PRINCIPLES OF MANAGMENT ALL UNITS NOTES PPT

OVERVIEW OF
MANAGEMENT
1–1
UNIT
1

What Is Management?
• Managerial Concerns
Efficiency
 “Doing things right”
– Getting the most output
for the least inputs
Effectiveness
 “Doing the right things”
– Attaining organizational
goals
1–2

What Is Management?
• Management involves coordinating and
overseeing the work activities of others so that
their activities are completed efficiently and
effectively.
1–3

Exhibit 1–3 Effectiveness and Efficiency in
Management
1–4

Who Are Managers?
• Manager
Someone who coordinates and oversees the work of
other people so that organizational goals can be
accomplished.
1–5

Classifying Managers
• First-line Managers
Individuals who manage the work of non-managerial
employees.
• Middle Managers
Individuals who manage the work of first-line
managers.
• Top Managers
Individuals who are responsible for making
organization-wide decisions and establishing plans
and goals that affect the entire organization.
1–6

What Managers Do?
•Three Approaches
Functions they perform.
Roles they play.
Skills they need.
1–8

Planning
Defining goals, establishing
strategies to achieve goals,
developing plans to integrate and
coordinate activities.

Organizing
Arranging and structuring
work to accomplish
organizational goals.

Leading
Involves motivating
subordinates, influencing
individuals or teams as they
work, selecting the most effective
communication channels

Controlling
Monitoring,
comparing, and
correcting work.

What Managers Do (Mintzberg)
•Actions
thoughtful thinking
practical doing
1–14

Management Roles
Managerial
roles
Leader
Figurehead
Entrepreneur
Disturbance
handler Spokesperson
Monitor
Negotiator
Resource
Allocator
Informational
roles
Interpersonal roles
Decisional
roles

Interpersonal Roles
• Roles that involve interacting with other
people inside and outside the organization
• Interpersonal roles:
Figureheads: Greet visitors, Represent the company
at community events
Leader: Influence, motivate, and direct others as well
as strategize, plan, organize, control, and develop

Informational Roles
•Collecting, Processing
•Roles: Monitor, and
spokesperson

Decisional Roles
• Whereas interpersonal roles deal with people and
informational roles deal with knowledge, decisional
roles deal with action
• Decisional roles:
Entrepreneur: Managers must make sure their
organizations innovate, change, develop, and adopt
Disturbance handler: Addressing unanticipated problems
as they arise and resolving them.
Resource allocator: How best to allocate resources
Negotiator: Negotiation is continual for managers

•interpersonal roles deal with
people
•informational roles deal with
knowledge,
•decisional roles deal with
action 1–19

What Is An Organization?
• An Organization Defined
A deliberate arrangement of people to accomplish
some specific purpose (that individuals independently
could not accomplish alone).
• Common Characteristics of Organizations
Have a distinct purpose (goal)
Composed of people
Have a deliberate structure
1–20

Exhibit 1–9 Characteristics of Organizations
1–21

What Managers Do?
• Skills Managers Need
Technical skills
Knowledge and proficiency in a specific field
Human skills
The ability to work well with other people
Conceptual skills
The ability to think and conceptualize about
abstract and complex situations concerning the
organization
1–22

Skills Needed at Different Management Levels
1–23

How The Manager’s Job Is
Changing
• The Increasing Importance of Customers
Customers: the reason that organizations exist
 Managing customer relationships is the responsibility of all
managers and employees.
 Consistent high quality customer service is essential for
survival.
• Innovation
Doing things differently, and taking risks
Managers should encourage employees to be
aware of and act on opportunities for innovation.
1–24

Universal Need for Management
1–25

PRINCIPLES OF MANAGMENT ALL UNITS NOTES PPT

Management as an Art
• Art refers to creative skills and talent
which people require to conduct certain
activities effectively.
• Art is an Inborn talent. However it can be
refined through Learning and Practice.

Management is an Art due to the following reasons:
1. Intelligence 2. Initiative
3. Innovative

6. Result Oriented
4. Individual Approach
5. Application & Dedication

Comparison :
Management as
As An art
• Based on Practice and
creativity.
• It is a theoretical body of
knowledge.
• Has Personalized
Application.
As a Science
• Based on
Experimentation.
• It is a systematized body
of knowledge.
• Has Universal Application.

 DIVISION OF WORK OR SPECIALIZATION
 AUTHORITY AND RESPONSIBILITY
 DISCIPLINE
 UNITY OF COMMAND
 UNITY OF DIRECTION
 SUBORDINATION OF INDIVIDUAL TO GENERAL
 REMUNERATION
 CENTRALIZATION
 LINE OF COMMAND/SCALAR CHAIN
 ORDER
 EQUITY
 STABILITY OF TENURE
 INITIATIVE
 ESPRIT DE CORPS
II. Modern Operational Management
Theory
14 Principles of Henri Fayol

1. DIVISION OF WORK or SPECIALIZATION
Division of work makes a man specialist. The reason is
that division of work helps to specialize in an activity which
increases the output with perfection. It also avoids wastage of
time. Division can be applied to both technical and managerial
kind of work.

 Authority & Responsibility.
 Managers must be able to give orders.
Authority gives them this right. Note that
responsibility arises wherever authority is
exercised.

 Discipline.
 Employees must obey and respect the rules that
govern the organization.

 Unity of command.
 Every employee should receive orders from only
one superior.

 Unity of
direction.
 Each group of
organizational
activities that have
the same objective
should be directed
by one manager
using one plan.

Subordination of individual
• The individual should
subordinate self-
interest to the general
good. It is incumbent
upon management to
reduce conflict
between the
individual and the
general well being
wherever possible.

 Remuneration
 Workers must be paid a fair
wage for their services.
 Means the wages and salaries paid
to employee. It should be fair &
must be paid on time.
 It satisfy both employee &
employer
 It should be decided on-Work
allotted.
 cost of living.

 CENTRALIZATION
 Fayol thought centralization of authority to be
desirable, at least for overall control. Certainly, both
formulation of policy and the generation of basic rules
and procedures ought to be centralized

 Scalar chain
 The line of authority
from top management to
the lowest ranks
represents the scalar
chain. Communications
should follow this chain.

Order
 People and materials
should be in the right
place at the right time.

Equity
 Managers should be
kind and fair to their
subordinates.

 Stability of tenure of personnel
 High employee turnover is inefficient. Management
should provide orderly personnel planning and
ensure that replacements are available to fill
vacancies.

 Initiative.
 The power of
thinking out,
proposing and
executing.
Management
should encourage
employees to
originate and
carry out plans.

 Esprit de corps
 It means that create a
team spirit or union is
strength.
 Developed an
atmosphere of mutual
trust and understanding.
 Create a sense of
belonging employees
 It bring a loyalty,
dedication and

Organizational Behavior
• Human behavior in organizations is complex.
• The field of organizational behavior draws from
a broad, interdisciplinary base of psychology,
sociology, anthropology, economics, and
medicine.
• There are two theories on how employees
behave:
2 - 48

Behavioral Theory on How
Employees Behave Toward
Work
Theory X Assumptions:
Employees dislike work.
Employees are
irresponsible.
Employees lack
ambition.
Employees resist
change.

Another Theory on How
Employees Behave
Theory Y Assumptions:
Employees are willing to
work.
Employees are self
directed.
They accept
responsibility.
Employees are creative.
They are self-controlled.

Difference between
Administration and
Management
1–51

Objectives
Management
• Stated as broad
strategic aims
Administration
• Stated in general
terms and reviewed or
changed infrequently

Success Criteria
Management
• Performance mostly
measurable
Administration
• Mistake avoiding
• Performance difficult
to measure

Ressource Use
Management
• Primary task
Administration
• Secondary task

Decision Making
Management
• Many decisions
• Decisions affect few
• Decisions must be
made quickly
Administration
• Few decisions
• Decisions affect many
• Decisions take time to
be made

BUSINESS
•A business (also called a company,
enterprise or firm) is a legally
recognized organization designed to
provide goods and/or services to
consumers.
1–57

Forms of Business Organization
• sole proprietorship
• partnership
• Corporate society
• Public society
Slide 58

Sole Proprietorship/ sole trader
It is a type of business entity which is
owned and run by one individual

Partnership
a business owned by two or more
people

Responsibilities, profits, and losses are
shared
can be held liable for errors of partners
unlimited liability for business expenses
responsible for all money or services
owned.
business income is taxed as personal
income
Disadvantages of a partnership:

easy to establish
multiple sources of capital
risks are spread among partners
Slide 62
Advantages of a partnership :

Corporation
a business that has the legal rights of a
person but is independent of its owners

Organization & the
environmental factors
1–64

External and Internal Environment
1–65
The
Manager
Internal
Environment
Task
General

The External Environment
3–66

Internal & External Environment classification:
Internal Environment
1.Resources
2.Capabilities
3.Culture
External Environment:
1.specific environment
a. Customers b. Suppliers
c. Competitors d. Pressure Groups
2. General Environment
a. Economic conditions b. Political/Legal Conditions
c. Socio-cultural Conditions d. Demographic Conditions
e. Technological Conditions f. Global conditions

External environment
 External environment refers to force
and institutions outside organization
that potentially affect an organizations
performance
 General and Specific Environment

 Specific Environment that is directly
relevant to achievement of an org’s goal
 Customers,competitors,suppliers,pressure
groups
 Economic conditions,political/legal
conditions,socio cultural conditions,
demographic conditions,technological
and Global conditions
External environment-
Specific Environment

Customers
Customers:customers who absorbs
organizational outputs
They represent potential uncertainty to
an organization,Their taste can
change,they can become dissatisfied
with organization’s product or service

Competitors:
 Competitors: Organizations cannot
afford to ignore its competitors.
Managers must be prepared to
respond to competitors policies
regarding pricing new
products,services offered and other
incentives it is giving to customers

Specific Environment-
Suppliers
 Suppliers:Any party that provides input for
the business. E.g financial institutions are
provider of money, colleges are suppliers of
human resources
 Managers need to have steady and and
reliable flow of inputs to meet the goals

Specific Environment-
Pressure groups
 Pressure groups: Managers must
recognize the special interest groups
that attempt to influence organization

General Environment
Economic conditions:
 Economic conditions: It includes the
impact of economic factors like Interest
rates, changes in disposable income
and the stage of general business cycle
 e.g : when consumer’s incomes fall
their confidence about job security
declines,they will postpone
purchasing any thing that is not
necessary

General Environment
Political/legal conditions:
 Political/legal conditions:
Federal,state and local government
influence what org can and cannot do
 Managers must adapt their practices to
the changing expectations of the
society and their life style

General Environment
Demographic Conditions:
 Demographic Conditions: Trends in
the physical characteristics of
population such as gender,age,level of
education,income,geographical location
 Technological:It is changing the ways
the org are operating,so businesses
must address this issue and its impact
on performance of org.

General Environment-
Socio-cultural Conditions
 Managers must adapt their practices
to the changing expectations of the
society in which they operate.
77

Technological Conditions
 The whole area of technology is
radically changing the fundamental
ways that organizations are structured
and the way that managers manage.
78

Global conditions
 Globalization is one of the major
factors affecting managers and
organizations
79

TRENDS AND CHALLENGES
OF MANAGEMENT IN GLOBAL
SCENARIO
80

81
 Workforce diversity
 Changing employee expectation
 International environment
 Building organizational capabilities
 Job design & organizational structure
 Changing psycho-social system
 Technological advance
 Management of human relations
 Changes in legal environment
 Expanding globalization

1.Workforce diversity
Changing the Way You Do Business
 It refers to the way in which people in a
workplace are similar & different from
one another. in addition to the
characteristics protected by law, other
similarities & differences commonly
cited include background, education,
language skills, personality & work role.
82

Advantages of Workforce
diversity
 IMPROVE DECISION MAKING
 IMPROVE TEAM PERFORMANCE
 BETTER CONSUMER SERVICES
 ENHANCE COMMUNICATION SKILLS
 CREATIVITY & INNOVATION
83

2.Changing employee expectation
 The managers has then to redraw new
methods of motivation such as job
design.
 Ex: motivation of workers to deliver
their contribution towards the
accomplishment of organizational goals.
84

85
3.INTERNATIONAL ENVIRONMENT
The Environment which
includes all the factors
and forces which are
external to the Business
organization such as
economic, socio-cultural,
legal demographic etc.
are known as
International
environment.

 In simple word International
Environment means the growth and
expansion of business to a larger
extent.
i.e. global all over the world.
86

4. Building organizational
capabilities
 To acquire new skills, knowledge & to
evaluate environmental changes to
evaluate business strategies.
87

5. Job design & organizational
structure
 Design with foreign concepts ex: quality
circle,TQM etc
i. Task Approach
ii. People Approach
88

6.Changing Psycho-Social
System
 Management designed to perform its
work function.
 But in future Human Participation will
be required.
89

7.Technological Advance
 New jobs will be created and many old
jobs will become redundant
90

8.Management of human
relations
 New generation of workforce
comprising educated will ask for higher
degree of participation.
91

9.CHANGING IN LEGAL
ENVIRONMENT
 Increases changes in legal environment
necessary adjustments have to be
made.
92

10. Expanding Globalisation
93

Strategies for
International
Business
94

International Management
 Focuses on the operations of
international firms in host countries.
 International businesses engage in
transactional across national
boundaries.
95

Multinational Corporation (MNC)
 Multinational Corporations have their
headquarters in one country but
operate in many countries.
96

Orientations
 Ethnocentric Orientation – The style of the foreign
operations is based on that of the parent company.
 Polycentric Orientation – The foreign subsidiaries are
given a great deal of managerial freedom.
 Regio centric Orientation – The foreign operations are
staffed on a regional basis.
 Geocentric Orientation – The entire organization is
viewed as an interdependent system operating in many
countries.
97

Strategies
 Multinational corporations must give
weightage to two important factors
The need to make optimum
economic decisions on a global basis
Responsive to host country
differences
98

In order to fulfil the above two criteria the
MNCs may opt for any of the four strategy
Worldwide integration / Globalisation
Strategy
National responsiveness strategy
Regional responsiveness strategy
Multifocal strategy
99

Forms of International Business
Exportation – Exportation of goods and
services from parent country to host country.
Licensing agreement – Licensing agreement
for producing goods in another country.
Management contracts – The company
can engage in management contracts for
operating in foreign companies.
Joint Venture and Strategic Alliances
o One form of interaction is a joint venture with
the firm in the host country.
1–100

Wholly Owned Subsidiaries
o A wholly owned subsidiary is an operation on
foreign soil that is totally owned and controlled
by a company with headquarters outside the
host country.
o In wholly owned subsidiary, the production
facilities are totally owned by one company.
1–101

Challenges of Management in
Global Scenario
Language barriers
Selling and Marketing in foreign markets
Attitudes of host governments
Communication and coordination between
subsidiaries

104
What is Planning?
• Deciding in advance what to do, how to do it ,
when to do it and who has to do it.
• Planning is the pre-selection of objectives and
outlines the action before starting any
business.
• Planning is decision making in advance.
• Choosing the alternatives and making the
decision is called planning.

105
Nature of Planning
•Goal oriented: Every plan must contribute in some
positive way towards the accomplishment of objectives.
•Primacy of Planning: Planning is the first of the
managerial functions
•Efficiency, Economy and Accuracy
•Co-ordination
•Limiting Factors: money, manpower etc
•Flexibility
•Planning is an intellectual process: The quality of
planning will vary according to the quality of the mind
of the manager.

Importance of Planning
• Provides direction
• Leads to economical utilization of resources
• Reduces the risks
• Facilitates decision making
• Encourages Innovation & Creativity
• Improves morale
• Facilitates control

Planning Process
(or)
Steps in Planning
1–107

Being Aware of opportunities
Market, competition, Customers, Strengths Weakness
Establishing objectives
Where we want to be, what to achieve and when
Developing premises
In what environment ( I & E), scenarios
Determining alternative courses
How many and which are most promising
Evaluating alternative courses
In the light of objectives
Selecting a course
Formulating derivative plans
Quantifying plans by budgeting
Steps in planning

1. Being aware of opportunities
• All managers should take look at future
opportunities and see them clearly and
completely.
• They should know their strengths and
weakness, understand what problems they
wish to solve and why, and know what they
expect to gain.
• Setting realistic objectives depends on
(i) About market
(ii) About expected competition
(iii) What customers wants

2. SETTING OBJECTIVES
• The second step in planning is to establish or
set objectives
• Objectives specify the expected results and
indicate the end points of
(i) What is to be done
(ii) Where the primary emphasis is to be placed
(iii) What is to be accomplished by the
strategies, policies, procedures, rules, budgets
and programs.
1–110

3. DEVELOPING PREMISES
• It is important for all the managers
involved in planning to agree on the
premises.
• Forecasting is important in premising:
What kind of markets will be there?
What volume of sales? What prices? What
products? What technical developments?
What cost? Etc
1–111

4. INDENTIFYING ALTERNATIVE COURSES
OF ACTION
•to search and examined alternative
courses of actions.
•The planner must usually make
preliminary examination alternative
courses to accomplish the goal.
1–112

5. EVALUATING ALTERNATIVE COURSES
• After determining alternative courses and
examining their strong and weak points,
the next step is to evaluate the
alternatives.
1–113

6.SELECTING A COURSE
• Selecting an alternative is the real point of
decision making. This is the point at which
the plan is adopted.
• the manager has to decide one best alternative
or several alternative courses of action.
1–114

7.FORMULATING DERIVATIVE PLANS
•The seventh step in planning is
formulating derivative plans.
•When a decision is made next step is
to formulate a supporting plan, such
as to buy equipment, materials, hire
and train workers and develop a new
product.
1–115

8. Quantifying Plans by Budgeting
• the final step in planning is to quantify them
by converting them into budgets.
• The overall budgets of an enterprise represent
the sum total of income and expenses with
resulting profit.
1–116

117
Types of Plans
• Long range Vs Short range
• Strategic Vs Operational
• Corporate Vs Functional
• Proactive Vs Reactive
• Standing Vs Single Use

118
Long range Vs Short range
Long range plan Point of
distinction
Short range plan
Covers many years &
affects many
departments of an
organization
Meaning Covers less than one
year and is more
specific & detail
5 yrs or more Time Up to one year
Mission ,long term goals
and strategies
Deals
with
Current operations of
organization
Top management Prepared
by
Lower level executives

119
Strategic Vs Operational
Strategic Plan Point of
distinction
Operational Plan
5 years or more Time
horizon
Under one year
Adapt to external
environment based on
internal strengths
Purpose Implement internal goals
Top management Level
involved
Middle & lower level
Primarily judgmental Basis for
planning
Exact data & Standards
used

Corporate Vs Functional
• Corporate Plan:
– A comprehensive plan that outlines the broad
objectives of a company as a whole and
develops plans to achieve those objectives
– Focus on organizational performance
• Functional Plan:
– Is unit planning and deals with different
departments.
– Focus on departmental performance

121
Proactive Vs Reactive
• Proactive Planning:
– Managers challenge the future,
anticipating future contingencies
• Reactive Planning:
– Organizations react to events as and when
they arise

122
Standing Vs Single Use
• Standing Plans
– Developed for
activities that recur
regularly over a
period of time
• Ex:
– Objectives, Policies,
Procedures, Methods,
Rules
• Single Use plans
– Developed to carry
out a course of
action that is not
likely to be repeated
in future
• Ex:
– Programmes,
Schedules, Projects,
Budgets

Types of Plans – Key Point
•Strategic Plans
Apply to the entire organization.
•Operational Plans
Specify the details of how the overall
goals are to be achieved.
7–123

• Long-Term Plans
Plans with time frames extending 5 years
• Short-Term Plans
Plans with time frames of one year or less
• Specific Plans
Plans that are clearly defined and leave no
room for interpretation
• Directional Plans
Flexible plans that set out general guidelines
and provide focus,
7–124

•Single-Use Plan
one-time plan specifically designed to
meet the need of a unique situation.
•Standing Plans
Ongoing plans that provide guidance
for activities performed repeatedly.
7–125

TYPES OF PLANS/ Hierarchy of Plans
Mission or purposes
Objectives or goals
Strategies
Policies
Procedures
Rules
Programs
Budgets

Mission or purpose
The basic purpose or function
or tasks of an enterprise or
agency or any part of it
Objectives or goals
The end towards which
activity is aimed

1–128
Strategies
The determination of the basic long
term objectives of an enterprise and the
adoption of courses of action and allocation
of resources necessary to achieve these
goals
Policies
General statements or
understanding that guide or channel
thinking in decision making

Procedures
Plans that establish a
required method of handling
future activities
Rules
Rules spell out specific
required actions or non actions
allowing no discretion

1–130
Programs
A complex of goals, policies,
procedures, rules, task assignments,
steps to be taken, resources to be
employed, an other elements necessary
to carry out a given course of action
Budgets
A statement of expected results
expressed in numerical terms

Management by Objectives
(MBO)
1–132

Management by Objectives (MBO)
• Is a method whereby managers and
employees define goals for every department,
project, and person and use them to monitor
subsequent performance.
4 major activities:
1. Set goals
2. Develop action plans
3. Review progress
4. Appraise overall performance

Step 1: Set Goals
Take Corrective
Action
Review
Progress
Step 3:
Review
Progress
Appraise
Performance
Step 4: Appraise
Overall Performance
Action Plans
Step 2: Develop Action Plans
• Corporate Strategic
Goals
• Departmental Goals
• Individual Goals

Benefits of MBO Problems with MBO
1. Improvement of
management
1. Danger of inflexibility
2. Performance can be
improved at all company
levels.
2. An environment of poor
employer-employee relations
reduces MBO effectiveness.
3. Employees are motivated. 3. Strategic goals may be
displaced by operational goals.
4. Departmental and
individual goals are
aligned with company
goals.
4. Mechanistic organizations and
values that discourage
participation can harm the
MBO process.
5. Too much paperwork saps
MBO energy.

Strategic Management
The set of managerial decisions and
actions that determines the long-run
performance of an organization.
136

Strategic management process
a six-step process that encompasses
strategic planning, implementation, and
evaluation.
1–137

FORMATION OF
MISSION &
OBJECTIVES
SWOT
ANALYSIS
CONSIDERATION
OF STRATEGIC
ALTERNATIVES
EVALUATION
AND CONTROL
IMPLEMENTATION CHOICE OF
STRATEGY
STRATEGIC MANAGEMENT PROCESS

1.Mission and Goals
• Mission
a statement of the purpose of an
organization
• Major goals
the foundation for further planning
• Secondary goals
Are objectives to be attained that lead to superior
performance.

2.SWOT(Identifying Organizational
Opportunities)
a. External Analysis
b. Internal Analysis
Strengths Weaknesses
Opportunities Threats

1-141
a. External Analysis
• Identify strategic opportunities and threats in
the operating environment.
Macroenvironment National
Immediate (Industry)

1-142
b. Internal Analysis
• Identify strengths
Quality and quantity of resources available
Distinctive competencies
• Identify weaknesses
Inadequate resources
Managerial and
organizational deficiencies

8–143
Step 4: Formulating strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in
the organization that provide relative
advantage over competitors
Match organizational strengths to
environmental opportunities
Correct weaknesses and guard against
threats

8–144
• Step 5: Implementing strategies
Implementation: effectively fitting
organizational structure and activities to the
environment.
The environment dictates the chosen
strategy; effective strategy implementation
requires an organizational structure matched
to its requirements.
• Step 6: Evaluating results
How effective have strategies been?
What adjustments, if any, are necessary?

1-145
Strategic Managers for All Levels

 Corporate-Level Managers
Oversee development of strategies for whole organization
CEO is principle general manager who consults with other
senior executives
 Business-Level Managers
Responsible for business unit that provides
product/service to market
 Functional-Managers
Supervise function/operation (e.g., marketing, operations,
accounting, human resources)
LEVELS OF STRATEGIC MANAGEMENT

8–147
Types of Organizational Strategies

8–148
• Corporate Strategies
Top management’s overall plan for the entire
organization and its strategic business units
• Types of Corporate Strategies
Growth: expansion into new products and markets
Stability: maintenance of the status quo
Renewal: examination of organizational weaknesses
that are leading to performance declines
1.Corporate Strategies

8–149
a. Growth Strategy
Seeking to increase the organization’s business by
expansion into new products and markets.
•Types of Growth Strategies
Concentration
Vertical integration
Horizontal integration
Diversification

8–150
a. i. Concentration
Focusing on a primary line of business.
a. ii. Vertical Integration
attempting to gain control of inputs (become a
self-supplier).
attempting to gain control of output through
control of the distribution channel or provide customer
service activities (eliminating intermediaries).

8–151
iii. Horizontal Integration
Combining operations with another competitor in the
same industry to increase competitive strengths and
lower competition among industry rivals.
iv. Diversification
Expanding by combining with firms in different, but
related to field of operation

8–153
• Renewal Strategies(re-establish)
Developing strategies to counter organization
weaknesses that are leading to performance declines.

8–154
2.Competitive Strategies
• Competitive Strategy
A strategy focused on how an organization will
compete in each of its SBUs (strategic business
units).

DECISION MAKING
PROCESS
1–155

156
Decisions and Decision Making
• Decision = choice made from available
alternatives
• Decision Making = process of identifying
problems and opportunities and resolving
them

Six Steps in Decision Making
Figure 7.4

Decision Making Steps
Step 1. Recognize Need for a Decision
Managers must first realize that a decision must
be made.
Step 2. Generate Alternatives
Managers must develop feasible alternative courses
of action.
If good alternatives are missed, the resulting
decision is poor.
It is hard to develop creative alternatives, so
managers need to look for new ideas.

Step 3. Evaluate Alternatives
What are the advantages and disadvantages of
each alternative?
Managers should specify criteria, then evaluate.

Step 4. Choose Among Alternatives
Rank the various alternatives and make a decision

Step 5. Implement Chosen Alternative
Managers must now carry out the alternative.
Step 6. Learn From Feedback
Managers should consider what went right and
wrong with the decision and learn for the future.
Without feedback, managers do not learn from
experience and will repeat the same mistake over.

CASE Study: Which is Best
Cool Drink
1–162

Step 1: Identifying the problem

Step 2: Identification of decision
criteria
1) Brand
2) Taste
3) Color
4) Packaging
5) Price

Step 3: Allocation of weights to
criteria
Criteria Abhi Bj Amit Too Total
Brand 9 10 10 8 37
Taste 10 8 10 10 38
Color 6 5 7 6 24
Packaging 9 8 6 5 28
Price 8 9 9 8 34
Criteria Weight
Taste 10
Brand 9
Price 8
Packaging 6
Color 4

Step 4: Development of alternatives
• Coca Cola
• Sprite
• Pepsi
• Fanta (orange)
• Lipton (ice tea)
• Tipco (fruit juice)
• Ichitan (green tea)

Step 5: Analyzing alternatives
Drink Taste Brand Price
Packagin
g Color
Coca Cola 10 10 7 6 7
Sprite 8 9 8 7 6
Pepsi 9 10 6 8 6
Fanta (Orange) 6 7 8 8 10
Lipton (Ice Tea) 10 9 8 5 5
Tipco (Fuit
Juice) 10 9 7 8 8
Ichitan (Green
Tea) 10 8 8 6 5

Step 6: Selecting an alternative
Drink
Criteria*Weight
Taste Brand Price Packaging Color Total
Coca Cola 100 90 56 36 28 310
Sprite 80 81 64 42 24 291
Pepsi 90 90 48 48 24 300
Fanta
(Orange) 60 63 64 48 40 275
Lipton (Ice
Tea) 100 81 64 30 20 295
Tipco (Fuit
Juice) 100 81 56 48 32 317
Ichitan
(Green
Tea) 100 72 64 36 20 292

Step 7: Implementing the
decision

Step 8: Evaluating the decision’s
effectiveness

Decision Making Process
A) Define the Problem

It is also a powerful strategic planning tool
used to evaluate a project in business venture
or in an organization or individual requiring a
decision in pursuit of an objective

• How to choose a education after +2
CASESTUDY

•Marks
•Interest
•Economy
•Job opportunities
•Family Background
•No of years(3,4,5)
FACTORS

• Palani, Mani and Arun studying in a same
school
• They are average students
• Let us take a decision on their future education.
THREE FRIENDS

• Likes adventure and sports
• Hails from poor family
• He had two elder brother who works in their
home town
PALANI

• Mother and Father are teachers
• They desire to make his son to acquire higher
degree
• Mani is interested in vehicles and machines
MANI

• Hails from an average family
• He is good in maths.
• He had a younger sister and it is his responsibility to
educate him.
ARUN

•Take a decision on
all three friends by
considering the
factors and situation
given above
DECIDE

•TRAIN TRACK AND CHILDREN
CASE STUDY

• A group of children were playing near 2 railway
tracks, one still in use while the other disused. Only
one child played on the disused track, the rest on the
operation track
WHAT TO DECIDE

• The train came and you were just beside the
track interchange.
• It was not possible to stop the train but you
could make the train change its course to the
disused track and save most of the kids
WHAT TO DECIDE

•However, that would also mean the
lone child playing in the disused
track would be sacrificed. Or would
you rather let the train go way.
Let us take a pause to think what kind
of decision we would make
WHAT TO DECIDE

•Analyze the
situation
•Thick and reflect
•Decide
•Now go ahead
WHAT TO DECIDE

Most people might choose to divert the
course of the train, and sacrifice only one
child.
To save most of the children at the
expense of only one child was rational
decision most people would make morally
and emotionally
WHAT TO DECIDE

•But, have you ever thought that the child
choosing to play on the disused track had
in fact made the right decision to play at a
safe place.
•Nevertheless, he had to be sacrificed
because of his ignorant friends who
choose to play in the used track which is
dangerous.
WHAT TO DECIDE

• This kind of dilemma happens around us
everyday. In the office community, in politics
and especially in a democratic society the
minority is often sacrificed for the interest of
the majority. No matter how foolish or ignorant
the majority are and how farsighted and
knowledgeable the minority are.
WHAT TO DECIDE

•The child who choose not to play
with the rest on the operational
track was side lined. And in the
case he was sacrificed, no one
would shed a tear for him
WHAT TO DECIDE

• To make the proper decision is not try to change
the course of the train because the kids playing
on the operational track should have known very
well that track was still in use and that they
should have run away if they heard train sirens.
WHAT TO DECIDE

•If the train was diverted, that lone
child would definitely die because he
never thought the train could make
over to that track.
•Notably that track was not in use
probably because it was not safe.
WHAT TO DECIDE

•If the train was diverted to the unused
track, we would put the lives of all
passengers on board at stake. And in your
attempt to save a few kids by sacrificing
one child, you might end up sacrificing
hundreds of people to save these few kids
WHAT TO DECIDE

•While we are all aware that life is full of
tough decisions that need to be made, we
may not realize that hasty decisions may
not always be the right one.
•Remember that What’s right is not
always popular and what’s popular isn’t
always right.
WHAT TO DECIDE

CASE STUDY: Buying a CAR
1–199

BUYING A CAR
•Price
•Model
•Options
•Style
•Fuel Efficiency
1–200

CASE STUDY: Buy a MOBILE
1–201

6–204
Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3

6–205
Evaluation of Laptop Alternatives Against Weighted Criteria

Decision-Making
Process
Types of Problems and
Decisions
• Well-structured
- programmed
• Poorly structured
- nonprogrammed
Decision-Making
Conditions
• Certainty
• Risk
• Uncertainty
Decision Maker Style
• Directive
• Analytic
• Conceptual
• Behavioral
Decision-Making Approach
• Rationality
• Bounded Rationality
• Intuition
Decision
• Choose best
alternative
- maximizing
- satisficing
• Implementing
• Evaluating

Types of Decisions
Programmed decision:
A decision that is fairly structured
or recurs (occur again)with some
frequency (or both).
Non-programmed decision:
A decision that is relatively
unstructured and occurs much
less often than a
PROGRAMMED DECISION.

Rational Decision Making(logical)
1–208

1.Recognize the need for a decision
• Manager recognize the need for a decision
in the form of a problem or opportunity.
1–209

2.Definition of the problem
• A problem is the gap between present and
the desired state of affairs on the subject
matter of the decision.
1–210

3.Search and develop alternatives
• The alternative course of action can be
developed by collecting more information,
thinking creatively, consulting experts and
undertaking research.
1–211

4.Evaluate Alternatives
• After identifying alternative courses of action,
they must be compared and evaluated. This
step determines the relative cost of each
alternative.
1–212

5.Implement chose alternative
• The decision taken by the management will not
serve the purpose if it is not executed properly.
1–213

6.Learn from feedback
• Feedback is important because decision making
is a continuous and never ending process
• Feedback information is very much useful in
taking the corrective measures and in taking
right decisions in the future
1–214

Decision-Making Conditions
Certainty Risk Uncertainty
Level of ambiguity and chances of making a bad decision
Lower Moderate Higher
The decision
maker faces
conditions of:

9 - 216
1.Certainty:
A condition in which the
decision maker knows with
reasonable certainty what
the alternatives are and
what conditions are
associated with each
alternative.
2. Risk:
A condition in which the
availability of each
alternative and its potential
payoffs and costs are all
associated with probability
estimates.

9 - 217
3.Uncertainty
• A condition in which
the decision maker
does not know all the
alternatives, the risks
associated with each,
or the likely
consequences of each
alternative.

11 - 219
What Is Organizing?
• Deciding how best to
group organizational
activities and resources.
• Organizing: the process
by which managers
establish working
relationships among
employees to achieve
goals.

NATURE OF ORGANIZING:
1. Group of Persons
2. Common Objectives
3. Division of Work
4. Co-ordination
5. Communication
6. Central Authority
7. Rules & Regulations
8. Environment

Common Objectives: Every organization has a
common objectives. The common goal is the
basis of cooperation among the members.
Group of Persons: An organization is a group of
people working together for the achievement of
common objectives.

Division of Work: total task is divided into the members
of the group. Division of work is necessary not only
because one individual cannot do all the work but
specialization results in efficiency and effectiveness.
Co-ordination: The members of an organization are
willing to help each other for the achievement of desired
goals.

Communication: People who form an organization
communicates with each other in order to integrate or
coordinate there efforts. People can perform together
efficiently.
Authority: In an organization, there is a central directing
authority which controls the concerted efforts of the
group. The chain of authority- responsibility relationships
is known as the chain of command.

Rules and Regulations: For the orderly and systematic
working of the members, rules and regulations are laid
down and enforced by the central authority.
Environment:
Economic,social,political and legal factors.

IMPORTANCE OF
ORGANIZING
1. Facilitates
Administration
2. Encourages
Growth &
Diversification
3. Optimum
Use of
Technology
4. Stimulates
Innovation &
Technology
5. Encourages
Good Human
Relations
6. Ensures
Continuity of
Enterprise
7.
Coordination

PURPOSE / IMPORTANCE OF organizing:
Facilitates Administration: Achievement of the objectives
of an enterprise by providing a framework of coordination
and control. Individual goals can be coordinated towards
group goals. A properly balanced organization facilitated
both management and operation of the enterprise.
Encourages Growth & Diversification: It has enabled
organizations to grow and expand to giant sizes. It provides
flexibility for growth without losing control over various
activities.

Optimum Use of New Technology: Optimum use of
technology permits optimum utilisation of human resources.
Sound organization ensures that every individual is placed
on the job for which one is best suited.
Stimulates Innovation & Creativity: It stimulates
creative thinking and initiative on the part of employees. It
provides recognition for the professional and the specialist
in terms of their achievement.

Encourages Good Human Relations: The assignment of
right jobs to right person improves job satisfaction and
inter-personal relations. Well-defined jobs and clear lines of
authority and responsibility ensure good human relations.
Ensures Continuity of Enterprise: It provides scope for
the training and development of future management.
Coordination: Division of labor, better utility of
technology and human talent helps to improve the
efficiency and quality of work.

PROCESS:
1.
2.
3.
4.
IDENTIFICATION
OF ACTIVITIES
GROUPING OF
ACTIVITIES
ASSIGNMENT OF
DUTIES
DELEGATION OF
AUTHORITY

Process of organizing:
1. Identification of Activities: First step is to determine the
tasks that must be performed to achieve the established
objectives. Activities and jobs are building blocks of any
organization. The activities to be performed depends
upon the objectives, nature & size of the enterprise.
2. Grouping of Activities: The various activities are the
grouped into departments or divisions according to
similarity and common purpose.
It may be grouped on various basis i.e. functions
products, territories, customers etc depending on
requirements.

3. Assignment of Duties: The assignments of activities
creates responsibility and ensures certainty of work
performance. The process should be carried down to the
lowest levels.
4. Delegation of Authority: Every individual is given the
authority required to carry out the responsibility assigned
to him. Every individual must know to who are his
subordinates.

It is a framework within which an Organization
arranges it’s lines of authorities and
communications and allocates rights and
duties.

Formal and Informal Organization
Formal structure is defined as the relationships
among organizational resources as outlined by
management.
9
Informal structure is defined as the patterns of
relationships that develop because of the
informal activities of organization members.

DEPARTMENTATION
The basis by which jobs are grouped together.
Forms (or) Types
• Departmentation by Function
• Departmentation by Geography
• Departmentation by Customer Group
• Departmentation by Product
• Departmentation by Process
1–234

Functional/Divisional Structures
• A division is a collection of functions working
together to produce a product.
– Product structure: divisions created according to the
type of product or service.
– Geographic structure: divisions based on the area of
a country or world served.
– Market structure: divisions based on the types of
customers served.

Product Structure
Washing Machine
Division
Lighting
Division
Television
Division
Corporate
Managers
CEO
Corporation

Geographic
Organization
• Geographic Organization – The categorization of
organizational units by geography.
• Advantages :
 Allows for the use of local employees or salespeople.
• Disadvantages :
• Having multiple locations can be costly.

Geographic Structure
Northern
Region
Western
Region
Southern
Region
Eastern
Region
Corporate
Managers
CEO
Corporation

Customer Organization
• Customer Organization – The categorization of organizational units by
customers served.
• Advantages :
 Allows employees to identify with a particular customer type.
• Disadvantages :
• Possible duplication of facilities and equipment.

Market Structure
Large Business
Customers
Small Business
Customers
Educational
Institutions
Individual
Customers
Corporate
Managers
CEO
Corporation

Hybrid Organization
• Hybrid Organization – An organizational structure that uses
multiple types of departmentalization within the organization.
• A small organization may have no organization at first. As it
grows, it may organize first on one basis, then another, and
then another.
• Hybrid organizations share the same advantages and
disadvantages as the organization types being used within it.

Line Authority
• An organizational structure in which authority originates at
the top and moves downward in a line
• It is the simplest organizational structure.
Advantages :
• It is a clear authority structure that promotes rapid
decision making.
Disadvantages :
• May force managers to perform too broad a range of
duties.
• May cause the organization to become too dependent on
key employees who are capable of performing multiple
duties.

Matrix Structure
• Matrix Structure – A hybrid organizational structure in which individuals
from different functional areas are assigned to work on a specific project
or task.
• Advantages :
• Employees are challenged constantly, interdepartmental cooperation
develops along with expanded managerial talent.
• Disadvantages:
• A role conflict can develop if the authority of the project manager is
not clearly delineated form that of a functional managers.

Matrix Organization
Project A
Project B
Project C
Functional Control
Project-
based
Control
Engineering Production Logistics Design

Team Organization
Member A
Member B
Member C
Functional Control
Engineering Production Logistics Design
Team Leader
Member D

Span of Control
Narrow Span Drawbacks
• Expense of additional layers of management
• Increased complexity of vertical communication
• Encouragement of overly tight supervision and
discouragement of employee autonomy
Concept
Wider spans of management increase
organizational efficiency
The number of subordinates a manager can efficiently and
effectively direct

Determination of Span of Control
• Direct single relationship
• Direct group relationship
• Cross relationship 1–256
A
B C
SUPERVISOR
SUBORDINATES
A
C
B

Factors that Determine an Effective Span
• Capacity of supervisor
• Capacity of subordinates.
• Nature of Work
• Type of Technology
• Delegation of Authority
• Clarity of plans
• Communication Techniques
• Using of objective standards
• Geographical closeness of employees
• Direction and Coordination
1–257

• Large, complex organizations often require a
taller hierarchy.
• In its simplest form, a tall structure results in
one long chain of command similar to the
military.

• Flat structures have fewer management levels,
with each level controlling a broad area or
group.
• Flat organizations focus on empowering
employees rather than adhering to the chain
of command.

Centralization
The degree to which decision making is concentrated at
a single point in the organization.
Decentralization
The degree to which decision making is spread
throughout the organization.
Centralization & Decentralization

Advantages & Disadvantages Centralization
ADVANTAGES:
• Provide Power
• Minimal extensive
controlling procedures
and practices
• Minimize duplication
of function
DISADVANTAGES:
• less motivated
• Neglected functions
for mid. Level
1–266

Advantages & Disadvantages Decentralization
ADVANTAGES:
• Quicker Decisions
• Motivation of Local
Managers
• Reduces workload
DISADVANTAGES:
• Loss of Control
• Duplication of
Services
1–267

Delegation of
Authority
1–268

Delegation of Authority (Distributing Authority)
• Authority:
Power that has been
legitimized by the
organization.
• Delegation:
The process by which
managers assign a
portion of their total
workload to others.
11 - 269

MOTIVATION to
subordinates
Holding
ACCOUNTABILITY
TRAINING to
subordinates
Establishing
CONTROL
Define
RESPONSIBILITY
and AUTHORITY
Determining the
GOAL
PROCESSOF DELEGATION

IMPORTANCE OF DELEGATION
Relief to top managers.
Development of managers.
Development of subordinates.
Better decision-making.
Specialization.
Job satisfaction.

BARRIERS TO DELEGATION
Insecurity.
Lack of confidence in subordinates.
Fear of making mistakes.
Lack of initiative.
Absence of access to various resources.

WAYS TO OVERCOME BARRIERS TO
DELEGATION
Develop confidence
Communication.
Motivation.
Choose the right person for the right job.
Freedom to subordinates.
Clarity of task.
Matching the jobs with abilities of
subordinates.

275
Job Analysis
Tasks Responsibilities Duties
Job
Analysis
Job
Descriptions
Job
Specifications
Knowledge Skills Abilities
Human Resource
Planning
Recruitment
Selection
Training and
Development
Performance Appraisal
Compensation and
Benefits
Safety and Health
Employee and Labor
Relations
Legal Considerations
Job Analysis for Teams

"Staffing means filling
and keeping filled,
positions in the
organisation structure."
Harold
Koontz

IMPORTANCE OF STAFFING
FILLING ORGANISATIONAL POSITIONS:
Concerned with filling of good systematic staffing.
DEVELOPING COMPETENCIES:
Right job according to right person.
RETAINING PERSONNEL:
Continuing them in the organization.

ELEMENTS OF STAFFING
Manpower planning
Job analysis
Recruitment and selection
Training and Development
Performance appraisal

SCOPE OF STAFFING
Hiring
Remuneration
Motivation
Employee maintenance
Human relations

MANPOWER PLANNING
“ Manpower planning is the process by which an
organization ensures that it has the right number
and the kind of people, at the right place, at the
right time, capable of effectively and efficiently
completing those tasks that will help the
organization achieve its overall objectives”.

 To ensure right people at right place at
right time.
 To ensure future needs of manpower in
the light of organizational planning and
structure.
 Making the current manpower inventory
suitable for future managerial positions.
Features of manpower planning :

Importance of manpower planning
 DEFINING FUTURE PERSONNEL NEED.
(Basis of recruiting and developing personnel)
COPING WITH CHANGES.
(Future changes can be cope up with
effective planning)
PROVIDING BASE FOR DEVELOPING TALENTS.
(Setting up the priorities before recruiting)
INCREASING INVESTMENT IN HUMAN
RESOURCES.
(Provides the way for effective utilization of
talents)

Job analysis
“Job analysis is the process of studying and
collecting information relating to the
operations and responsibilities of a specific
job. The immediate products of this analysis
are job descriptions and job specifications”.

Recruitment
Process of locating,
identifying, and attracting
capable candidates
Can be for current or future
needs
Critical activity for some
corporations.
What sources do we use for
recruitment

Selection is the process of
differentiating between applicants
in order to identify and hire those
with a greater likelihood
of success in a job.
selection

Recruitment
Sources
Internal
Searches
Employee
Referrals
Voluntary
Applicants
Employment
Agencies Advertisements
School
Placement
Sources of Recruitment

Difference : Recruitment &
selection
RECRUITMENT SELECTION
 To attract maximum number To choose best out of the
of candidates. available candidates.
 It creates application pool It is a rejection process
as large as possible. where few are selected.
 Techniques are not very Highly specialized techniques
intensive. are required.
 Outcome is application Outcome is the candidate who
pool. is offered job.

Training & development
TRAINING :
“Training is a short term process utilizing a systematic
and organized procedure by which non managerial personnel
learn technical knowledge and skills for a definite purpose.
 DEVELOPMENT:
“Development is a long term educational process utilizing a
systematic and organized procedure by which managerial
personnel learn conceptual and theoretical knowledge for
general purpose”.

Role of training & development
 INCREASE IN EFFICIENCY
 INCREASE IN MORALE OF EMPLOYEES
 BETTER HUMAN RELATIONS
 REDUCED SUPERVISION
 INCREASED ORGANIZATIONAL VIABILITY &
FLEXIBILITY

Performance appraisal
 Major key to managing itself
 Basis of determining who is promotable to higher
position
 Determines strengths and weaknesses of a
manager
 Measures performance in accomplishing goals and
plans
 Integral part of organization
 Recognize legitimate desire of employees for
progress
 Essential for effective management

Appraisal Methods
Graphic Rating Scale
Critical Incidence method
BARS
Self Appraisal
180 Degree Appraisal
360 Degree Appraisal
Management by Objective
Balance Score Card

Conclusion
Staffing is the most vital asset with an
organization, without which it cannot move
ahead in the competitive world. It can be
equated with HR management as both have
same sort of objectives. Staffing is an open
system approach. It is carried out within the
enterprise but is also linked to external
environment.

Directing
• Involves motivating subordinates, influencing
individuals or teams as they work, selecting
the most effective communication channels
or dealing in any way with employee behavior
issues.
1–296

ELEMENTS OF DIRECTION
 Communication
 Leading
 Motivation
 Supervision
 Coordination

Communication and Management
• Communication
– The sharing of information between two or
more individuals or groups to reach a
common understanding.
16-299

Communication and Management
• Importance of Good Communication
– Increased responsiveness to customers
– More innovation through communication

The Communication Process
• Phases of the Communication
Process:
– Transmission phase in which information
is shared by two or more people.
– Feedback phase in which a common
understanding is assured.
16-301

Most Common Way to Communicate
Writing
Visual
images
Body
language
Speaking

• Sender – person wishing to share
information with some other person
• Message – what information to
communicate
• Encoding – sender translates the
message into symbols or language
• Noise – refers to anything that hampers
any stage of the communication process

• Receiver – person or group for which
the message is intended
• Medium – pathway through which an
encoded message is transmitted to a
receiver
• Decoding - critical point where the
receiver interprets and tries to make
sense of the message

Verbal & Nonverbal Communication
• Verbal Communication
– The encoding of messages into words,
either written or spoken
• Nonverbal
– The encoding of messages by means of
facial expressions, body language.
16-306

Communication Media
• Face-to-Face
– Has highest
information
richness.
– Can take
advantage of
verbal and
nonverbal signals.
16-307

Communication Media
• Spoken Communication Electronically
Transmitted
– Has the second highest information
richness.
– Telephone conversations are information
rich with tone of voice, sender’s emphasis,
and quick feedback, but provide no visual
nonverbal cues.
16-308

Communication Media
• Personally Addressed Written
Communication
– Has a lower richness
– Personal addressing helps ensure receiver
actually reads the message—personal
letters and e-mail are common forms.
16-309

E-Mail Dos and Don’ts
• E-mail allows telecommuting employees to
work from home and keep in contact.
– Pay attention to spelling and treat the message like
a written letter.
16-310

Communication Media
• Impersonal Written Communication
– Has the lowest information richness.
– Good for messages to many receivers
where little or feedback is expected (e.g.,
newsletters, reports)
16-311

Communication Networks in
Groups and Teams
16-312
Type of Network
Wheel Network Information flows to and from one central
member.
Chain Network Members communicate only with the people next
to them in the sequence.
Wheel and chain networks provide little interaction.
Circle Network Members communicate with others close to them
in terms of expertise, experience, and location.
All-Channel
Network
Networks found in teams with high levels of
communications between each member and all
others.

16-313
Communication
Networks in
Groups and
Teams

Technological Advances in
Communication
• Internet
– Global system of computer networks that is
easy to join and is used by employees to
communicate inside and outside their
companies
• World Wide Web (WWW)
– “Business district” with multimedia
capabilities
16-314

Communication
• Intranets
– A company-wide system of computer
networks for information sharing by
employees inside the firm.
• Advantages of intranets
– Can be used for a number of different
purposes by people who may have little
expertise in computer software and
programming
16-315

Communication
• Groupware
– Computer software that enables members
of groups and teams to share information
with each other and improve
communication.
16-316

New Technologies
for Communication
 Informational databases
 Electronic mail systems
 Voice mail systems
 Fax machine systems
 Cellular phone systems

Barriers to Effective
Communication
– Messages that are unclear, incomplete, difficult
to understand
– Messages with no provision for feedback
– Messages that are misunderstood
– Messages delivered through automated
systems that lack the human element
16-318

Downward Communication
Travels from superior to
subordinates.
 To give specific task directives about
job instruction
 To give information about organization
procedures and practices

 To tell subordinates about their
performance
 To provide ideological-type information
to facilitate the goals

Upward Communication
Travels from subordinate to
superior. The most common purpose of
this communication is to provide
feedback on how well things are going.
It provides also the middle level
managers the opportunity to represent
their subordinates to the upper level
managers.

Lateral Communication
Takes place between people in the
same level of the management
hierarchy. The most common reason for
this communication flow is to provide
coordination and teamwork

Diagonal Communication
Occurs between people who are
neither in the same department nor in
the same level of management
hierarchy. In this case, someone
communicate either downward or
upward with someone in another
functional area.

OVERCOMING BARRIERS TO
COMMUNICATION

 Use feedback to facilitate
understanding and increase the
potential for appropriate action
 Repeat message in order to provide
assurance that they are properly
received

 Use multiple channels so that the
accuracy of the information may be
enhanced
 Use simplified language that are
easily understandable and which
eliminates the possibility of people
getting mixed-up with meanings

“Motivation is the work a manager
performs to inspired, encourage,
people to take required action”

Need Theory
People are motivated to obtain outcomes at
work to satisfy their needs.
1)Managers must determine what needs worker wants
satisfied.
2)Ensure that a person receives the outcomes when
performing well.
◦ Several needs theories exist.
 Maslow’s Hierarchy of Needs.
 Alderfer’s ERG.

Maslow’s Hierarchy of Needs
Self-
Actualization
Realize one’s
full potential
Use abilities
to the fullest
Esteem
Feel good
about oneself
Promotions
& recognition
Belongingness
Social
interaction, love
Interpersonal
relations, parties
Safety Security, stability
Job security,
health insurance
Physiological
Food, water,
shelter
Basic pay level
to buy items
Need Level Description Examples
Lower level needs must be satisfied before higher needs are
addressed.

Alderfer’s ERG
After lower level needs satisfied, person seeks higher needs. When
unable to satisfy higher needs, lower needs motivation is raised.
Growth
Self-development,
creative work
Worker continually
improves skills
Relatedness
Interpersonal
relations, feelings
Good relations,
feedback
Existence
Food, water,
shelter
Basic pay level
to buy items
Lowest
Highest Need Level Description Examples

Maslow’s Hierarchy of Needs
Physiological
Safety & Security
Love (Social)
Esteem
SA

Motivational Theories X & Y
Physiological
Safety & Security
Love (Social)
Esteem
SA Theory Y - a set of
assumptions of how to
manage individuals
motivated by higher
order needs
Theory X - a set of
assumptions of how to
manage individuals
motivated by lower
order needs

Alderfer’s ERG Theory
Physiological
Safety & Security
Love (Social)
Esteem
SA
Existence
Relatedness
Growth

Herzberg’s Two-Factor Theory
Hygiene Factor - work condition related to
dissatisfaction caused by discomfort or pain
 maintenance factor
 contributes to employee’s feeling not dissatisfied
 contributes to absence of complaints
Motivation Factor - work condition related to the
satisfaction of the need for psychological growth
 job enrichment
 leads to superior performance & effort

Nature and Characteristics
Motivation
 Is an internal feeling
 Motivation is related to needs
 Motivation lead to goal oriented
behaviour
 Motivation can be positive or negative

Importance of Motivation
1.Puts human resources into action
Every concern requires physical,
financial and human resources to
accomplish the goals.

The level of a subordinate or an
employee does not only depend upon
his qualifications and abilities.

3. Leads to achievement of
organizational goals
The goals of an enterprise can be
achieved
4. Builds friendly relationship
Motivation is an important factor
which brings employees satisfaction.

Organizational
Culture
1–341

Definition
• The general pattern of behaviour, shared beliefs
and values that organization members have in
common.
1–342

ELEMENTS
six elements are:
Stories: The past events and people
talked about inside and outside the
company.
Rituals and Routines: The daily
behavior and actions of people that
signal acceptable behavior.
1–
343

Symbols: The visual representations of
the company including logos
Organizational Structure: This
includes both the structure defined by
the
organization chart, and the unwritten
lines of power.
Control Systems: The ways that the
organization is controlled.
Power Structures: involve one or two
key senior executives, a whole group
of executives, or even a department 1–
344

MANAGING CULTURAL
DIVERSITY
 Setting a good example
 Communicate in writing
 Training programs
 Recognize individual differences
 Differences in cultural background
 Flexible work environment
 Continuous monitoring
1–
345

Leadership Is…
- Process of directing the behaviour of
others toward the accomplishments of
objectives.
- Is one of the important parts of
direction.

LEADING IN TIMES OF CRISIS
 Stay calm
 Be visible
 Put people before business
 Tell the truth
 Know when to get back to business

Behavioral Theories
(LEADERSHIP STYLES)
1.Autocratic Leadership
Under the autocratic leadership style, all
decision-making powers are centralized in
the leader, as with dictators.
The autocratic management has been
successful as it provides strong motivation to
the manager. It permits quick decision-
making.

2.Participative Leadership
consists of the leader sharing the
decision-making abilities with group
members by promoting the interests of
the group members and by practicing
social equality.

3.Free- rein Leadership
A person may be in a leadership
position without providing leadership,
leaving the group to fend for itself.
Subordinates are given a free hand
in deciding their own policies and
methods.

4.Toxic leadership
A toxic leader is someone who has
responsibility over a group of people or
an organization.

 Initiates action- Leader is a person
who starts the work by communicating
the policies and plans to the
subordinates from where the work
actually starts.
 Motivation- He motivates the
employees with economic and non-
economic rewards and thereby gets
the work from the subordinates.

 Providing guidance- Guidance here
means instructing the subordinates
the way they have to perform their
work effectively and efficiently.
 Creating confidence- Confidence is
an important factor which can be
achieved through expressing the work
efforts to the subordinates,

 Building morale- Morale denotes
willing co-operation of the employees
towards their work and getting them
into confidence and winning their trust.
 Builds work environment- An
efficient work environment helps in
sound and stable growth. He should
treat employees on humanitarian
terms.

 Co-ordination- This synchronization
can be achieved through proper and
effective co-ordination which should
be primary motive of a leader.

The Purpose of Control
20 - 361
Adapt to
environmental change
Limit the
accumulation of error
Control helps
the organization
Cope with organizational
complexity
Minimize costs

Levels of Control
• Operational control:
Focuses on the processes used to transform
resources into products or services.
• Financial control:
Concerned with financial resources.
• Structural control:
How the elements of structure are serving the
intended purposes.
• Strategic control:
How effective are the functional strategies helping the
organization meet its goals.
20 - 362

Who Is Responsible for
Control?
• Control rests with all
managers.
• Large corporations
have a controller.
• What does a
controller do?
Helps line managers
with their control
activities.
20 - 364

Process of
controlling
1–365

Steps in the Control Process
• Establish standards.
• Measure performance.
• Compare performance against standards.
• Determine need for corrective action.
• The sub-steps:
Maintain status quo.
Correct deviation.
Change standards.
20 - 366

Steps in the Control Process
20 - 367

1. Establishing Standards
Measurable or tangible(Output Standards)
• Standards can be measured and expressed
quantitatively are called as measurable standards.
They can be in form of cost, output, expenditure,
time, profit, etc.
Non-measurable or intangible(Input Standards)
• There are standards which cannot be measured
quantitatively. For example- performance of a
manager, deviation of workers, their attitudes
towards a concern. These are called as intangible
standards.

2. Measuring Actual Performance
• Measurements must be accurate enough to spot
deviations or variances between what really
occurs and what is most desired.
• Without measurement, effective control is not
possible.

3.Comparing Actual with Standard
• Deviation is as the gap between actual
performance and the planned targets.
• For example, if stationery charges increase
by a minor 5 to 10%, it can be called as a
minor deviation.
• On the other hand, if monthly production
decreases continuously, it is called as
major deviation.

4.Correction of Deviation
• Taking any action necessary to correct or
improve things.
There are two types of exceptions:
Problems - below standard
Opportunities - above standard

BUDGETARY CONTROL
The establishment of budgets, relating
the responsibilities of executives to the
requirements of a policy
1–375

Salient features:
a. Objectives: Determining the objectives
b. Activities: Determining the variety of
activities
c. Plans: Drawing up a plan
d. Performance Evaluation: Laying out a
system of comparison of actual
performance
e. Control Action: Ensuring that when the
plans are not achieved, corrective
actions are taken 1–376

CLASSIFICATION OF BUDGETS
1–377

• Long Term Budget: prepared for periods longer
than a year ex: R&D Budget
• Short Term Budget: less than year
ex:cash budget
• Basic Budget: remains unaltered
• Current Budget: related to the current conditions
• Fixed Budget: remain unchanged
• Flexible Budget: various budgets for different
levels of activity
• Functional Budget: the individual functions in an
organization
• Master Budget: Profit & Loss Account
1–378

BUDGETARY CONTROL
TECHNIQUES
1–379

1. Revenue and Expense Budgets:
• budgets spell out plans for revenues and
operating expenses in rupee terms.
1–380

2.Time, Space, Material, and
Product Budgets:
• Many budgets are better expressed in quantities
rather than in monetary(money) terms.
1–381

3. Capital Expenditure Budgets
• capital expenditures for plant, machinery,
equipment, inventories, and other items.
1–382

4. Cash Budgets
• cash budget is simply a forecast of cash receipts
1–383

5. Variable Budget
• analysis of expense items to determine how
individual costs should vary with volume of
output
1–384

6. Zero Based Budget
• By starting the budget of each package from
base zero, budgeters calculate costs
1–385

NON-BUDGETARY CONTROL
TECHNIQUES
• many traditional control devices not connected
with budgets, although some may be related to,
and used with, budgetary controls.
1–386

i) Statistical data:
• Analysing the numerical data
1–387

ii) Break- even point analysis
• chart depicts the relationship of sales and
expenses
1–388

iii) Operational audit:
• internal audit
1–389

iv) Personal observation
• one should never overlook the importance of
control through personal observation.
1–390

v) PERT(Program (or Project)
Evaluation and Review Technique):
• one should never overlook the importance of
control through personal observation.
1–391

vi) GANTT CHART:
• a type of bar chart that illustrates a project
schedule
• Gantt charts illustrate the start and finish dates
of the terminal elements and summary elements
of a project.

PRODUCTIVITY
• Productivity refers to the ratio between the
output from production processes to its input.

Typical Productivity
Calculations
a) Physical Productivity
This is a ratio of the amount of product to the
resources consumed.
b) Functional Productivity
This is a ratio of the amount of the
functionality delivered to the resources consumed
c) Economic Productivity
ratio of the value of the product produced to
the cost of the resources used to produce it.

COST
CONTROL
• Cost control is the measure taken by
management to assure that the cost objectives
set down in the planning stage are attained

Steps involved in designing
process of cost control system:
• Establishing norms: To exercise cost control it
is essential to establish norms, targets or
parameters
• Appraisal: The actual results are compared with
the set norms.
• Corrective measures: The variances are
reviewed and remedial measures or revision of
targets, norms, standards etc., as required are
taken.

Advantages of cost control
• Better utilization of resources
• To prepare for meeting a future competitive
position.
• Reasonable price for the customers
• Improves the image of company for long-term
benefits.
• Improve the rate of return on investment.

PURCHASE CONTROL
• Purchase control is an element of material
control.
• The advantages derived from a good and adequate
system of the purchase control are as follows:
a) Continuous availability of materials
b) Purchasing of right quantity
c) Economy in purchasing
d) Works as information centre
e) Development of business relationship
f) Finding of alternative source of supply
g) Fixing responsibilities

MAINTENANCE CONTROL
• Maintenance department has to excercise effective cost
control, to carry out the maintenance functions in a pre-
specified budget
• First line supervisors must be apprised of the cost
information of the various materials
• A monthly review of the budget provisions and
expenditures actually incurred in respect of each
center/shop
• The total expenditure to be incurred can be uniformly
spread over the year
• The controllable elements of cost such as manpower
cost and material cost can be discussed

QUALITY
CONTROL
• Quality control refers to the technical process
that gathers, examines, analyze & report the
progress of the project & conformance with the
performance requirements

steps involved in quality control process are
1) Determine what parameter is to be controlled.
2) Establish its criticality
3) Establish a specification for the parameter to be
controlled
4) Produce plans for control
5) Organize resources to implement the plans
6) Install a sensor at an appropriate point
7) Collect and transmit data to a place for analysis
8) Verify the results and diagnose the cause of variance.
9) Propose remedies and decide on the action
10) Take the agreed action and check that the variance

Advantages and disadvantages
• Advantages include better products and services
• Disadvantages include needing more man
power/operations to maintain quality control

PLANNING
OPERATIONS
• An operational planning is a subset of strategic
work plan. It describes short-term ways of
achieving milestones and explains how, or what
portion of, a strategic plan will be put into
operation during a given operational period, in
the case of commercial application

Like a strategic plan, an operational plan
addresses four questions:
• Where are we now?
• Where do we want to be?
• How do we get there?
• How do we measure our progress?

Operational plans should contain:
• clear objectives
• activities to be delivered
• quality standards
• desired outcomes
• staffing and resource requirements
• implementation timetables
• a process for monitoring progress.

References
• www.slideshare.net
• www.docstoc.com
• www.slideworld.com
• www.nptel.ac.in
• www.scribd.com
• http://opencourses.emu.edu.tr/
• http://engineeringppt.blogspot.in/
• http://www.pptsearchengine.net/
• www.4shared.com
• www.eazynotes.com

Book References & PPT
materials
1. Stephen P. Robbins and Mary Coulter,
'Management', Prentice Hall of India.
2. Charles W L Hill, Steven L McShane,
'Principles of Management', Mcgraw Hill
Education
3.Hellriegel, Slocum & Jackson, ' Management - A
Competency Based Approach
1–407

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