Principle of Management - Notes (MAS)

Principle of Management (NOTES – Mr Sabahat)

INTRODUCTION TO MANAGEMENT

What is Management? Management is a process of working with resources to accomplish organizational goals. Good managers do those things both effectively and efficiently. Some manager fails on both criteria because they focus on one at the expense of another. The best manager maintains a clear focus on both effective and efficiency so the art of manager is called management. Managers are classified in four types:

1- Top Managers 2- Middle Managers 3- Functional Managers 4- Lower Managers

Top Managers: are at the top of hierarchy of management.

By utilization of organization resources the target can be achieved by management.

Manager

↓

Management ↓

Resources (1-Human resources 2-Financial resources 3-Physical resources

4-Informational resources 5-other resources)

Goals (Effectively & Efficiently)

By the application of Function of management

Planning Organizing Leading Controlling

The most important resource and cheapest resource is human resource. Finance is the second important resource through which we can accrue everything. Manager prime responsibility is that to achieve goal of the organization and has also maintain efficiency and effectiveness. Good Managers (Effective): Goods managers are those who achieve organization goal. Bad Managers (Ineffective): Those managers who could not achieve the organization goals. Manufacture organization can increase their profit through reduction in production (operation) cost.

Principle of Management (NOTES – Mr Sabahat)

Efficient: to achieve organizational goals with minimum vestige of resources i.e. to make best possible use of men, machine, money and time. So some manager are fail in both criteria, management don’t like those type of manager because some time they focus in one side. E.g: A-8hrs, 300Rs B-2hrs, 30000Rs Target

D C-6hrs, 1500Rs

Manager are not only required for business organization but also for government, educational institution and other organization too. How we can produce effectiveness and efficient managers? By application of the functions of management managers could be effective and efficient

Principle of Management (NOTES – Mr Sabahat)

MANAGEMENT

Organizing: Efficient managers are those who achieve the goals of organization. Managers who reduce the wastage of resources of an organization are known as effective managers. Planning:

1. What are the goals? 2. What are the ways? 3. What are the targets?

Planning = Goals + Plans = Targets + Means

Managers are coordinator of resources. Organizing Resources: Assembling and coordinating of resources. Without resources, manager cannot achieve the goals. In organization we create the responsibilities of employees & delegate the powers and authorities.

1. Finding of HR 2. Acquisition of HR 3. Allocation of HR

Everything should be in a systematic way organized. Through leading manager can improve the performance of individuals. As manager they perform the functions of leading in organization. Through leading function manager can improve the individual, group and organization.

Manager

↓ Management

↓ Goals

(Effectively & Efficiently)

Functions of Management

Planning Organizing Leading Controlling

Principle of Management (NOTES – Mr Sabahat)

Leading: Is stimulating the employees to be high performers, directing, motivating, communicating and influencing the employees individually and groups. Management is a process of attainment of goals in effective and efficient manner through planning, organizing, leading and controlling of Human, Financial, physical information and other resources. Controlling: Excellent planning, solid organizing and outstanding leaders don’t guarantee success. The 4th function of controlling monitor the progress taking corrective actions:

1. To establish the procedures 2. The measure the actual performance 3. To compare the actual performance 4. With standards

If we find any differences or any deviation between actual and standards performance then we take corrective action.

Principle of Management (NOTES – Mr Sabahat)

ENVIRONMENT

What is Environment? Everything surrounded by you is called environment. Management Environment: Everything which surrounds the management is called management environment. Management environment consist of forces, factors, element, sectors, components and actors atmost that can affect the management ability to perform effectively and efficiently. Management environment further classified as Internal and External environment.

Macro Environment Economic Social Forces Forces Legal Political Forces Forces

Technological forces

Micro Environment

Supplier customer

Labor

Supply

Consumer

Organization

Manager

External Environment

Internal Environment

Principle of Management (NOTES – Mr Sabahat)

Management Economics

Observer

Monitor

Scan

Analyze Internal Environment External Environment (Within the organization) (Outside the organization)

Strength

Weakens

Reduce the competitors

1. Managers can identify and rectify the changes within the environment 2. A manager can analyze, strength, weakness of the organization internally. 3. Internal environment consist of forces and actors within the organization.

Strategic Planning:

1. Corporate / divisional planning 2. Business plan 3. Product plan 4. Functional plan

External Environment: Offer changes and management always try to avail the opportunities and identify the problem & management rectify the problems which are identified by environment we analyze over strength and weakness. We know the environment which exist outside the organization is knows as external environment. The external environment criticizes the factor, actor it’s also further classified in micro and macro economics. A manager observes the environment & investigates and defines the problem and monitors the environment, scanning and analyzes the problem. Micro/ Specific/ Task Environment: Micro environment is external environment in this we analyze threat, opportunities offered by the environment. Micro environment forces are smaller size forces they are also closed to the company and controllable upto some extent.

Specific/ Micro/ Task Environment

Macro/ General/ Mega Environment

Principle of Management (NOTES – Mr Sabahat)

1. Supplier 2. Customer 3. Intermediaries 4. Competitors 5. Labor supply

Input Resources→ Process → ouputs (Goods, Services)

1. Supplier: can damage your market goods and goods name and decrease your sales. Through communication we promote our sales. Through PR companies built good image in public.

2. Customers: is buyer and consumer is end user. Customer and consumer can be same at the time. Customer can be a personal consumer. Business consumer who acquired the goods and services to run their business. Every organization produces a product or services. All goods which are brought for personal use are known personal goods or consumer goods. Any parties which buy goods are customer.

3. Intermediaries: they link between manufacturers whole sellers →retailer →consumers

a. Resellers: are intermediaries, micro environmental forces or external environment forces. Reseller can directly input the sale of the organization as they buy directly from the company

b. Wholesaler &Retailers: creates the delivery to the consumer. They also provide opportunity and treats to manufacturers. They can increase or decrease sales of organization and may create bad image of manufacturer.

Micro Environment

Supplier customer

Labor

Supply

Competitors

Intermediaries

Organization

Manager

Principle of Management (NOTES – Mr Sabahat)

c. Physical Distribution Firms: takes your product from the production/ manufacture and transfer physical goods into the ware houses. E.g. Goods made in Multan reached Karachi via transport then distributed to different areas in Karachi its physical distribution firm. Manufacturer → Producer → Warehouse → Whole seller → Retailer → consumer

d. Total Quality Management: It starts from suppliers to consumers until the goods

being delivered.

e. Service Agencies: Research Firms – RAT (Relevant, Accurate, Time) If its incomplete then we would be in trouble so if we get proper information RAT then we would be able to have good decision in benefit of an organization.

f. Advertising Agencies: companies inform customer via media in 3 ways (Inform,

Stimulate and Sales). These agencies help to boost the sales of company product.

g. Legal Advisor: They provide advice on legal issues of the company & its products.

h. Financial Parties:

i. Bank: it must provide the finance to company on right time to avoid any delay like in launch of product.

ii. Insurance: Provide securities to the company against bills any other companies who provide credits.

i. Competitors: is someone who is producing an alternative product is known as a

competitor. The companies which are producing same products are genuinely known as competitors. Due to competition consumer receive more features and quality of products. Competitor is a harsh reality to any organization. Competitor is one who reduces sale and revenue of any organization.

Principle of Management (NOTES – Mr Sabahat)

MAGE ENVIRONMENT Mage environment is external environment existing outside the organization. They can disturb or influence the organization. They cannot be control. Mage environment is gradual develop and cannot be changed easily. These are indirectly contact with the management one mage environment force disturb the whole system of organization. Economic System: can be effect the production cost of nay product. Political Environment: Political condition of any country effect the revenue of an organization.

Principle of Management (NOTES – Mr Sabahat)

PLANNING

Planning usually incorporate both ideas, determine the organizations goals and defines the means for achieving them. Planning = Goals + Plan + Target + Means First of all organization defines: Mission → Goals → Strategies

MISSION

Management has three types:

Top Management or Strategic Management – Strategic Planning (long term planning more than 3 yrs)

Middle Management or Technical Management – Technical Planning (moderate planning 1 – 3 yrs)

Lower Management – Operational Planning (less than 1 year) Mission statement always written for customer. In mission statement we focus on our customer. Goals Characteristics:

1. Measurable & specific In measurable benchmark shall be setted with a quantity. In specification we design the quality and style of product.

2. Cover key dimension 3. Challenging but realistic 4. Defined time period 5. Link to reward

Goals

Strategic Goals

Tactical Goals

Operational Goals

Plans

Strategic Plans

Tactical Plans

Operational Plans

Principle of Management (NOTES – Mr Sabahat)

STRATEGIC MANAGEMENT

Strategic management is responsible of whole organization. All activities carry out under the supervision of strategic management. Strategic Management: is the set of decision and action used to formulate, implement and evaluate strategies that will provide a competively superior fit between the organization and its environment so as to achieve organizational goals. Strategic management is second name of top management. Strategic Planning: is the managerial process of developing and maintaining a variable fits

between the organizations resources skills, objectives and its changing market opportunities.

The aim of strategic planning is to shape and reshape the company’s business and products so

the yield target profit and growth.

Principle of Management (NOTES – Mr Sabahat)

SWOT Analysis Strategic Planning Leading Controlling Intensive Growth Strategy Growth Strategy Integrated Growth Strategy Diversification Growth Strategy Grand Strategy (Master Strategy) Stable Strategy Turn around Retrenchment strategy When environment gives threat then sales is decline. We can fill the gap by the application of growth strategies.

Analyze Internal Environment

Strengthen

Weakness Analyze Current

Mission

Goals

Strategies

Analyze External Environment

Threats

Opportunities

Develop

Mission

Goals

Strategy Formulation

Corporate Plan

Business plan

Functional plan

Strategy Implementation

Strategy Evaluation

Market Development Product Development

Forward Integration Hazard Integration Backward Integration

Concentric diversification Conglomerate diversification

Principle of Management (NOTES – Mr Sabahat)

Strategic Planning: 1. Mission 2. Goals & objectives 3. Strategies 4. Internal Environment 5. External Environment

Grand strategy is to provide the direction to employees of the organization.

Growth strategy is applied when organization want to influence/ increase profit, sale and revenue of organization.

Strategic planning is different between standard sales and current sales.

Intensive Growth Strategy:

1. Market Penetration Strategy:

Current Market

Current Product

Current Business Though market penetration we can increase our sales.

2. Market Development Strategy: is a type of intensive growth strategy in which we intend to increase sales, revenue, and profit of the organization.

New market

Existing product

Field of specialization

1. Market Penetration

Strategy

3. Product Development

Strategy

2. Market Development

Strategy

4. Diversification

Strategy

Current Product New Product

Current Market

New Market

Principle of Management (NOTES – Mr Sabahat)

3. Product Development Strategy:

New Product

Existing Product

Field of specialization/ Related Field Forward Growth Strategy: In business we have to be independent not be depended. If we depend on suppliers that would be threat for us. In forward integration organization acquire/ control the distribution process through this we can gain whole profit. Horizontal Growth Strategy: Through this we control over to the competitor and we acquired the business of our competitors we purchased the business of competitors. Diversification of Growth Strategy:

1. Concentric 2. Conglomerate diversification

Diversification means new product in new market. In this field of specialization is same and introduces new product remained in same field is called concentric diversification through that we increase revenue and profit of organization. Conglomerate Diversification: When we start a new business with a new product is called conglomeratic diversification. Retrenchment Defensive Strategy: When organization observed threats then organization apply retrenchment / defensive strategy.

Principle of Management (NOTES – Mr Sabahat)

COMMUNICATION

Process/ Element/ Components/ Factors of Communication.

Sender Noise Receiver Feedback when response/ reaction are communicated to sender this becomes feedback of your message. We can receive a positive response if our message is effective. Response is only a reaction after receiving any message. Noise is any type of barrier it may be physical or physiological. Barriers reduce the size of information. Barriers can distributed the process of communication Communication Process: In communication there are two major parties sender and receiver. There are two tools of communication medium/ message. These are four components in communication. Without medium information cannot be communicated to receiver. These are two types of medium/ channels. Verbal Communication Non Verbal Communication Verbal Written observation Sometime nonverbal communication is more authentic.

Encode Message Medium

Decode Encode Feedback

Principle of Management (NOTES – Mr Sabahat)

ORGANIZATION

Organizing is the second important function of management.

Management ↓

Effective / Efficiency ↓

Functions of Management Organization is the coordinating of resources for the operation of organization we must require resources. Without resources we cannot operate the organization. Coordination is done through organizing follow of rules sequence system procedure and process. Organizational structure/ principles: through coordination we achieve better results. Coordination has to be built. Coordination is impossible until and unless if there is no interaction or understanding. Work Specialization/ Division of Labor: should be divided into small units and depute permanent staff for the performance of that task. Concept – Repetition of work

Learner Accurate person Expert Practice Practice Less effective Effective Most Effective Less efficient Efficient Most Efficient Experts are the most effective and most efficient employee of organization. Long Term: Monitoring Job Burden Irritation Avoidance Lack of interest Less productivity Solutions:

1. Job Enlargement – Increase in responsibility 2. Job Rotation – Rotation of activities among employees 3. Job Participation – Involvement of staff what they wish to perform in organization

Principle of Management (NOTES – Mr Sabahat)

Organization Structure:

Work specialization

Chain of command

Span of control and management

Departmentalization (based upon product, function & process of work)

Centralization (power to remain at top) & Decentralization (Power distributed to each level in org)

Formalization Approaches to Structural Design:

Functional approach (divided people in department like administration, finance with lateral relationship)

Divisional approach (like merger of Peads & Gyne dept & above both chair one division head)

Hybrid approach (its contribution of functional/ divisional approach)

Principle of Management (NOTES – Mr Sabahat)

DECISION MAKING

Decision: the decision made form alternative choice/ option. We take best decision which made betterment for us. Decision Making: The process of identify problem and opportunities generating alternative and selecting alternative and implementing alternative. Manager has two decision criteria: 1. Find the problem 2. Find the opportunities / avail the opportunities For decision making information required. Mangers have skills to predict the future of organization. RAT: Relevant, Accurate and Time Research Process Data Information Decision Making Primary Secondary Research Problem solving Opportunities Current Current Future Future Primary data which is collected for decision making Secondary data is published data Process:

1. Finding and obtaining data 2. Recording the data 3. Arranging the data 4. Classifying the data 5. Summarize the data 6. Interpreting the data/ information

Programme Decision Making: Predefined decision making rules and procedures are already defined this is known as programme decision making.

Principle of Management (NOTES – Mr Sabahat)

Unknown Decision Making: When we encounter such situations which we were not faced these decisions are known unprogram decision making. Such decisions based on your creativity, ability and efficiency if we have knowledge about the decision making of unprogram decision. Information is an essential element for the decision making process. Process of Decision Making:

1. Define the problem a. Observation b. Preliminary data gathering c. Problem identifying

2. Establish the alternative 3. Evaluate the alternative 4. Choose the best alternative 5. Implement the decision 6. Evaluate the decision

Observation: Manager feels something happening change. When continuously change is observed then manager feels there is some problem before defining a problem we have to collect preliminary data gathering.

Establish the Alternative: when we identify the problem than we establish the alternative.

Evaluate the Alternative: Once we have established the alternative then we evaluate the alternative through information which is gathered through research or data. We obtain relevant information of all alternatives.

Choose the best alternative: when we gather data about all alternatives then we choose the best alternative finally.

Principle of Management (NOTES – Mr Sabahat)

MOTIVATION

Leading is function through which manager improve the performance of individual or group. Motivation: through motivation we communicate and influence the performance of individual or group. What is motivation? The willingness of exist highly levels of efforts to achieve organizational goals, conditions by satisfaction of some individuals needs. Motivation Process: Need Motive / Drive Incentive Dissatisfaction Behavior Incentive Hunger Motive Food Thirst Motive Water Needs cannot be created its only trace out. Need Motive Incentive Content theories Process theories Reinforcement theories

Management

Effectiveness & Efficinecy

Functions of Management

Planning Organizing Leading Controlling

Principle of Management (NOTES – Mr Sabahat)

Maslow Theories of Needs:

Self Actualization

Needs

Self Esteem

Belongness Needs

Safety Needs

Physiological Needs

High Level

Needs

Lower Level

Needs

Principle of Management (NOTES – Mr Sabahat)

LEADERSHIP

Leading

1. Communication 2. Motivation – Stimulate 3. Leadership – Influence

Leading is a function through which management managers improve this performance of an individual and a group as well as organization. Through leading managers communicate, leading and motivate employees. Leadership: is the ability manager through which influence the others towards organizational goals.

Autocratic Leaders Democratic Leader Power: The potential ability to influence the other behavior. Legitimate Powers: the power which legitimate in management structure or position and authority granted by management. Reward Powers: A manager has authority to reward the employee directly or indirectly also influence to reward the employee. Coercive Power: that influence directly or indirectly punish the employee.

Leadership

Influence the others

Power

Logitimate Power (Position

Power)Reward Power

Coercive Power (Punishment)

Expert PowerRefercent

Power (Personality)

Principle of Management (NOTES – Mr Sabahat)

Expert Power: the power that related to the experience of a manager who has expertise also through …. Referent Power: The manager who create friendly environment and influence the other through referent powers. Autocratic Leader: a leader who tends to centralized authority and relay on legitimate rewards and coercive powers to manager (influence) the subordinate. Democratic Leader: who delegates the authorities to other or believe on decentralization encourage participation at each level.