1 Management and Entrepreneurship
Nov 19, 2014
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Management and Entrepreneurship
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Chapter – 1 Management
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Objectives
• To expose the students to a number of important concepts of management
• To throw light on the complex set of roles performed by the managers
• To understand the skills required to perform various management roles
• To provide an overview of several influential approaches that have shaped managerial thinking during the past century.
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Meaning
• “Management is the art of getting things done through and with the people in formally organised groups”…..Koontz H.
• “Management is the
process of planning,
organising, actuating and
controlling to determine
and accomplish the
objectives by the use of
people and
resources”…..Terry G.
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Nature & Characteristics of Management
• Critical element in the economic growth of the country.
• Essential in all organized effort, be it a business or any other activity.
• Dynamic and life giving element in every organization.
• A process, discipline, activity.
• Intangible, goal oriented & universal.
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Scope of Management
• The scope is very wide.
• According to Herbison & Myers, it refers to three
distinct ideas.
i) as an economic resource
ii) as a system of authority
iii) as a class or elite.
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Importance of Management
• Optimum use of resources
• Effective leadership and motivation
• Establishes sound industrial relations
• Achievement of goals
• Change and growth
• Improve standard of living.
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Functions of Management
• No consensus on the classification
• No similar terminology amongst the experts
• Newman & Summer:
– Organizing, planning, leading & controlling
• Henry Fayol:
– Planning, organizing, commanding, coordinating &
controlling
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Functions of Management
• Luther Gullick: POSDCORB
P : planning
O : organizing
S : staffing
D : directing
CO: coordinating
R : reporting
B : budgeting
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Functions of Management
Planning
– The process of establishing goals and a
suitable course of action for achieving
those goals.
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Functions of Management
Organizing
– The process of engaging two or more
people in working together in a structured
way to achieve a specific goal or set of
goals.
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Functions of Management
Staffing
– Selecting and training the individuals for
specific job functions & charging them with
the associated responsibilities.
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Functions of Management
Directing
– It is the process of influencing and
motivating employees to perform essential
tasks in a n organization.
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Functions of Management
CO: coordinating
– The integration of the activities of the
separate parts of an organization to
accomplish organizational goals.
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Functions of ManagementReporting
– Process of executives keeping the
superiors and subordinates informed
about what is going on through records,
research and inspection.
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Functions of Management
Budgeting
– Formal quantitative statement of resources
allocated for planned activities over
stipulated periods of time.
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Functional areas of Management
• Production• Marketing• Finance• Human Resources• Research & Development• Industrial Engineering• MIS• Maintenance • Quality Engineering • Materials
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Management :Science or Art ? Elements of Science
• Systematic body of knowledge
• Scientific inquiry and Observation
• Experimentation
• Universal truths
Elements of Art
• Application of Knowledge
• Doing things creatively
• Personalized skill
• Perfection through practice
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Management as Science
• Distinct discipline
• Offers principles & guidelines
• Social science
• An inexact science
• Scientific & systematic.
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Management as Art
• Uses the practical knowledge acquired in
tackling problems.
• Combines human & nonhuman resources in a
creative way to achieve results.
• A personalized activity
• Constant practice leads to good management
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Management: Science as well as Art
• Art of management is as old as civilization.
• Science of management is young and developing
• Both are complementary & mutually supportive
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Management: Science as well as Art
• According to Peter Drucker:
“Every organization has the same resources to work with. It is the quality of management that spells the difference between success and failure”.
• Ability to solve problems requires sound knowledge & constant practice
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Management as a Profession
Essential features of profession:
– Well defined body of knowledge
– Formal education and training
– Minimum qualification
– Representative body
– Service above self
– Ethical code of conduct
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Management as a Profession
• Management has well defined body of
knowledge, tools and techniques, research &
consultancy
• Acquiring management education through formal
training is possible
• No representative body unlike for doctors,
lawyers, etc
• No universal code of conduct.
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Management as a Profession
• No regulatory body and code of conduct leads to
neglection of service motto.
• Not a recognized profession ,but moving in that
direction .
• Some initiatives are: separation of ownership
from management, state regulation of business
activities, proliferation of management
institutions, etc.
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Management & Administration• Controversy over the meaning of the terms
Management and Administration.
• Three schools of Thought- administration is broader than management, administration is part of management, management and administration are identical.
• American School of thought: Administrators think, managers act; administration is a top level activity, management is a lower level function. Proponents-Ordway Tead, Oliver Sheldon, W.Spriegel.
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Management & Administration
• English School of thought: Management is rule
making and rule enforcing body, Administration is
just an implementing agency. Proponents-
E.F.L.Brech, Henry Fayol, Kimball and Kimball.
• Newman, Harold Koontz, McFarland , Ernst Dale
maintain that management and administration are
identical.
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Roles of Management• Management roles refers to specific categories
of managerial behavior.• Mintzberg identifies ten management roles
grouped under three major heads namely – interpersonal roles( roles that involve people and
other duties that are ceremonial and symbolic in nature),
– informational roles( roles that involve receiving , collecting and disseminating information)
– decisional roles( roles that revolve around making choices).
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Roles of Management
• Interpersonal roles include: Figure head, Leader,
Liaison
• Informational roles include: Monitor,
Disseminator, Spokesperson
• Decisional roles include Entrepreneur,
Disturbance handler, Resource allocator,
Negotiator
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Roles of Management
• According to Robert Katz, the following skills are
required for managers job:
– Technical skills( knowledge and proficiency in a specialized
field),
– Human skills( ability to work well with other people
individually and in a group),
– Conceptual skills( ability to think and to conceptualize about
abstract and complex situations).
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Levels of Management
• Three levels exist in Management –
– first line managers( responsible for the overall
direction and operations of an organization),
– middle managers( translate the broad
strategies into specific goals for
implementation)
– top line managers( responsible for the
production of goods and services).
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Levels of Management
• First line managers: foremen, white collar
supervisors, Section heads.
• Second line managers : Functional heads and
immediate subordinates.
• Top line managers : CEO, President, Chairman,
MD, COO, CIO .
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Relative Skills Needed for Effective Performance at different levels of
Management
CONCEPTUAL
HUMAN
TECHNICAL
Top Management
Middle Management
First-line Management
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Development of Management thought
Venetian business
enterprises and their
management practices
1400
Adam Smith division
of labor
1700
Industrial Revolution
1800
Early management approaches
1900- 1950
Modern management approaches
Post 1950
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Key Management Theories – An Overview
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990
Labour Shortage
“Muckrakers” begn exposes of business
(1902)
World War I
(1914-1918)
The Great Depression Begins
Deming lectures on quality in Japan Apple Corp.
Formed (1977) Baldrige Award initiated (1987)
In search of Excellence becomes bestseller (Mid-1980s)
World War II
(1941-1945)
Protest Movemenets
(1960s to early 1970s)
IBM PC Introduced
(1981)
AT & T divestiture
takes effect (Jan 1, 1984)
Scientific Management School Classical Organizational Theory School
The Behavioral School
Management Science
The System Approach
The Contingency Approach
Dynamic Engagement Approach Source: Management by Stoner
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Development of Management thought
• Management is as old as human civilization. Ex:
Egyptian pyramids, Great Wall of China.
• During 1400’s: Venetian business enterprises and
their management practices
• During 1776: Adam Smith described the advantages
of division of labor and specialization.
• Beginning of 18th century: Industrial Revolution
resulted in the advent of machine power , mass
production and efficient transportation.
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Development of Management thought
• Evolution of management thought can be studied in two broad categories:
• Early management approaches (Scientific management, administrative management theory and human relations movement)
• Modern management approaches (behavioral, quantitative, systems and contingency approaches) .
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Scientific Management
• Fredrick W.Taylor (1856-1915) – father of scientific management
• An approach that emphasizes the scientific study of work in order to improve worker efficiency.
• Contributions by Taylor: Scientific task planning, Time and Motion study, Standardization, Differential Payment , functional foremanship.
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Scientific Management• Basics of Scientific Management ( 4
principles)Each task must be scientifically designed so
that it can replace the old, rule of thumb methods.
Workers must be scientifically selected and trained so that they can be more productive .
Bring the scientifically designed jobs and workers together so that there will be a match between them.
Division of labor and cooperation between management & workers.
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Scientific Management
Taylor summed up his approach in these words:
i. Science, not rule of thumb
ii. Harmony, not discord
iii. Cooperation , not individualism
iv. Maximum output in place of restricted output
v. Development of each man to his greatest efficiency
vi. Equitable division of work
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Scientific Management
Limitations:
i. Exploitative device
ii.Depersonalized work
iii.Unpsychological
iv.Undemocratic
v.Antisocial
vi.Unrealistic
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Administrative Management Theory
• Henry Fayol(1841-1925) developed this theory.• Focuses on principles that can be used by
managers to coordinate the internal activities of organizations.
• Explains the process of managing an organization from the top managerial perspective.
• Five functions to be performed by managers: planning, organizing, Commanding, Coordination, Controlling.
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Administrative Management Theory
• Managers should apply 14 principles at the operational level:
Division of work
Authority and Responsibility
Discipline
Unity of Command
Unity of direction
Subordination of individual interest to the common
good
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Administrative Management Theory
Remuneration of Personnel Order Centralization Scalar Chain Equity Stability of tenure Initiative Espirit de Corps
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Administrative Management Theory
Limitations:
Lack of empirical evidence
Neglect of human factors
False assumptions
Pro-management bias
Historical significance
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Human Relations Theory
• Elton Mayo(1880-1949) contributed to this theory.
• It is a movement in management thinking and practice that emphasized satisfaction of employees’ basic needs as the key to increased worker productivity.
• Compensated the deficiencies in scientific management and administrative management.
• Gained popularity after studies of human behavior at work situations during 1924-33.
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Human Relations Theory
• Hawthorne Studies: A group of studies
conducted at the Hawthorne plant of
Western Electric company whose results
ultimately led to the human relations view of
management.
• Illumination Experiment: Test group Vs
Control group, Illumination Vs Productivity.
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Human Relations Theory
• Hawthorne Effect: The possibility that individuals singled out for a study may improve their performance simply because of the added attention they receive from the researchers, rather than because of any specific factors being tested.
• Bank wiring Experiment: Group norms influencing individual behavior Vs Economic incentives.
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Human Relations Theory
• Key Concepts:
The individual-not only motivated by economic factors but also by social & psychological factors.
The work group-workers find satisfaction in the member ship of social groups.
Work environment-to be conducive for both organizational and personal growth.
The leader-should provide participative climate.
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The Human Relations Movement Pyramid
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Human Relations Theory
Criticisms:
Philosophy preaches collaboration not
competition-cow psychology
Concerned only with operative employees
Over concern on happiness – productivity
link
Anti individualistic
Not a scientifically designed experiment.
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Behavioral Approach
• Developed as a natural evolution to Hawthorne Experiments.
• Hawthorne studies stressed on emotional elements to explain human behavior and performance.
• Behavioral approach emphasizes on scientific research as the basis for developing theories about human behavior in the organizations that can be used to develop practical guidelines for managers.
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Behavioral Approach• Contributors: Abraham Maslow, Chris Argyris,etc• Also called as Human Resources approach. • Contributions:
Individual motivation, group behavior Foundation to HRM Job enrichment MBO Positive reinforcement
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Behavioral Approach
• Limitations:
Self actualizing view
Compatibility of individual & organization
Discounted the non human aspects of
organization
Best of managing is humanizing organizations
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Quantitative Approach• Features
Offers quantitative aids to decision making, develops quantitative tools to assist in providing products and services.
Managerial Choices depend on criteria such as costs, revenues, ROI, etc
Emphasis on computers and their assistance in decision making alternatives.
Promotes holistic view of factors influencing decision making
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Quantitative Approach
Eliminates subjective thinking in decision making
Minimizes bias in decision makingAids in objective rational decision making.
• Limitations:All variables influencing decision can’t be
identified.Less importance to human relationshipsDecision quality depends on the data inputted
to the computer.
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Systems Approach
• Integrated approach to management problem solving and decision making
• Advocates: Chester Barnard, George Homans
• Key Concepts of this approach:System is a set of interdependent partsConcept of holismSystem can be open or closedSystem has a boundary
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Systems Approach
• Tries to solve problems by diagnosing them with in a frame work of inputs, transformation processes, outputs and feed back
• Good balance between the needs of various functional parts of the enterprise and goals of the firm as a whole.
• Conceptual frame work to understand organization is too abstract.
• Does not identify situational differences and factors
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C
BD
A
E
Sub-systems
Environment
Environment
System Approach
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Contingency Approach• Also termed as Situational approach• Based on the premise that situations dictate
managerial action• Advocates: Selznic, Woodward, James
Thompson• Appropriate managerial action depends on the
particular parameters of the situation• Spells out the relationship of the organization to
its environment• Concerned with structural adaptations of
organizations to its task environment.
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Contingency Approach
• More pragmatic and action oriented. Integrates theory and practice in a systems framework
• Advocates the managers to develop skills for situational analysis
• Limitations:– Paucity of literature & Complex
– Defies empirical testing
– Reactive
– Not holistic in nature
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References• Principles of Management-P C Tripathi, P N Reddy; 3rd Edn.,TMH
• Management-Stephen Robbins; 8th Edn.,PHI
• Management-VSP Rao, V H Krishna; Excel
• Essentials of Management-Koontz,Weihrich;5th Edn.,TMH
• Management – James A F Stoner, R Edward Freeman, Daniel R
Gilbert;6th Edn., PHI
• Principles of management: a modern approach-Henry Albers, 4th
Edn,,John Wiley & sons
• Fundamentals of management-Donnelly, Gibson,Ivancevich ,10th
Edn,.Irwin Mc Graw
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Web References
• www.12manage.com• www.cliffsnotes.com• www.swlearning.com• www.gutenburg.org• www.cheathouse.com• en.wikipedia.org• www.business.com• www.businessmanagement.suite101.com• www.greatmanagement.org• unpan1.un.org• www.harehall.co.uk
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Question Bank
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Case Study