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Business management


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Business management

  1. 1. Management & Behavioural Processes Vikas vadakara
  2. 2. Management Concept What is an organization? Group of people working together in a systematic manner to achieve a set of goals Understanding “Management“ from resource- based perspective: Human Financial Physical Information 2 vikas vadakara
  3. 3. 1] Human: managerial talent and labour2] Financial: capital used to finance both ongoing and long term operations.3] Physical: raw materials, office, production facilities equipment4] Information: Usable data needed to make effective decisions3 vikas vadakara
  4. 4. 4 vikas vadakara
  6. 6. Management in OrganizationsMangers engage in above activities to combine 4 resources efficiently and effectively and towork toward achieving goals of the organization 6 vikas vadakara
  7. 7. What is Management? A set of activities (including planning and decision making, organizing, leading, and controlling) directed at an organization’s resources (human, financial, physical, and informational) with the aim of achieving organizational goals in an efficient and effective manner. 7 vikas vadakara
  8. 8. Efficient Vs Effective Efficient  Effective1. Doing the things right 1. Doing the right things 2. Focuses on achieving the “end”2. Focuses on the process or “means” goal. of doing things 3. Making right decisions and3. Using resources wisely in a cost successfully implementing them effective way and Getting most 4. Effectiveness involves thinking long output from least amount of inputs term4. Efficiency restricted to the present 5. Effectiveness is about gaining state success5. Efficiency will look at avoiding 6. Effectiveness encourages mistakes or errors innovation as it demands people to think, the different ways they can6. Since efficiency is about doing meet the desired goal. things right, it demands documentation and repetition of the same steps. Doing the same thing again and again in the same manner will certainly discourage innovation 8 vikas vadakara
  9. 9. Who is a Manager? One who plans, makes decisions, organizes, leads and controls human, financial, physical and information resources. Helping others to do their work Responsible for getting things done 9 vikas vadakara
  10. 10. Other definitions… “Management is the accomplishment of results through the efforts of other people: Lawrence A Appley “Management is the art of getting things done through and with the people in formally organized groups” Koontz 10 vikas vadakara
  11. 11. Nature of Management Management is universalBasic principles of management can be applied in all managerial situations regardless of size, nature and location of the organization. Universality of managerial tasks and principles also implies that managerial skills can be transferrable and managers can be trained and developed. MultidisciplinaryBecause it includes knowledge, information from various disciplines like economics, statistics, psychology, sociology, operations research etc. Management integrates ideas and concepts taken from these disciplines and presents newer concepts which can be put in to practice for managing organizations. 11 vikas vadakara
  12. 12.  Management is dynamicManagement has framed certain principles which are flexible in nature and change with the changes in the environment in which the organization exists.According to Peter Drucker; “Managers do not wait for future, they make the future” Relative, not absolute principlesManagement principles should be applied according to the need of the organization. A particular management principle has different strengths in different conditions Is a system of authorityA manager is supposed to get things done, rather than doing things himself by using authority. Authority means right to give orders and power to obtain objective from subordinates. It’s a rule making and rule entering body in an organization. 12 vikas vadakara
  13. 13. Management Science or Art?13 vikas vadakara
  14. 14. Science Science is a systematic body of knowledge that is developed through observation and experimentation and can be verified Scientific principles establish a cause and effect relationship between various factors Mere knowledge or collection of facts does not qualify as science. It is only when the gathered knowledge is verified in different geographies and over a period of time it becomes science 14 vikas vadakara
  15. 15. Art Art is a systematic application of a skill or knowledge for the accomplishment of results It represents methods or ways of doing specific things to effect change and accomplish results through deliberate efforts. Science is concerned with knowing “why” and art is with the “how” of application 15 vikas vadakara
  16. 16. Management as an Art Personal Skill: Manager has to use his skill, knowledge to solve many complimented problems on day to day basis Practical Knowledge: Management does not merely mean systematic presentation of principles can be applied in practical to get better results Result Oriented: Management is concerned with accomplishment of objectives, it is result oriented and for that it leads, directs others towards attaining desired goals. 16 vikas vadakara
  17. 17.  Regular Practice: Effectively and effectiveness can be attained through regular practice. Like an artist manager also practices regularly so that he can work better and can get output in an effective and efficient manner Creativity: Any art work can be considered as a creative work. Like an art, management is one of the most creative arts as it deals with getting things done through others by motivating their efforts in an innovative manner 17 vikas vadakara
  18. 18. Management as a Science Systematic body of knowledge: Management is an organized body of knowledge built up by management practitioners, philosophers and thinkers by conducting extensive research and verification of the same over the years. Principles of management make use of scientific methods. Taylor applied scientific techniques like time and motion study, work study etc Cause and effect relationship: In management also cause and effect relationship is studied. Poor planning cause low productivity, lack of employee benefits, low salary cause high attrition, poor marketing cause less sales etc 18 vikas vadakara
  19. 19.  Continuous observation: Principles of management have been developed on the basis of continued observations by many theorists and practitioners over a period of years. Validity and predictability: Scientific principles represent basic truth and can be applied at all times to all situations. In management also there are certain fundamental principles which can be universally applied and repeatedly tested to verify its validity and predictability, reliability 19 vikas vadakara
  20. 20. Management as pure science suffers fromfollowing limitations Principles of management don’t always have a universal application. Unity of Command, which means reporting to one superior. It does not mean that he should not report to more than one boss, if superiors have better understanding, know how to balance between the advantages and disadvantages of multiple commands, an employee can have more than one superior. Human beings behavior can not be predicted Management lack certainty about the result. 20 vikas vadakara
  21. 21. Conclusion management is a mixture of art and science. As an art it demands certain skills from its practitioner and as a science it provides its practitioner with a systematic body of knowledge comprising certain principles laws etc, which have been tested and verified. Management is a crude science because its application varies from person to person and from one situation to another. We can conclude that management is a behavioural science. 21 vikas vadakara
  22. 22. Is administration and management oneand the same? No universally accepted view on this point. American school of thought says  Administrators think- Top level function  Managers do- Lower level function British School of Thought  Management is wider concept than administration  Administration is a lower level function of day to day activities  Management is rule making and rule enforcing activity There is really no clear cut distinction between management and administration 22 vikas vadakara
  23. 23. Management as a profession Profession means an occupation backed by specialized knowledge, expertise and training. Over the past few years management has grown in to a distinct discipline backed by systematic body of knowledge. Number of process, principles, techniques and tools have been developed and they are important through formalized education and training Management also focuses on ethical behaviour and developed certain code of conduct to regulate performance of management professional. Like a Doctor, Managers [consultants] do charge fees on services rendered. 23 vikas vadakara
  24. 24. Purpose of Management To achieve productivityManagement is an active force which acquires uses, organizes factors of production, (men, material, machine, money) and coordinates different interdependent activities in an organization to achieve organizational goals effectively and efficiently. Without management a country’s resources main as resources only and don’t result in production. To adapt to the changes in the business environmentAs an organization exists in a dynamic environment, management has to adapt the changes which happen in different sectors like technology, regulatory policies, economic policies, politics, demography etc and leads the organization towards excellence. 24 vikas vadakara
  25. 25.  To compete, survive and growManagement guides the organization to compete amongst the rivals, survive the threats in the external environment and achieve growth and prospects through continuous learning and innovation To meet the expectations of the stakeholdersManagement has to meet expectation of various stakeholders like adhering to rules and regulations of the Government, maximizing returns to the investors, providing good working conditions and benefits to the employees, maintaining good relationship with clients/suppliers and providing quality goods and services to customers, meet responsibilities towards society. 25 vikas vadakara
  26. 26. Functions/Process of Management26 vikas vadakara
  27. 27.  These solid lines describe basic logic between activities theoretically. Practically, dotted arrows show that most managers engage in more than one activity at a time and often move back and forth between the activities in unpredictable ways. Manager is likely to be engaged in different activities simultaneously. Functions of management don’t usually occur in a tidy, step-by-step fashion. Managers are constantly engaged in many different activities. A manager may be helping a colleague develop goals for the next quarter-planning, discussing a proposed company restructuring- organizing, praising a subordinate for outstanding performance-leading, and checkingvadakara month’s sales 27 vikas on last information- controlling.
  28. 28. • Defining goals, establishingPlanning & strategy, developing plans to Decision making coordinate activities • Determining what needs to be done, how it will be done and who is to doOrganizing it • Monitoring, leading and any other actions involved in dealing with Leading people • Monitoring activities to ensure thatControlling they are accomplished as planned Lead to achieving organization’s stated goals 28 vikas vadakara
  29. 29.  Acronym Created by Gulick and Urwick based on Henry Fayol’s 14 principles of management 29 vikas vadakara
  30. 30.  Planning: process of establishing goals and a suitable course of action for achieving those goals  Organizing: process of arranging resources  Staffing: selecting and training individuals for specific job functions and charging them with associated responsibilities  Directing: process of influencing and motivating employees to perform essential tasks in an organization30 vikas vadakara
  31. 31.  Coordinating: integration of activities of the separate parts of an organization to accomplish organizational goals  Reporting: process of executives keeping superiors and subordinates informed about what is going on  Budgeting: formal quantitative statement of resources allocated for planned activities over stipulated periods of time31 vikas vadakara
  32. 32. Levels Of managers32 vikas vadakara
  33. 33. Managing at Different Levels of the organization:Top Managers  Small group of executives who manage the overall organization, the strategic level.Middle Managers  A large group that implement the strategies developed at the top.First-Line Managers  Supervise and coordinate the activities of operating employees.33 vikas vadakara
  34. 34. Types of managersBased on Based on Scope Based on workManagement Level of Activity activityTop Managers Functional Line ManagersMiddle Managers General Staff ManagersFirst LineManagers34 vikas vadakara
  35. 35. Manager/Non Manager Non managers receive orders, works follow decisions taken by managers Directly contribute to the production Report to first line managers 35 vikas vadakara
  36. 36. Managerial Roles36 vikas vadakara
  37. 37. Managerial SkillsConceptual Skills Mental ability to analyze and diagnose complex situations Allow Managers to see how things fitHuman Skills Ability to work with, understand, mentor and motivate others Both individually and as a group Many managers fail in thisTechnical Skills Ability to apply specialized knowledge or expertise 37 vikas vadakara
  38. 38. Key Characteristics to become a successfulManager Education Experience Efficient time management Empathy Continuous learning Communication ability Technical Expertise Goal Oriented Risk Taking 38 vikas vadakara
  39. 39. Evolution of Management ThoughtIntroduction First known management ideas were recorded in 5000 BC when Sumerian Traders developed written records for government The Egyptians used management functions of planning, organizing, and controlling when they constructed the pyramids. Roman empire and their military hierarchy, public administrative systems. 39 vikas vadakara
  40. 40. Management breakthroughs and practices over the last4000 years 40 vikas vadakara
  41. 41. Early writings on ManagementSun Tzu’s The Art of War A book on military strategy by Chinese General Sun Tzu in 6th Century BC.Highlights By being aware of utilizing organization’s strengths and utilizing them to exploit weaknesses of the enemy- success can be achieved Emphasizes importance of discipline to get things done through coordinated group effort 41 vikas vadakara
  42. 42. Chanakya’s Arthashastra Developed around 3rd Century BC Written by Chanakya Book deals with the governance of kingdom by a king or a leaderHighlights Lays down principles that should be taken in to consideration by a leader while making policies of governance and people management Importance of creating departments, development of detailed job profiles and qualifications of administrators who had to manage these departments as directors. 42 vikas vadakara
  43. 43. Evolution of Management Thought Evolution of management Thought Early Management Modern Approaches Approaches Quantitative Approach Neo Classical System Approach Approaches Contingency Approach Early Classical ApproachesScientific Management Human Relation ApproachAdministrative Mgt Behavioural ScienceBureaucratic ApproachOrganization 43 vikas vadakara
  44. 44. Classical ApproachScientific Management  Frederick Winslow Taylor(1856- 1915) Graduated in science and engineering through evening study 1878- joined as worker at Midvale steel works. 1898- joined Bethlehem steel company as Engineer Acknowledged as Father of scientific Management44 vikas vadakara
  45. 45. Steps in Scientific Management45 vikas vadakara
  46. 46. Studied the work processes andintroduced One best way to do the job/work study: analyzing different operations performed in a work, eliminating unnecessary operations and finding one best way to the job Time study, motion study and fatigue studyTime study: to determine the time required for each movementMotion study: study of movements of workers and machines to ensure performance of only necessary activitiesFatigue study: shows when employees are getting tired and when management should provide rest periods to increase efficiency, productivity of workers 46 vikas vadakara
  47. 47.  Differential wages linked to productivity Careful selection and training of workers Division of labour and distribution of work between management and workers Harmonious relationships between management and workersOverall objective- efficiency of the labour 47 vikas vadakara
  48. 48. Limitations of scientific management It ignored human touch in an organization and viewed workers as machines Monotonous and boring job Exploitation device Harsh and difficult to perform 48 vikas vadakara
  49. 49. Administration Management Scientific management deals with improving efficiency and productivity of individual employees Administrative management focuses on managing whole organization. Henry Fayol [1841-1925] is the main contributor to this approach 49 vikas vadakara
  50. 50. Henry Fayol [1841-1925] A French Industrialist Regarded as “ Father of Modern Management Theory”50 vikas vadakara
  51. 51. Suggested conceptual framework for studying management by dividing industrial activities into 6 groups Technical Financial Security Accounting Managerial Commercial 51 vikas vadakara
  52. 52.  Identified 5 managerial functions to carry out these activities; planning, organizing, commanding, coordinating and controlling. Fayol was the 1st management thinker to recognize need for management teaching Believed that management was an activity common for all organizations including government agencies Published a famous book named “General And Industrial Management” In his book, he presented 14 principles of management for running an organization efficiently. 52 vikas vadakara
  53. 53. Fayol’s 14 principles of management1. Division of Work:division of total task lightens the work, specialization[one person does only one thing] increases the efficiency and output.2. Parity between Authority and responsibility:managers should balance between both. They should have right to give orders and should own accountability for the task3. Discipline:Respect of authority and following rules. Clarity of rules, built in rewards, punishments help to maintain discipline 53 vikas vadakara
  54. 54. 4. Unity of Command:One should receive orders from only one superior5. Unity of Direction:there should be single plan and head for each group of activity with same objective/ direction6. Subordination of Individual interests to general interestsIndividuals interests should be harmonious with organization’s interests. Integrate the both7. Fair remuneration to workers:Remuneration should be based on cost of living, business condition. Additional works should get 54 vikas vadakara incentives. This increases morale and efficiency
  55. 55. 8. Centralization:Major decisions should be taken by Top Management, operations level decision making power can be given to lower level.9. Scalar Chain:Chain of superiors from highest to lowest ranks. Authority should run from top to bottom in proper channel10. Order:there should be a place for everything and every thing should be in its place 55 vikas vadakara
  56. 56. 11. Equity:managers should be kind and fair to their workers12. Stability of tenure of personnel:Try to minimize employees turnover, build long term commitment, a sense of belongingness among their subordinates. Provide job security13. Initiative:Managers should encourage their subordinates to take initiatives.14. Esprit de corps:[ team spirit]Management should create team spirit among employees for harmony and unity 56 vikas vadakara
  57. 57. Bureaucratic Management  Max Weber (1864- 1920)  German sociologist  Known as Father of Modern Sociology57 vikas vadakara
  58. 58. Focuses on development and implementation of rational guidelines like organization’s structure, hierarchy of authority, rules and procedures, division of roles and responsibilitiesfor managing work in an organization.58 vikas vadakara
  59. 59. Weber’s Principles of Bureaucracy59 vikas vadakara
  60. 60. Neo Classical ApproachesBehavioural Science ApproachUnlike the classical management perspective, the behavioral management perspective placed more emphasis on individual attitudes and behaviors and on group processes recognized the importance of behavioral processes in the work place. 60 vikas vadakara
  61. 61.  Elton Mayo[1880-1949] and his associates conducted research [Hawthorne studies], a series of experiments that focused on behaviour in the workplace [ Hawthorne plant of Western Electric Company near Chicago.] First Study/Phase: Illumination Study [1924]: Study involved manipulating illumination for one group of workers and comparing their productivity with another group. But both the groups produced the same output 61 vikas vadakara
  62. 62.  11 Phase- Relay Assembly Test[1925]The experimental group of employees were given Freedom to fix work schedules Six breaks of five minutes per shift were allowed Work day and week were shortened Work was simplified Financial incentives for increased production Friendly supervision These kinds of special attention and treatment enhanced productivity ( i.e. Hawthorne Effect) 62 vikas vadakara
  63. 63.  111 Phase: [1928] Interviewing Program Interviewed 21000 employees to find the reasons for increased productivity Informal work groups and their productivity norms were recognized as the main causes for productivity 63 vikas vadakara
  64. 64.  1V Phase: Bank Wiring Observation Room Experiment[1929] Team work and performance based incentives introduced Efficient workers did not pressure the others to work more for benefiting by incentive scheme. They formed group norms to regulate the productivity. Over produced named: rate busters Under produced named: chiselers 64 vikas vadakara
  65. 65.  The group norms were Don’t turn out too much work Don’t turn out too little work Don’t tell supervisors anything that would harm a colleague Don’t be too officious-rather follow group normsImplications of Hawthorne studies Suggested managing through good human relations Involves motivating people, team work, group influence etcConsider the human factor as theyvadakarasocial beings 65 vikas are
  66. 66. Human Relation Approach Proposed that workers respond primarily to the social context of the workplace, including social conditioning, group norms, and interpersonal dynamics. Human behavior in organizations is complex There are two theories on how employees behave;These theories are developed by Douglas McGregor Theory X and Theory Y 66 vikas vadakara
  67. 67. Theory X Here manager thinks that employees behave like this, they are negative, and scientific management can be applied  Employees dislike work.  Employees are irresponsible.  Employees lack ambition.  Employees resist change.67 vikas vadakara
  68. 68. Theory Y Here manager thinks that employees behave like this, they are positive, and human relations should can be improved to get more productivity  Employees are willing to work.  Employees are self directed.  They accept responsibility.  Employees are creative.  They are self-controlled.Douglas suggests that managers should follow Theory Y68 vikas vadakara
  69. 69. Limitations of Neo Classical Approaches Focused more on group behaviour Human behaviour is complex in nature, so can’t predict the results 69 vikas vadakara
  70. 70. Modern ApproachesQuantitative Approach or Management Science Approach or Operations Research Approach During World War II, military people took some mathematical approaches to deploy its resources efficiently and effectively After war, Companies like DuPont, General Electric began to use some techniques for deploying employees, choosing plant location, planning warehouse etc. Concerned with applying quantitative techniques to management 70 vikas vadakara
  71. 71. Features Organizational efficiency depends upon quality of managerial decisions A problem can be expressed in the form of a quantitative/ mathematical model containing mathematical symbol and relationships Different variables in management can be quantified, expressed in the form of an equation. 71 vikas vadakara
  72. 72. Contributions Provided precise tools for decision making in areas like production, finance, costing, transportation and storage It has been widely used in planning and controlLimitations Fails wherever human element is involved Most decisions involves human judgment, Q A can provide only data for such decision makingQ. A can suggest best possible alternatives, hence quantitative techniques can be valuable supplements 72 vikas vadakara
  73. 73. Systems Approach Developed during early 1960s Contributors: Kenneth Boulding, Johnson and Bernard etc System: An interrelated set of elements functioning as a whole Organizations are viewed as a systemBasic types of system: Open System: organization that interacts with its environment Closed System: that doesn’t interact with its environment 73 vikas vadakara
  74. 74. The Organization as an Open System74 vikas vadakara
  75. 75.  Inputs: human, financial, materials, information resources from its environment Through technological and managerial processes inputs are transferred into outputs Outputs to environment: products, services Environment reacts to these outputs and provides feedback to the system 75 vikas vadakara
  76. 76. Sub systems Approach also focuses on sub systems: systems within a broader system Change in one subsystem can affect other subsystem E.g.: if purchase department does not acquire right quality of inputs [ raw material], production department will not be able to do its job efficiently Synergy suggests that organizational units or sub units may become more successful working together than working alone. 76 vikas vadakara
  77. 77. Example for synergy : Walt Disney Company’s movies, theme parks, television programs, other licensed programs all benefit one another Children who enjoy Walt Disney movie like Mickey Mouse, want to go to Disney World, see the movie there, buy Mickey Mouse toys, buy theme printed lunchbox, cloths etc, and film music generates additional revenue. 77 vikas vadakara
  78. 78. Entropy Is a normal process that leads to system decline When an organization does not monitor feedback from its environment and make appropriate adjustments, it may fail 78 vikas vadakara
  79. 79. Implications As per systems approach management should continuously re-energize the organization to avoid entropy Coordination of the organization’s parts is essential for proper functioning of the entire organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Organizations are not self-contained and, therefore, must adapt to changes in their external environment 79 vikas vadakara
  80. 80. Contingency Approach/SituationalApproach Classical, neo classical and quantitative approaches considered universal perspectives, because they tried to indentify the “one best way” to manage organizations. Contingency Approach suggests there is no one best way of doing things under all conditions 80 vikas vadakara
  81. 81. Features Stresses that there is no best way of doing a thing. Conditions of contingency/situation will determine which technique would be most suitable Managers should prepare objectives, policies, procedures, rules and regulations according to situation of business Success in management depends upon the ability to cope with environmental demands Managers should sharpen their diagnostic skills to anticipate and comprehend environment changes 81 vikas vadakara
  82. 82. Limitations This approach lacks theoretical base Manager is required to think through all possible alternatives, as there is no clear cut principles to act upon. 82 vikas vadakara
  83. 83. Quality And Performance Excellence In a progressive organization management and employees are quality conscious Through continuous improvement they bring performance excellence in their work place Excellence Model Though there are many excellence models, European Foundation For Quality Management model is very famous 83 vikas vadakara
  84. 84. EFQM Model Was founded in 1988 Started with 14 European countries, now comprises with over 600 companies from most Western European countries Involves nine criteria for excellence; first five are enablers means one should perform them first, rest four are results of achieving excellence 84 vikas vadakara
  85. 85. EFQM Model People People Management SatisfactionLeadershi Policies , Customer Business Processes Satisfaction p Strategies Results Impact on Resources Society85 vikas vadakara
  86. 86. Learning Organization Means an organization that has developed continuous capacity to adapt and changeFeatures: Systematic thinking Developing personal mastery Building share vision Team learning/ continuous improvement 86 vikas vadakara
  87. 87. Global Awareness Awareness of current happenings- national and international updates Technological challenges 87 vikas vadakara
  88. 88. 21st Century Executives challenges Global strategies: diverse cultural, economies, different regulations, demography Technological developments Inspiring leaders Role model of ethical behaviour Win -Win Approach: seeking mutual benefit Work life balance 88 vikas vadakara
  89. 89. Social Responsibility of Managers Organization is a part of society Relationship with the community or society in which organizations are exist and work Decisions taken may affect society in different ways Show the concern towards society 89 vikas vadakara
  90. 90.  Economic responsibilities: produce goods and services required and helpful to the society Legal Responsibilities: follow rules and regulations, laws Environmental Responsibilities: protect environment and preserve ecological balance Ethical Responsibilities: e.g. fair and unbiased treatment to workers Discretionary Responsibilities: contribution to society by adopting villages to develop, donate books, computers to schools, free medical campaign 90 vikas vadakara
  91. 91. 91 vikas vadakara