Principles of Management unit 1

PRINCIPLES OF MANAGEMENT
MG8591
4:15 AM POM - Unit 1
Prepared By,
Mrs.S.SRIDEVI

Course Outcomes
At the end of the course, the student should be
able to:
1. Describe the basic of management and its types,
skills, management roles, types of business
organization and current trends in business.
2. Explain the nature and purpose of planning,
types, objectives of planning and decision process.
3. Compare the different organization structures,
authorities and responsibilities, human resource
management and training and development.
4. Estimate the individual and group behavior,
motivation, job satisfaction types and theories of
leadership, communication and IT.
5. Demonstrate the ability to directing, leadership
and communicate effectively.
6. Apply the knowledge using the various system
and process of controlling, budgetary and non-
budgetary control techniques and use of computer

UNIT I INTRODUCTION TO
MANAGEMENT AND ORGANIZATIONS
 Definition of Management
 Science or Art
 Manager Vs Entrepreneur
 Types of managers
 Managerial roles and skills
 Evolution of Management
 Scientific,
 human relations
 System and contingency approaches
 Types of Business organization
 Sole proprietorship, partnership, company-public and
private sector enterprises
 Organization culture and Environment
 Current trends and issues in Management.

Manage
Men-
Technology
Men-
Tactfully
Men-as
Team
Competenci
es
Objectives
Men-
Things

5 M’s of Management
Materia
l
Machin
e
Method Money
Men

Strategies /
Processes
To do better
MANAGEMENT
FUNCTIONS
Achieve Goals
and Objectives
Management Principles
1. Planning
2. Organising
4. Directing
5. Controlling
3. Staffing

Definition of Management
 “Management is the process of
designing and maintaining an
environment in which individuals are
working together in groups efficiently
to accomplish selected aims”
- - Koontz and Weihrich
 “Management is the art of knowing
what is to be done and seeing that it is
done in the best possible manner”
- - F.W.Taylor

 “Management consists of getting things
done through others. Manager is one
who accomplishes the objectives by
directing the efforts of others ”.
- - S. George
 “Management is the process by which
managers create, direct, maintain and
operate purposive organization through
systematic, coordinated and co-operative
human effort”
- - McFarland

 “Management is a distinct process
consisting of planning, organising,
actuating and controlling the
performance to determine and
accomplish the objectives by the use of
people and resources”
- - George R.Terry
 “To manage is to forecast and plan, to
organize, to command, to co-ordinate
and to control”
- - Henry Fayol

 “The job of management is to make
cooperative endeavour to function
properly. A manager is one who gets
things done by working with people and
other resources”
- - Newman,
Warren
 “Management may be defined as the art
of securing maximum results with a
minimum of effort so as to secure
maximum prosperity and happiness for
both employer and employee and give
the best possible service to the public.”
- - John F.M

Nature of Management
1. Management is multidisciplinary in
nature.
2. Management is a continuous
process.
3. Management is a universal activity.
4. Management is a Science as well as
an Art.
5. Management is dynamic and not
static.
6. Management is a profession.
7. Management aims at obtaining
wealthy results. 4:15 AM POM - Unit 1

Nature of Management
9. Management is a group activity.
10. Management implies skill and
experience in getting things done
through people.
11. Management is a system of authority.
12. Management implies good
leadership. 4:15 AM POM - Unit 1

Scope of Management
1. Functional areas of management
 Financial Management
 HR Management
 Marketing Management
 Production Management
 Material Management
 Purchasing Management
 Maintenance Management
 Office Management
2. Subject-matter of management - POSLC
3. Management is an inter-disciplinary
approach
4. Principles of management-Universal
5. Management is an agent of change- R & D
6. Essentials of management

Functions of
Management
Planning
activities to
achieve the
organization's
objectives
Organizing
resources and
activities to
achieve the
organization’s
objectives
Staffing
the
organization
with qualified
people
Directing
employees’
activities
toward
achievement
of objectives
Controlling
the
organization’s
activities
to keep it
on course

Functions of Management
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

Organizing

Staffing
 Staffing process involves
 Selection of candidates for positions
 Fixing salary
 Training and
 Developing them for effective
organizational functions
 The manager performs the duties of
job analysis, job description.

Directing / Leading
 Directing involves
 Guiding, supervising, communicating, and
motivating the subordinates in their jobs.
 Motivation, Leadership and communication
are three important sub functions.
 Motivation helps to increase the
performance of workers.
 Communication provides them proper
information for improved and effective mgmt
 Leadership is the process by which a
manager guides and it influences the work
of his sub ordinates.

Controlling
 Controlling deals with the
 Checking and verifying the activities against the
predetermined standards.
 It is the process of ensuring that the actual
activities confirm to the planned activities.
 Controlling process involves
i. Establishing standards
ii. Measuring the current performance
iii. Comparing this performance to the established
standards.
iv. Taking the corrective actions of deviations that
are detected.

Management : Science or Art?
 “Management is the oldest of arts and
the youngest of sciences”
 This explains the changing nature of
management but does not exactly
answer what management is?
 Lets look into terms
 Science
 Art

What is Science?
 “Science is a systematized body of
knowledge which establishes
relationship between cause and
effect”.
Cause Effect
 Characteristics:
 It is the existence of a systematic body of
knowledge with array of principles
 It is based on scientific enquiry
 The principle should be verifiable
 It is a reliable basis for predicting future
events
Relationship

Science -
Universally
accepted
Principles
Management
Unity of
Command

Scienc
e
Management

Management – a Science:
 As a discipline, management fulfills
the science criterion
 Application of principles helps
managers to achieve the desired
goals.
 It is a dynamic subject in which it has
economics, psychology, sociology,
mathematics and engineering.
 It is multi-disciplinary in nature.
 Science is classified into 2 types:-
 exact – the results are accurate
 inexact 4:15 AM POM - Unit 1

Management – an inexact
Science:
 It is an inexact science because
 Every organization human resources
have different
attitudes
aspirations and
perceptions
 Readymade and standard solutions
cannot be obtained
 Management is complex and
unpredictable
 Every organization decisions are
influenced by the environment. The
environment is so complex and

What is an art?
 “Bringing about of desired results
through the application of skill”
 Art is skilful application which depends
entirely on the inherent capacity of a
person
 It comes from
 within a person and
 it is learned from practice and experience
 Characteristics:
 Art is the application of science. It is
putting principle into practice.
 After knowing a particular art, practice or
experience is needed to become skilful.

Management – an Art:
 Practical knowledge + Personal
skill to achieve concrete results
 It is creative
 It implies
capacity to apply accurately the
knowledge to solve the problems
to face the situation
to realise the objectives fully and
timely

Management – a science as
well as an art:
 Management is a science because it
contains the general principles
 It is also an art because it requires
certain personal skills to achieve the
desired results
 Science provides the knowledge
 Art deals with the application of
knowledge and skills
 Management is thus a science as well
as an art

Scienc
e
Art
Managemen
t
Knowledge
Application of Knowledge
and skill

Management vs
Administration

Manager Vs Entrepreneur
 Manager is a person who is responsible
for performing the functions of
management such as planning,
organizing and directing the group
towards the goals of management.
 Entrepreneur is also a person who starts
the business and utilizes the resources
of men, money, materials, and
machines.

Entrepreneur Manager
1. Person who starts the business. Person who runs the business for a
long period of time.
2. Entrepreneur considers the
various risks associated with finance
and materials.
The manager does not get all these
risks.
3. Entrepreneur is always driven by
opportunity or demand in the present
market.
Manager uses the presently
available resources to produce the
final product.
4. It has the rights to implement the
changes in the process according to
the changes required in the product.
Manager can only follow the rules
and procedures to achieve the goal
of the company
5. Entrepreneur is the owner of the
company
Manager is the person hired for the
company
6. Entrepreneur can get all kinds of
rewards from the public
Manager can get only fixed rewards
in terms of salary
7. Entrepreneur is more risk taker Manager is less risk taker

Entrepreneur Manager
8. Entrepreneur is the desire for the
control over the business
Manager has delegation of authority.
9. Entrepreneur acts like one man
army
Manager is the leader of the team
consisting of various groups.
10. Entrepreneur always aims to
implement creativity and innovation.
Manager is the person to establish
and preserve the status of the
company.
11. Entrepreneur is informal and
flexible in organization structure.
Manager is not informal and flexible
in organization structure.
12. Entrepreneur is sensitive in
decision making.
Manager collects the information and
waits for the advice.
13. Entrepreneur may come from a
family of entrepreneur background.
Manager comes from a family of
general members.
14. Entrepreneur is full responsible Manager avoids the mistakes and

Management Levels
Types of Managers

Top Level Management or Manager
 Has the most authority and responsible for the
entire organization.
 Have titles such as executive vice president,
managing director, chief operating officer, chief
executive officer, or chairman of the board.
 Main functions of top management:
◦ To formulate the goals and policies of the
company
◦ To formulate the budgets
◦ To appoint the top executives
◦ To provide the overall direction and leadership of
the company
◦ To decide the distribution of profits etc.

Middle Level Management or
Manager
 Managers beneath the top-levels of the
hierarchy.
 They directly supervise other managers below
them.
 They manage the work of first-line managers.
 Have titles such as department head, project
leader, plant managers or division manager.
 Main functions of middle level management:
◦ To implement the overall organizational plans.
◦ To implement strategies generated by top
managers.
◦ To monitor and control the operating
performance of the sub-units and reporting
managers.
◦ To train, motivate and develop the supervisory

Lower Level or Supervisory
Manager
 Has the least authority and lowest in the
hierarchy.
 Responsible for the work of operating
employees.
 Main functions of lower level management:
◦ To train and develop the efficiency of the
workers.
◦ To assign jobs to workers.
◦ To give orders and instructions.
◦ To maintain discipline and good human
relations among workers.
◦ To report feedback information about
workers. 4:15 AM POM - Unit 1

Henry Mintzberg’s
10 Managerial Roles under
3 Categories

Interpersonal Roles
 Figurehead role
 To perform ceremonial and symbolic duties
such as greeting visitors and signing legal
documents.
 Leader
 Responsible for staffing and training
 Directs and motivates subordinates
 Counsels and communicates with
subordinates
 Liaison
 Maintains the information links both inside

Informational Roles
 Monitor
 Seeks and receives the information
 Scans periodicals and reports
 Maintains personal contact with
stakeholders
 Disseminator
 Forwards information to organization
members
via memos, reports and phone calls
 Spokesperson
 Transmits the information to outsiders via

Decisional Roles
 Entrepreneur
 Initiates the improvement in projects
 Identifies new ideas
 Delegates responsibility to others
 Disturbance Handler
 Take the corrective action during disputes or
crisis
 Resolves conflicts among subordinates
 Adapts to environments
 Resource allocator
 Decides who gets resources, prepares allocator
budgets, sets schedules and determines
priorities.
 Negotiator
 Represents the department during negotiations

Managerial Skill
 Technical skill – understanding and proficiency in performing
a task
 Human skill – work effectively as a group
 Conceptual skill – design and problem solving skill

Importance of Management
1. Attainment of group goals
2. Effective functioning of business
3. Resource development
4. Management controls the organization
5. Sound organizational structure
6. Integrates individual efforts
7. Motivation
8. Communication
9. Coordination
10. Decision-making
11. Leadership quality
12. Management is needed at all levels.

Evolution of Management
 Origin – man started living in groups –
according to their intelligence, physical
and mental capabilities.
 Evidence – found in the organization of
 Public life in ancient Greece
 Roman Catholic Church
 Military forces
 Evolutionary changes – result of the
industrial revolution
 Agricultural societies into Industrial societies
 Industrial structure became extremely
complex
 At this stage, development of formal theory of
management became necessary.

Evidence in Thirukural
 Thiruvallur says about management
 Explanation : The efficacy of support will
yield only wealth and the efficacy of action
will yield all that is desired.
துணைநலம் ஆக்கம் த்ருஉம் விணைநலம்
வவண்டிய எல்லாந் தரும். (651)

Industry Revolution

Necessity of Management
Principles
Improve productivity
Lower cost
Improve quality of
products
Improve
employee
relationships
Increase
efficiency
MANAGER

Evolution of Management
Pre-scientific
or Pre-classical
management
period
(before 1880)
• Robert
Owen (1771
– 1858)
Charles
Babbage
(1792 – 1871)
Henry
Robinson
Towne (1844
– 1924)
Classical
management
theory
(1880-1930)
Scientific
management
of Taylor
Administrative
management
of Fayol
Bureaucratic
model of Max
Weber
Neo-classical
or Behavioural
theory
(1930-1950) Modern theory
1950 onwards
System
approach
Contingency
approach

Pre-scientific or Pre-classical
Management Period

1.Contributions of Robert Owen
Father of Personnel Management
 Owner of a group of textile mills in Lanark, Scotland
 Promoter of co-operative and trade union movement in
England
 He emphasized the recognition of human element in
industry.
 He believed that worker’s performance in industry was
influenced by
Working conditions
Treatment of workers
 He introduced new ideas of human relations like
Shorter working hours
Housing facilities
Training of workers in hygiene
Education of their children
Provision of canteen 4:15 AM POM - Unit 1

Charles
Babbage
Father of
Modern
Computing

2.Contributions of Charles Babbage
Father of Modern Computing
Professor of Mathematics at Cambridge
University
Found drawback of Manufacturers
a little use of science and maths
Relied upon opinions instead of
investigations and accurate knowledge.
His management ideas
Advocated to take business decisions based
on
use of accurate observations
measurement
precise knowledge
Improve productivity through the concept of

3. Contributions of Henry
Robinson Towne (1844 – 1924)
President of the famous lock
manufacturing company “Yale and Town”
Advised the combination of engineers and
economists as industrial managers
Accountant skill is also essential to the
successful management of industrial
workers
These above pre - classical theories
laid ground work for major management theory
Not sufficient to industry

Classical Management
Theory

Classical Management Theory
Developed during industrial revolution
Farms Factories
Small shops Large Companies
when new problems related to the factory
system started to appear
Managers were unsure
How to train employees
Deal with the increased labour dissatisfaction
At the same time increase productivity
3 parts
Scientific Management theory
Administrative Management theory
Bureaucratic Management theory

Scientific Management Theory
Use of the scientific method to define the
“one best way” for a job to be done
Need to increase the productivity and
efficiency
Finding the best way by
Examining how the work process was actually
accomplished
Scrutinizing the skills of the workforce
Contributions by
1. Frederick W.Taylor (1856 – 1915)
2. Henry Gantt (1861 – 1919)
3. Frank Gilbreths (1868 – 1924) and Lillien
Gilbreths (1878 – 1972)

1.1.Contributions of Frederick W.Taylor
Father of scientific management
Analyzed causes of low efficiency in
industry
Lack of order and system in methods
Pioneered the time-and-motion study
1. Work task broken into various motions
2. Eliminating unnecessary motions
3. Motions timed to determine optimal daily
production
Implemented his theory at Bethlehem
Steel Plant
Shoveling
Pig-iron handling 4:15 AM POM - Unit 1

1.1.Contributions of Frederick W.Taylor

1.2. Contributions of Henry Gantt
(1861–1919)
Developed the Gantt chart
bar graph that measures the
planned and
completed work along each stage of
production
This is a control tool based
on time instead of qty, vol, wt.
Unique pay incentive system
Extra wages for extra work besides
guarantee of minimum wages
Definite bonus in addition to daily minimum
wages

1.3.Contributions of Frank Gilbreths (1868
– 1924) and Lillian Gilbreths (1872 – 1972)
Husband and wife team
 studied the job motions – refined Taylor’s
analysis of work movements
Aims were for a particular task
Break-up into each of its component
actions
Analyse every individual action necessary
to perform
Find better ways to perform each
component action
Reorganize each of the component actions
so that it could be more efficiently
performed with less cost of time and effort

1.3.Contributions of Frank Gilbreths (1868
– 1924) and Lillian Gilbreths (1872 – 1972)
18 Essential motions a worker can
perform defined as “Therbligs”

F.W.Taylor’s Scientific Management

Elements of Scientific Management
1. Planning the Task
2. Scientific Task and Rate-Setting (work study)
a. Method study
b. Motion study
c. Time study
d. Fatigue study
e. Rate setting
3. Scientific selection and training
4. Standardization
5. Specialization
i. Route clerk
ii. Instruction card clerk
iii. Time and cost clerk
iv. Shop disciplinarian
v. Gang boss
vi. Speed boss
vii. Repair boss
viii. Inspector
6. Financial incentives
7. Economy
8. Mental Revolution

Benefits of Scientific Management

Administrative Management
Theory
 Scientific management focussed on the
productivity of individuals
 Administrative Management
concentrates on developing the
organisational structure that leads to high
efficiency and effectiveness

2.1 Fayol’s Administrative
Management Theory
 Organisational structure is the system
of task and authority relationships
which control how employees use the
resources to achieve the
organisation’s goals
 Emphasis on development of
management principles rather than
work methods

2.1.Henri Fayol (1841-1925)-Father of
modern theory of general and industrial
management
French mining engineer identified 14
principles of management based on
experiences
Divided total industrial activities into
6 categories
Technical
Commercial
Financial
Security
Accounting
Management

Henri Fayol -14 principles of
management
1. Division of work:
 Work is divided in small tasks/job and
 Each work is done by a trained specialist which
leads to greater efficiency, specialization,
increased productivity and reduction of
unnecessary wastage and movements.
2. Authority and Responsibility:
Authority means power to take decisions and get
work from his subordinates
Responsibility means obligation to complete the
job assigned on time.(Amount and kind of work
expected)
Authority and responsibility should go hand in
hand.
Mere responsibility without authority, makes an executive
less interested in discharging his duties.
Similarly giving authority without assigning responsibility
makes him arrogant and there is fear of misuse of power.

management
3. Discipline:
 It is the obedience to organizational rules
by the subordinates.
 Discipline requires good supervisors at all
levels, clear and fair agreements and
judicious application of penalties.
4. Unity of Command:
 It implies that every worker should receive
orders and instructions from one superior
only,
5. Unity of Direction:
 Each group of activities having the same
objective must have one head and one plan.
 This ensures unity of action and

management
6. Subordination of Individual Interest to General
Interest:
 Every employee has individual interest
 General interest of organization is development and
progress
 Employee should give first importance to general
interest than his individual interest for effective
management
7. Remuneration of Employees:
 The overall pay and compensation should be, fair to
both employees and the organization.
 The wages should encourage the workers to work
more and better

management
8. Centralization and Decentralization:
 Centralization means concentration of decisions and making
authority in few hands at top level.
 Decentralization means evenly distribution of power at every level of
management.
 Both should be balanced as no organization can be completely
centralized or completely decentralized.
9. Scalar Chain:
 The formal lines of authority between superiors and subordinates
from the highest to the lowest ranks is known as scalar chain.
 This chain should not be violated but in emergency employees at
same level can contact through Gang Plank by informing their
immediate superiors.

Henri Fayol -14 Principles of
management
10. Order:
 2 types of order
Material order - A place for everything and everything in
its place
Social order - A place for everyone and everyone in its
place
 People & material must be in suitable places at
appropriate time for maximum efficiency.
11. Equity:
 The working environment of any organization should
be free from all forms of discrimination (religion,
language, caste, sex, belief) and principles of justice
and fair play should be followed.
 No worker should be unduly favored or punished.
12. Stability of Personnel:
 High employee turnover rate is not good for the
efficient functioning

management
13. Initiative:
Workers should be encouraged to develop
and carry out their plan for improvements.
Initiative means taking the first step with
self motivation.
It will create morale of the employees
14. Espirit De Corps:
Management should promote team spirit,
unity and harmony among employees.
Management should promote a team
work.

Question 1
Ramesh is the owner of a printing press. The size of his organisation has
y/increased during the recent past. There are many employees who work in
his organisation. The organisation is considered good and has earned a lot
of reputation in the market. However when it comes to making key
decisions in the organisation related to many things he never considers the
opinions of his subordinates. Even though the size of the organisation has
increased yet he tries to take all the key decisions on his own.
Which principle of Fayol has been violated by him?
Answer: ‘Centralisation and Decentralisation’

Question 2
Mohan works on the floor of a mall as a manager. He is very hard working
but is unable to produce results for his organisation. His target for last
month was a sale of 10 lakh rupees from his floor. However by the end of
the month the sale was only 8 lakh rupees. He is very regular and takes all
the necessary steps to complete the target. However his staff is not as
competent as he himself is. When he tries to take action against disobedient
employees the top management doesn’t allow him to do so. They haven’t
given him the power to fire employees or take any strict action against them.
Which principle of Fayol is violated here by the Organisation?
Answer: ‘Authority and Responsibility’

Bureaucratic management theory- Max Weber
 German sociologist
 Authority should be a part of a person’s job and passed
from individual to individual
 central assumption was that organizations will find
efficiencies
when they divide the duties of labor
allow people to specialize
create structure for coordinating their differentiated
efforts, usually within a hierarchy of responsibility.
 Proposed 5 elements of bureaucracy that serve as a
foundation for determining an appropriate structure:
1. A well defined Hierarchy (Command-and-Control)
2. Division of Labour and Specialization
3. System of written rules and regulations
4. Interpersonal relationships between managers and
employees
5. Selection and Evaluation4:15 AM POM - Unit 1

Bureaucratic System
Characteristics
 A Well defined Hierarchy (Command-
and-Control)
Division of Reporting and oversight structure of
the organization permits the higher positions to
supervise lower positions
Clear Command-and control refers to the way
in which people report to one another or
connect to coordinate their efforts in
accomplishing the work of the organization.
 Division of Labour and Specialization
The degree to which people are organized into
subunits according to their expertise is referred
to as specialization—for example, human
resources, finance, marketing, or
manufacturing.
It may also include specialization within those

Bureaucratic System
Characteristics
System of written rules and
regulations
Must create well defined system of rules,
procedures and norms
It effectively controls behaviour and
facilitate coordination
Impersonal relationships between
managers and employees
Maintain impersonal relationship
Favouritism and personal prejudice do
not influence on decisions

Bureaucratic System
Characteristics
Selection and Evaluation
Based on performance or work output
Records
Maintain complete files regarding all
activities

Neo-classical or
Behavioural theory

Behavioural Management
Theory
 Modified ,extended and improved
classical theory which included
employee motivation and behaviour
 Role of psychology and sociology in
understanding individual and group
behaviour in an organisation
 Contributions
◦ Mary Parker Follett(1868-1933)
◦ Eltan Mayo (1880-1949)
◦ Abraham Maslow (1908-1970)
◦ Douglas McGregor(1906-1964)
◦ Chester Barnard (1886-1961)

Mary Parker Follett(1868-
1933)
 Importance of functioning of groups
 Principle of “power with” rather than
“Power over” in management
employee relationship
 Conflict resolution through integration
 Achievement of integrative unity

Eltan Mayo (1880-1949)
 Series of experiments to reveal
shortcomings of classical
management theory – Hawthorne
studies
 Investigated
◦ Informal grouping
◦ Informal relationships
◦ Patterns of communication
◦ Patterns of informal leaderships

Hawthorne studies – 4 parts
1. Illumination experiment
-established lighting levels to worker
productivity
-concluded no consistent relationship
between workers output and illumination
2. Relay Assembly test room experiment
-factors such as 1. length of work day
2. Rest hrs
-concluded that socio-psychological
factors like feeling of being important,
recognition, attention, participation, cohesive
work group and non-directive supervision
improved productivity

Hawthorne studies – 4 parts
3. Bank wiring test room experiment
-to find out causes which restricted output
-concluded that workers were more
responsive to social force of their peer groups
than the control and incentives of management.
4. Mass Interview Programme
-workers interviewed to validate
Hawthorne studied
-asked about supervisory practices and
employee morale
-concluded that upward communication
creates positive attitude
-workers pleased if ideas recognised

Abraham Maslow (1908-
1970)
 Based on consideration of human needs
with following assumptions
1. Human beings have needs that are
never completely satisfied
2. Human behaviour is aimed at satisfying
the needs that are yet unsatisfied at a
given point in time
3. Motivation needs can be classified
according to a hierarchical structure of
importance from the lowest to highest
levels.

Abraham Maslow (1908-1970)
Contd.
 Needs of hierarchy into 5 specific
areas
1. Physiological needs
2. Safety needs
3. Belonging and love needs
4. Esteem needs
5. Self-actualization needs
It helped managers visualize employee
motivation

Douglas McGregor(1906-
1964)
 Believed 2 basic kinds of managers exist
Theory X manager
– negative view of employees
– assumes that they are lazy,
untrustworthy
– incapable of assuming
responsibility
Theory Y manager
– assumes that the employees are
not
trustworthy
– capable of assuming responsibility
– high levels of motivation

Chester Barnard (1886-1961)
 Noticed organisations as social
systems that require human
cooperation
 Executives should serve 2 primary
functions
◦ They must establish and maintain a
communications system among
employees
◦ They must establish the objectives of the
organisation and motivate employees

Chester Barnard (1886-1961)
 Developed acceptance theory of
authority
 Authority of a manager flows from the
ability of subordinates to accept or
reject an order from the manager once
they
◦ Understand what the order requires of
them
◦ Review the order’s consistency with
organisation goals
◦ Recognise a personal benefit in obeying
the order 4:15 AM POM - Unit 1

Modern Management Theory

System Approach - Modern
Management
Theory
 System is a set of interrelated and
interdependent parts arranged in a
manner which produces a unified
whole
 System - Organisation
 Subsystem – Department (Its various
components or parts)

System Approach Contd.
 Organisation as a system is composed of 5
elements
1. Input - Human, Materials, Finance, Equipment
and Informational resources
2. Transformation processes – Organisation’s
managerial and technological abilities applied
to convert input into output
3. Output – Products, Services and Outcomes
produced by the organisation
4. Feedback – Information is about results and
organisational status relative to its environment
5. Environment – Set of forces and conditions
operate beyond an organisation’s boundaries
that affects manager’s ability to acquire and
utilize resources

Systems Approach -
Terminologies
1. Closed system:
 System which interacts less with its external
environment and receives less feedback
 Fixed boundaries
 Operation is relatively independent of the
environment outside the system
2. Open system:
 Organisation which interacts with its environment
 It constantly comes into contact with the environment
3. Entropy: Tendency of system to deteriorate or
break down over time
4. Synergy: When all subsystems work, making
the output is greater than the sum of output of
its parts.

Open system model of
Management

Systems Approach Contd..
 Provides an integral approach to
management
 More useful in managerial decision-
making
 Provides a framework through which
organisation’s environmental
interaction can be analysed and
implemented for effective decision-
making
4:15 AM
POM - Unit 1

Managerial Levels Based on
System
Approach
 Talcott Parsons suggested 3 meaningful
levels in organisation
1. Technical level: Involves actual
production and distribution of products
and services
2. Organisational level: Coordinates and
integrates the work performance at the
technical level
3. Institutional level: Involves the related
organisation to the needs of the
environment

Contingency Approach in Modern
Management
theory
Situational approach
Developed by managers, consultant and
researchers
Contributions in 1960 by
Tom Burns and G.M.Stalker from U.K
Paul Lawrence and Jay Lorch from US.
Crucial message of this theory
No one is the best way to organize
The characteristics of environment affect an
organization’s ability to obtain resources
Eg. Some mgmt. concept are more effective
in one situation and may fail in another .
Results or solutions differ as situation differs
4:15 AM
POM - Unit 1

Contingency Approach
Managers identify which technique is
suitable for a particular situation,
particular environment at a specific
time

Contingency Approach Contd..
More favorable to modern
management theory
Modern management theory suggests
the psychological approach to the
employees
Highly dependent on the experience
and judgement of the manager in a
given organizational environment

Business Organisation
 Business – state of being busy
– Functionally those human
activities involve the
production of wealth
 Organisation –process of bringing
various elements of business together
with the object of establishing
harmonious relationship and
adjustment in their functioning

 A business is an enterprise which
distributes or provides an article or
services where other members of the
community need and are able and willing
to pay for it - Urwick and Hunt
 The process of identifying and grouping
the work to be performed, defining,
delegating responsibility of authority and
establishing relationship for the purpose
of enabling people to work most
effectively together in accomplishing
objectives - Louis A. Allen

Types of Business
Organization

Sole Proprietorship
 Sole Trading
 Business unit which is owned and
controlled by a single individual
 Uses own saving to run business
 Makes all purchases and sells on his own
 Maintains all accounts
 Enjoys all profits and bears all losses

Characteristics of Sole Proprietorship
1. Sole Ownership - Single owner
responsible for all the things relating
to the business. bears all the risk and
organize the whole business. On the
closure of business he is personally
liable for all gains and losses.
2. Unlimited Liability - The liability of a
sole trader is unlimited. On the
occasion of any loss in the business,
not only the business assets, but
also the private assets of the sole
trader (house, shop or land etc.) can
be sold for recovery of losses.

Characteristics of Sole
Proprietorship
3. Enjoyment of entire profit – Only person
invested money and can enjoy entire profit
- Bears entire loss
- Own all and risks all
3. No separate legal entity – no legal entity
separate from its owner
4. Simplicity – simple to commence and close
5. Self employment – Uses own labour to
conduct the business
- Uses services from his family
3. Secrecy – All decisions taken by owner and
keeps business secrets to himself

Partnership
A partnership is an association of two or more
persons, who agree to combine their financial
resources and managerial abilities to run a
business and share profits in an agreed ratio
In Sole proprietorship
 financial and management skills are
limited
One man cannot supervise all activities
Therefore Partnership business grows out
of the need
Expansion with more capital
Better supervision and control
Division of work
Spreading of risks

Partnership
“A partnership or firm as it is often called, is
then a group of men who have joined capital
or services for the prosecution of some
enterprise.” - Kimball and Kimball
Partnership is the relation existing between
persons competent to make contracts, who
agree to carry on a lawful business in
common, with a view to private gain.”
-PROF. Haney
The relation between two or more persons
who agree to share the profits of a business
run by them all or by one or more persons
acting for them all -Indian
Partnership Act 1932

Features of Partnership
1. Agreement
2. Multiplicity of person
3. Lawful business
4. Sharing of profits
5. Contractual relations
6. Mutual agency
7. Unlimited liability
8. Registration
9. Common management
10. Utmost good faith

Kinds of Partners
1. Active partner
2. Sleeping or dormant partner
3. Normal partner
4. Partner in profit only
5. Partner by estoppel
6. Sub-partner
7. Secret partner
8. Minor as a partner

Rights of Partner
1. Right to express his opinion
2. Right of participation
3. Right of access to books
4. Right to share profits
5. Right to get interest on the capital
6. Right of indemnity

Differences between partnership
and sole traders

Joint Stock Company
 Sole proprietary and partnership firms
◦ Limited financial resources and
managerial capability
◦ Cannot meet the challenges needed for
massive production and speedy
distribution
 Joint Stock Company solves the
above
 There must be a group of persons
who voluntarily agree to form a
company
 Once formed the company becomes a

Joint Stock Company
 Its existence is not affected by change
of members
 Must have a seal to imprint on
documents whenever required
 An association of many persons who
contribute money or moneys’ worth to
a common stock and employ it in
some trade or business and also
share the profit and loss - Lord
Justice Lindley

Types of Companies
 Classified based on
◦ Formation
◦ Public Interest
◦ Control
◦ Nationality
◦ Area
 On basis of Formation
◦ (a) Statutory Company:
 Created by special Act of the Parliament or Assembly
of any state
 Done in special cases to regulate the working of the
company for some specific purpose.
 Eg. State Bank of India, RBI, LIC, UTI

Types of Companies
(b)Registered Company:
registered under Company Act 1956
governed by the Act
subject to the rules of memorandum
of association and articles of
association of their own
(c) Government Company :
-not less than 51% of the paid up share
capital is held by Central / /State Government
-auditor appointed by Central government
on the advice of controller and Auditor-General
of India
-audit report placed before parliament

Types of Companies
 On the basis of public interest:
(a) Private Limited
-company which has a minimum paid up
capital
(b) Public limited
-suitable for carrying on business at
large scale involving huge amount of capital
 On the basis of Control
(a)Holding Company
-A company controls the
management of another company
-eg. Company A holds more than
51% of paid up share capital

Types of Companies
(b) Subsidiary Company
- When one company controls the management of another company such
company so controlled is called as subsidiary company
 On the basis of Nationality
(a) Indian Company
- Registered in India
- may be private or public company
- share holders can be foreign
citizens
(a) Foreign Company
- company incorporated and registered
outside India

Types of Companies
 On the basis of Area
◦ (a) National Company
 - confine operations within the boundaries of the
country in which they are registered
◦ (b) Multi National Company
 - Extend the areas of their operations beyond the
country in which they are registered

Private Limited Company -
Features

Public Limited Company -
Features

Co-operative Organisation
 Voluntary association of persons for
the mutual benefit
 Aims accomplished through self help
and collective effort
 Mutual help – “one for all and all for
one”
 Each state government appoints a
registrar for controlling and
supervising societies
 When registered it becomes a body
corporate 4:15 AM POM - Unit 1

 Characteristics
◦ 1. Voluntary association
◦ 2. Equal voting rights
◦ 3. Service motive
◦ 4. Separate legal activity
◦ 5. Open membership
◦ 6. State control
◦ 7. Liability
◦ 8. No share transfer
◦ 9. Statutory audit
◦ 10.Cash trading

Public enterprises (or) State
enterprises
 Business Organization owned and managed by the
state government or any other public authority.
 The whole or most of the investment is made by
the government.
 Definitions:
 “Public enterprises are autonomous or semi autonomous
corporations and companies established, owned and
controlled by the state and engaged in industrial and
commercial activities”. - N.N.Mallya
 “Public enterprises mean state ownership and operation of
industrial, agricultural, financial and commercial
undertakings”. -A.H.Hanson

Characteristics of public enterprises
1. Financed by government
2. Financial independence
3. Government management
4. Public services
5. Legislative control
6. Monopoly enterprises

Merits and Demerits of public
enterprises
 Merits
◦ Helps in
implementing
government policies
◦ Ensures the
complete
government control
◦ Source of income for
government
◦ Useful for
developing
enterprises
◦ Funds are properly
 Demerits
◦ Excessive
government
interference
◦ Shortage of
competent staff
◦ Inefficient
◦ Tax burden to public
◦ Delay and Red-
tapism

Public corporation
 It is an autonomous body corporate created by
a special Act of a state or central government.
 Such Act defines the power, duties, privileges
and pattern of management of these
organizations.
 It is a statutory body to serve the general
public.
 A public corporation is clothed with the power
of the government, but possessed with
flexibility and initiative of private enterprises.
 It enjoys complete autonomy in management.

Characteristics of public
corporation
 It enjoys the status of a legal entity and as such it can enter
into contract in its own name.
 It is completely owned by the government and no private
individuals are entitled to purchase shares of these
organizations.
 It is managed by a board of directors who are from all walks
of industry and commerce. The chairman of these companies
are appointed by the government.
 The entire capital is financed by the government.
 It is primarily meant to render service and making profit is its
secondary considerations.
 The employees of corporation are subject to service
conditions laid down by the corporation.

Merits and Demerits of public
corporation
 Merits
1. Finance from
government.
2. Internal autonomy.
3. Free from
government
interference.
4. Protect public
welfare.
5. Service to society.
6. Flexibility
 Demerits
1. Limited autonomy
2. Misuse of power
3. Inefficient
operation
4. Lack of interest
5. Government
control

Government Company
 A company owned by central and / or state
government.
 Section 617 of the Companies Act, 1956, defines a
government company as a company in which not
less than 51% of the paid-up share capital is held
by the central government or by any state
governments, or partly by the central government
and partly by one or more state governments.
 They are registered as private limited companies
though their management and their control vest
with the government.
 This is a type of organization where both the
government and private individuals are
shareholders. 4:15 AM POM - Unit 1

Characteristics of government
Company
 It is formed under the provisions of the Indian
Companies Act, 1956.
 The total share capital or 51% or more of share
capital is held by the government.
 It enjoys the status of a legal entity and therefore it
can use or be sued by others.
 The finance of the company is obtained from both
the government and private share holders.
 The employees are governed by the rules
prescribed for the company by the board of
directors.
 It is not subject to budgeting, accounting, and audit
rules applicable to a government department.

Merits and Demerits of
government company
 Merits
◦ Handy organization
◦ Flexibility in
management.
◦ Freedom of action.
◦ Run on sound
business and
commercial lines.
◦ Helpful in
developing
neglected sectors.
◦ Provides healthy
competition to the
private sector.
 Demerits
◦ Lack of interest.
◦ Minority interest
neglected.
◦ Political inference.

Various state enterprises
available in India are:

Organization Culture
 Organizations can be characterized in a
similar way we classify people, rigid,
friendly, aggressive, warm, innovative or
conservative.
 Attributes and behaviour of people within
these organizations can be predicted
with the use of these behaviours.
 It prescribes norms and procedures for
the employee’s actions towards client’s
competitors, supervisors, subordinated
and peers.

Definitions
 “Organizational culture is a system of
informal rules that spells out how people
have to behave most of the time.” – Deal
and Kennedy
 “Organizational culture is a relatively
uniform perception held by the
organization. It has common
characteristics, it is descriptive, it can
distinguish one organization from
another, it integrates individual group
and organizational system variables.”
- Stephen P. Robbins

Definitions
 “Organizational culture refers to the
pattern of beliefs, values and learned
ways of coping with experience that
have developed during the course of
an organization’s history, and which
tend to be manifested in its material
arrangements and in the behaviours of
its members.” - Andrew
Brown

Characteristics of Organization Culture
1. Risk tolerance
 Degree to which employees are encouraged to be aggressive, innovative and
risk-taking.
 Internal and external environments have a close connection with the decision of
risk taking.
2. Direction
 It is the degree to which the organization creates clear objectives and
performance expectations.
 Organization culture created the correct direction.
3. Unit integration
 Integration is the degree to which units within the organization are encouraged to
operate in a coordinated manner.
 Organizational culture leads coordination of the employees to attain the goals of
the organization.
4. Management contract
 It is the degree to which managers provide clear communication assistance and
support their subordinates.
5. Identity
 It is the degree to which members identify the organization as a whole rather than
their particular work group in the field of professional expertise.

Characteristics of
Organization Culture
6. Reward system
 Best employees are motivated by the organization.
 The degree to which reward allocations are based on employee
performance criteria in contrast to seniority, favoritism, etc.
7. Control
 It is the number of rules and regulations, and the amount of direct
supervision that are used to control the employee behaviour.
8. Conflict tolerance
 It is the degree to which employees are encouraged to air conflicts and
criticisms openly
9. Communication patterns
 The degree in which the organizational communications are restricted
to the hierarchy of authority is called communication pattern.
 Each of these characteristics exists on a continuum from low to high
level.
10. Individual initiative
 It is the degree of responsibility, freedom, and independence that
individuals have.

Sources of Culture
1. Rituals
 Rituals are repetitive sequences of activities which express and
reinforce the key values of organization.
 If the organization organizes annual award meeting, sales persons are
rewarded for achieving their targets.
 Such annual reward meeting conveys to the people of the organization
that achieving the targets and performing better through hard work is
important.

Sources of Culture
2. Language
 Many organizations use language as a way to identify
members of culture or subculture.
 The member accepts and preserves the culture by learning the
language.
 Organizations develop unique terms to describe equipment,
offices, a key personnel supplies customers or products that
relates to business.
 This language unites the members of a given culture.
3. Material symbol
 The organization provides all facilities and freedom to their
employees.
 It may provide a car, bungalow, holidays in foreign country, perks,
dress.
 It conveys to the employees the importance of people the
organization
 Thus jogging, swimming, yoga, dance, drama have important
bearings in the learning of culture in the organization.
4. Stories

Functions of Culture
1. It distinguishes one organization from the other.
2. It conveys a sense of identity for organization
members.
3. It facilitates the generation of commitment to
something larger than ones individual self
interest.
4. It enhances the stability of the social system.
5. It serves as a sense-making control mechanism
that guides and shapes the attitude and
behaviour of employees.

Components of organizational culture
1. Support orientation
 It is related to the support an employee getting from an organization.
 Employees might be provided various training and counselling services.
 This support is not same for all organizations.
2. Rules orientation
 Every organization has at least some rules and regulations.
 Organizations make rules to ensure that tasks are performed with little or
no problems.
3. Innovation orientation
 Innovation is the introduction and implementation of new ideas that
positively benefit the organization and its members.
 Managers regard innovation as the major source of competitive
advantage.
4. Coordination orientation
 Coordination refers the blending efforts to ensure successful
attainment of objectives.
 Coordination can be achieved by means of planning, organizing,
actuating and controlling.

Types of organizational culture
1. Subculture
 It is a set of values shared by a minority.
 It is typically a result of problems or experiences which
are shared by members of a department or unit.
 It can weaken and undermine an organization if they are
conflict with the dominant culture and/or overall
objectives.
2. Dominant culture
 Sharing of the core value is dominant culture.
 It is the macro view of culture which gives an organization
its distinct personality and distinguishes it from other
organization
3. Strong culture
 It influences the behaviour of the people because of the

4. Weak culture
 If the core values of the organizations are not being accepted
and followed with commitment by more members of the
organization, the culture is weak.
 A weak culture creates low cohesiveness, loyalty and
commitment.
 The rate of labour turnover is high in the organization.
5. Authorization culture
 The leader of the organization exercises full control over the
subordinates who issues the orders and instructions of the
former.
6. Participative culture
 Superiors motivate their subordinates to attain goals of the
organization
 Subordinates also involve in the decision making process.

7. Normative culture
 The norms and procedures of the organization are predefined and the rules
and regulations are set as per the existing guidelines.
 The employees behave in an ideal way and strictly adhere to the policies of
the organization.
 No employee dares to break the rules and sticks to the already laid policies.
8. Pragmatic culture
 More emphasis is placed on the clients and the external parties.
 Customer satisfaction is the main motive of the employees in a pragmatic
culture.
 Every employee strives hard to satisfy his clients to expect maximum
business from their side.
9. Academy culture
 Hire skilled individuals
 Roles and responsibilities are delegated according to the background,
educational qualification and work experience of the employees.
 Ensure that various training programmes are being conducted at the
workspace to hone the skills of the employees.
10. Fortress culture
 Employees are not very sure about their career and longevity.
 The employees are terminated if the organization is not performing well.
 Individuals suffer the most when the organization is at a loss.
 Stock broking industries follow such a culture.

Creating and Sustaining
culture
1. Creating culture
2. Managing culture
i. Selection process
ii. Actions of top
management
iii. Socialization
i. Pre-arrival stage
ii. Encounter stage
iii. Metamorphosis
stage

culture
1. Creating culture
 Traditions and way of life of employees
 The vision and functions of organization are
creators of the culture
 The ideology and customs of organization
functions.
 Organization develops the progressive ideas
and technological development forming good
culture.
 The mission and vision, hard work and
competitive spirit have created a disciplined
organizational culture for improving the
performance.
2. Managing culture
Once a culture is in its place, there are practices

culture
i. Selection process
 Objective: to identify and select individuals with
knowledge skill and competence to perform the jobs
successfully.
 Applicants are interviewed in-depth for qualities like
 Ability to turnout high volumes of excellent worth
 Identify and understand problem
 Well-reasoned conclusions that lead to actions
ii. Actions of top management
 To establish the norms of dress
 What actions will pay off in terms of pay raises,
promotion, etc.
 Periodical review by the top management:
1. Work commitment and involvement
2. Labour turnover
3. Absenteeism
4. Punctionality 4:15 AM POM - Unit 1

culture
5. Superior-subordinates relationship
6. Product quality
7. Customer service
iii. Socialization
 It is the process that adopts employees to the
organizational culture.
 The new employees are to make aware of the
organizational culture.
 The organization has to help the people to adopt
themselves to the new culture. The adoption process is
called socialization.
 It can be conceptualized as a process made up of 3
stages:
1. Pre-arrival stage
2. Encounter stage

culture
1. Pre-arrival stage
 It recognizes that each individual arrives with a set of values,
attitudes and expectations.
 The recruitment selection process includes the presentation to
the prospective employees.
 A success depends on the degree to which the aspiring
member has correctly anticipated the expectations and
desires of those in the organization incharge of selection.
 Thus the pre-arrival stage is period of learning in this process
that occurs before a new employee joins the organization.
2. Encounter stage
 This stage commences after the individual entry in the
organization.
 The individual joins the organization with a set of expectations
about his/her job, co-workers, boss and the organization in
general.
 If the expectations and the reality differ employee must
undergo this stage.
 The individual may get disappointed with job and resign.
 A proper selection would reduce the incompatibility between
expectation and reality.

culture
3. Metamorphosis stage
 It is complete when the new member becomes comfortable
with the organization and job.
 The new member has internalized the norms of the
organization and the work group and understand accepts
these norms.
 The individual understands the rules, norms, procedures, etc.
 This is the stage in the socialization process in which a new
employee adjusts to his or her work groups values and norms.
 It enhances the individuals self confidence to complete the
job.
 Successful metamorphosis should have the positive impact
on individuals.
 Productivity and commitment to the organization reduce the
tendency to leave the organization.
 Organization philosophy strongly influences the recruitment
and selection process.
 This socialization process establishes and sustains the
organization culture.

Changing organizational culture
Approaches:
i. Recruit personnel with previous experience so that
they are able to interact well.
ii. The reward system can be changed to support the
cultural change.
iii. Set unique goals.
iv. Make changes from top to bottom so that a consistent
message is delivered.
v. Include employees in the process of change when
making changes in rules and policies.
vi. Managers must change employee’s ideas about what is
and what is not appropriate behaviour. They must
create new role model heroes and new stories to help
employees understand the meaning of what is
happening around them.

Organization and environmental
factors:
 The events or situations that can have either a positive
or a negative impact on organization’s business are
called ‘environmental factors’.
 All organizations draw input from the environment
and convert it into output and send them back to the
environment.
 The environment of the business consists of two
components
 Internal environment
 External environment

Internal environmental factors:
 Internal environmental factors are events that occur
within an organization.
1. Management
 People who invested in company and have property rights and claims on
the organization.
 Can be an individual or group of person who started the company or
 Who bought a share of the company in the share market.
 Have the right to change the company’s policy at any time.
2. Organizational structure
 Composition of board of directors influences the decisions of business.
 The structure and style of the organization may delay in decision making.
3. Employees
 Performs the tasks of the administration.
 Individual employees and also the labor unions
 If managed properly they can positively change the organizations policy.
 Ill management of the workforce could lead to a catastrophic situation.

Internal Environmental Factors
4. Organizational culture change
 Organizational culture is the collective behavior of members of an
organization and the values, visions, beliefs, habits that they attach to
their actions.
 An organization’s culture plays a major role in shaping its success
because culture is an important determinant of how well their
organization will perform.
 It plays a major role in shaping managerial behavior.
5. Financial changes
 The financial changes depend on the financial structure of the business.
 It is also dependent on the business transactions and the financial systems.
 For example, changes in interest rates or being overly reliant on one
financier / customer could affect business.

External Environmental Factors
 Events that take place outside the organisation
 Therefore harder to predict and control
 Factor can be more dangerous for an organisation as
unpredictable, hard to prepare and often confusing
 Factors include
◦ Technological changes
◦ Economic condition
◦ Political environment
◦ Industrial competition
◦ Government regulations
◦ Social-cultural factors

2 types of external environment:
1.General Environment or Macro
Environment
2.Task Environment or Micro Environment
General Environment or Macro
Environment
Consists of factors that may have an
immediate direct effect on operations
nevertheless influences activities of the
organisation

General Environment or Macro
Environment
1.Technology
-Technological developments have tremendous impact on
the organisation
-manager should cope up with this development for survival
-technological changes occur and vary from industry to
industry
-every organisation has to assess environment from time to
time
-remain competitive
2.Economic conditions
-Managers must assess changes in general economic
conditions affecting operations
- fluctuations measured by parameters like GDP,price level,
unemployment, demand and supply, industrial goods etc.
-Factors affect cost of input and ability of customer to buy
goods and services

Environment
-Key for survival
-Efficiency in operation, elimination of
wastage, product planning etc
-growth of a corporate sector is an
important indicator of sophistication and
growth of an economy
3.Political Factors
-Performance, growth and survival largely
depends on the attitude of the
government as it is empowered to monitor
and control
-Policies by government affects business
-Unstable Government Policies affect

Environment
4.Socio Cultural Factors
-Comprises basic beliefs, values and
norms which shape the people
-Plays a major role in deciding the
needs of the people
-Changes our life style and social
values eg. emphasis on quality of goods
instead of quantity of goods
Organisations must be able to
respond effectively and adapt to
environmental changes to survive and
attain objectives

Task Environment or Micro Environment
 Consists of factors that directly affect and are affected by
organisation’s operations
 Factors include
Suppliers
Customers
Competitors
Regulations
1.Suppliers
-Supplies raw materials which are converted to output
-Their relationship directly influences the operation of a
firm
-Shortages in supplying raw materials will lead to loss in
sales and damages customer goodwill
-organisation should be supplied with right input quality ,
quantity at right price to achieve their objectives
-cooperation is a key factor
-prefer multiple sources to avoid over dependency

Task Environment or Micro Environment
2.Customers
-organisation should not neglect customer’s expectations
and aspirations for long term survival
-customers taste and preferences are not static but
change
-organisation should identify such changes and respond
in a positive way
3.Competitors
-Influential in shaping an organisation
eg . Pepsi ‘s competitor is Coco-Cola
-Organisation and its competitors may plan a same
strategy at a time
-monitor competitor’s activities, capture their moves
and maintain customer loyalty
-based on analysis managers must anticipate the
competitive actions 4:15 AM POM - Unit 1

Current Trends and Issues in
Management
 Changes in socio-economic and political
conditions bring changes in environment within
organization
 Managers should update their knowledge and
skills to attain the needs and objectives of
organization
Workforce diversity
Changing demographics of workforce
Changing employee expectations
Internal environment
Building organizational capabilities
Job design and organizational structure
Changing psycho-social system
Technological advances
Management of human relations
Changes in legal environment

Indian Business in the
Globalisation
1. Textiles
2. Pharmaceuticals
3. Software
4. Automobiles
5. Industrial sector
6. Financial sector
7. Economic sector
8. Information Technology
9. Competition
10. Cultural
11. Technical sector
12. Legal/ Ethical sector

MNC
 Modern industries are moving towards
international management because of
globalisation
 International management involves
conducting business and industrial
operations in foreign countries and it is
affected by cultural and national
influence
 It involves free flow of ideas,
technology, goods, information and
management talent

MNC
 MNC are companies that manufacture
and market products or services in
several countries
 Adopts internal management
 Operates a number of plants abroad and
markets the products through a large
network
 MNC is defined as “An enterprise which
owns or control production or service
facilities outside the country in which
they are based

Principles of Management unit 1

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