – Less in developed country - More in developing countries (Africa or Latin America) b) Selling and Marketing in Foreign Markets Selling at home might fail overseas because of wide social and cultural differences. Ex: McDonald’s, Cocacola 101
  • 102. 12/11/2024 c) Attitudes of host governments Govt. insisting on part ownership in the subsidiary of tight rules and regulations governing the MNC’s behavior or harsh tax regimes d) Communication and Co-ordination between subsidiaries For expanding global business, lines of communication become longer and more complex. Challenges of Management in Global Scenario 102
  • 103. 12/11/2024 Advantages of MNC Investment Employment The Balance of Payment Technology Transfer Taxation 103
  • 104. 12/11/2024 Disadvantages of MNC Investment Uncertainty Control Transfer Pricing The Environment 104
  • 105. 12/11/2024 Japanese Management They combine structure and people with Japanese culture to create a highly productive and efficient organization. 105
  • 106. 12/11/2024 Characteristics of Japanese management or Theory Z 1. Human Resources : Japanese Management prefers human resource than financial resources 2. Job Security : It results in employees with high morale 3. Team work : team efforts & Team spirit leads to effective management 4. Promotion : Promotion are based on seniority 106
  • 107. 12/11/2024 5. Appraisal System : Employee performance in the long run is given more importance than short run. 6. Communication : It is designed to foster open communication. It facilitates extensive face to face communication. 7. Decision Making : Japanese management encourages the lower level employees ideas, Knowledge & Experience. Lower level employees also take part in decision making 107 Characteristics of Japanese management or Theory Z
  • 108. 12/11/2024 Weakness of Japanese Management 1. It suppressed individual talents 2. Promotion policy is not encouraging outstanding younger employees 3. Decision making process is time consuming process 108
  • 109. 12/11/2024 Japanese Management USA Management It involves long term planning It Involves short term planning More people involved in decision making process Only top executives involved in decision making process More favor for decentralization More favor for centralization Participative Management Not a Participative Management Here informal and democratic organization structure Formal and bureaucratic organization structure Training is important activity Training is not an important Job Security Job Insecurity 109
  • 110. 12/11/2024 Japanese Management USA Management Leader is not a important role Leader is a important role It enhances self control and peer control All Managerial activities controlled by superiors Execution of all the process in the organization is very fast Execution of all the process in the organization is not fast Given more benefits to the employees Employees benefits less compared to Japan Appraisal process is not consider immediately Appraisal process is consider immediately It enhances group performance It enhances individual performance Promotion, demotion and termination process are less Promotion, demotion process is often Communication system is poor Communication is effectively 110
  • 111. 12/11/2024 German Management  German Management is autocratic  The Managers expect obedience from their subordinates  Labour suggestions also accepted  One of the labour director is elected as a member of the executive committee.  Managerial decisions are taken by the executive committee in consultation with labour director  Labour director is represented the employee’s problems also 111
  • 113. 12/11/2024 113 Importance of Organizational Culture  Talent Attractor  Talent Retainer  Engage People  Creates Energy and Momentum  Changes the View of Work  Creates Greater Synergy  Makes Everyone More Successful
  • 114. 12/11/2024 114 CHARACTERISTICS OF ORGANIZATIONAL CULTURE Organizational Culture Attention in Detail Outcome Orientation People Orientation Team Orientation Aggressiveness Stability Innovation and Risk Taking Degree to which employee are expected to exhibit precision analysis and attention to detail Degree to which managers focus on results or outcomes rather than on ho these outcomes are achieved Degree to which management decisions take into account the effects on people in the organization Degree to which work is organized around teams rather than individuals Degree to which employees are aggressive and competitive rather than cooperative Degree to which organizational decisions and actions emphasize maintaining the status quo Degree to which employee are encouraged to be innovative and take risk
  • 115. 12/11/2024 ELEMENTS OF ORGANIZATIONAL CULTURE 115 Artefacts Language, Technology, Products, Style of dressing, Physical Environment, Manners, Myths, stories Espoused Values Conscious Strategies, goals and philosophies Basic Assumptions and Values Norms, Unwritten rules, shared assumptions, taken for granted beliefs, values existing at unconscious level
  • 116. 12/11/2024 STRONG vs WEAK CULTURE Strong culture  Strong culture-key values are deeply held and widely shared.  Employees in such organizations are more committed  Increased organizational performance. Weak culture  Weak Culture-do not make clear what is important and what is not  Lack of clarity in organization 116
  • 117. 12/11/2024 HOW AN ORGANIZATION’S CULTURE IS ESTABLISHED AND MAINTAINED? 117
  • 120. 12/11/2024 Internal Environment factors  Management  Organizational culture  Employee  Financial changes 120
  • 121. 12/11/2024 External Environment factors Macro Environment  Technology  Economic conditions  Political conditions  Socio-cultural factors Micro Environment  Suppliers  Customers  Competitors  Distributor 121
  • 122. 12/11/2024 Current trends and Issues in Management Work force diversity Changing demographics of workforce Internal environment Changing employee expectations Building organizational capabilities Technological advances Changing psycho-social system Job design and organizational capabilities Management of human relations Change in legal environment and industrial relation Globalisation 122

Editor's Notes

  • #40: 2. Authority without responsibility leads to irresponsible behavior whereas responsibility without authority makes the person ineffective. 5. Without unity of direction, unity of action cannot be achieved In fact, unity of command is not possible without unity of direction.
  • #42: Experimental
  • #44: Possibility