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INTRODUCTION TO MANAGEMENT
Management: A Competency Based Approach; 10 th Edition

MANAGING IN A DYNAMIC ENVIRONMENT
The word dynamic is putting an emphasis on change
...
Organizational
survival depends on coping with change
...
Without customers there is no organization
...
If demand changes, we have to change our product
...
Management is related to addressing the changes required
for the organisation to succeed
...



An environment is constantly changing and a manager has to be flexible in order to adapt to
environment



Diversity of characteristics



Trying to put a group of people together to achieve a common goal

People in the industry are prone to making mistakes
...
The important thing is to learn
from them
...
There is a lot
of convergence going on
...

If you don’t adapt to change you are prone to failure, example, Nokia found some problems as other mobile
brands had begun to change their appearance into sleeker versions, where as Nokia took longer to diversify
their appearance
...

Different types of management: time, stress, conflict, relationship, weight, waste, organisational and business
...

‘Knowing what you (or people) want to do and then seeing that they do it in the cheapest way’
...
Efficiency might be a better word as we minimize costs
...


1

Management is ‘being concerned with the running of an organization or part of it’
...


WHAT IS AN ORGANISATION
An organization is a group of people working together to reach their goal in a period of time
...

An ‘Organization’ is any structured group of people – working together to achieve certain goals that
individuals could not reach alone
...
Everyone has to have his own specific
role in the organization
...

A ’Goal’ can be defined as an outcome to be achieved or destination to be reached over time through the
exercise of management functions and expenditure of resources
...
In the
short-run there is little to be done to increase your output if demand increases
...
Sometimes we
have to keep an eye on the long-run by saving money for future investment to guarantee long-term
satisfaction
...



At times of economic uncertainty, organisations strive to survive example- closing down unprofitable
departments, lay off workers



Times of uncertainty bring a lot of problems for organisations; therefore, organisations need to thrive
on stability
...
One
can’t help but think who will leave the firm? The inefficient worker who won’t find a job or the
best/most talented worker who has many job offers? It is the star employees that will change job and
this is not a good sign for the organisation



In management there is no right answer or solution to a problem, it also depends on the economic
situation of the company and of the market, thus, 2 different companies would adopt different
strategies and would still be successful
...


The organization is the people and relationships, the interaction and communication
...
Without customers there is no organization
...
e
...

An organization must interact with its environment i
...
open system
...
Some even strike joint ventures or alliances with competitors
...
Strategic alliance or alliance is not a merger i
...

they do not decide to become one organization
...
Sony and Erickson still exist as different companies but they share their
resources in the mobile phone industry
...
Sony joined Erickson rather than both of them pulling out
...
Different skills combined can be used to get a better product
...
There is always a gamble on which product the customers will choose
...

The parties agree to create a new entity by both contributing equity, and they then share in the revenues,
expenses and control of the enterprise
...

A merger is a combination of two companies into one larger company
...

It can be a business operating for profit … OR maximise shareholders wealth
...


3

They have different aims rather than aiming for profit
...
Sometimes you get into issues regarding licence fees in the case of public broadcasting
...

One may have a corner shop while at the other end of the spectrum one may have a worldwide organisation
...
Though organisations may differ in aims, etc
...


DISTINGUISHING FEATURES BETWEEN GOODS AND SERVICES
Intangibility: goods can actually be touched
...
Services
such as financial advice cannot be actually seen and you cannot tell you can actually be satisfied with the
service
...
There is reputation and word of mouth but still this
depends on trust as you cannot know what you will get for sure
...
A lecture on two different days will surely not be identical
...
It depends on the personal circumstances of the service provider
...

Inseparability: this means that very often you cannot possible separate the service from the service provider
...
It is also something you cannot store
...
FAQs (frequently asked questions) are trying to come up with the most
common questions asked and to provide an automated response to give legal advice when needed
...

Perishability: services cannot be stockpiled
...
What is the value of
a newspaper of a week ago? Certain services are perishable
...
Goods are bundled together
with services for product differentiati on
...
The
services offered could be free insurance for one year, after-sales service, etc
...

Effective managers are essential to any organisation’s overall success
...
”
The definition of who needs an organisation provided by Griffin is the same as the definition of organisation
...

An organisation is a group of 2 or more people working together to achieve a common goal sharing
resources at their disposal
...


4

THE NEED FOR AFFECTI VE MANAGEMENT
Profit seeking organisations
Large businesses: In large organisations, management is required to define the operations of each
worker, share resources, etc
...

Effective management is essential
...
It is important to survive against competition
...
The other companies could be able to set the
prices of your common product to a low minimum as they can survive by selling other products
...
Thus, management in small businesses is fundamental because of
limited resources and because of the highly competitive environment
...
Management could be more important in a small organisation rather than in a large
organisation
...

Coordination is also very important
...
There is the need for transparency,
accountability because people want to know that their money from taxes is being invested properly
to generate some form of utility or added value
...
It is important that mistakes are very
rare and therefore management has to be very effective
...


WHAT OR RATHER WHO IS A MANAGER?
The definition of a “Manager” then follows:
“A person who allocates human, material and information resources in pursuit of an organisation’s goals
...

Efficiency implies minimizing waste and maximizing value from our limited resources
...

Effectiveness implies getting the required results
...

All resources no matter how abundant are finite and limited
...
however, they contribute through own individual
work not by directing others
...
As managers within organisations, the performance is
measured not on your individual performance but on the performance of your department
...

Managers achieve goals by enabling people to do their jobs effectively and efficiently not by performing all the
tasks themselves
...


DEFINE WHAT MANAGERS DO
The basic managerial functions as first defined by Fayol still stand:
Planning and Decision Making
Organising
Leading
Controlling

7

Planning
and
Decision
Making

Resources
Input from

Organizing
Goals
attained:

environment:

Efficiently
Effectively

Human
Financial
Physical
Information

Controlling

Leading

Regardless of their level, most managers perform all the functions of management (to different extends
and magnitudes)
...
Without a plan you have a tendency to fail (depends on what
project you are working on and depends on what kind of manager you are)
...


PLANNING
Planning can be considered to be preparing for tomorrow today
...
It
implies looking to the future
...

To establish an overall direction for the future
To identify and commit resources at achieving organisation’s goals
To decided which tasks must be done to reach those goals
The first part of planning is first to define organisational goals and then we have to plan the way to reach these
goals
...
Planning involves looking ahead; it is planning for
today/tomorrow
...
How shall you achieve those objectives?

8

ORGANISING
Creating a structure of relationships to enable employees to carryout management’s plans and meet its goals
...

An organisation’s success depends largely on management’s ability to utilise those resources
efficiently and effectively
...

The managerial function of communicating with and motivating others to perfo rm the tasks necessary
to reach the organisation’s goals
...
Controlling can be a feedback to decide whether planning h as been correct
...
You have to compare with your own statistical
records but you have also to compare with those of your competitors
...

Control procedures:
Sets standards of performance
Measures current performance against set standards: importance of comparing internally with past
performance and even comparing with competitors as well
...

Managers work in Organisations: different forms of organisations: small, large, international; effective
management is still required
...

Managerial jobs differ from each other in:
Level within the organisational hierarchy
Functional areas of specialisation

9

The CEO(Chief Executive Officer) and Store Manager are both Managers
...


LEVELS OF MANAGEMENT
In a small organisation there is usually one level of management
...

There are 3 basic levels of management:
Top Managers: CEO, Executives; usually the policy formulators
Middle Mangers: these link Top Managers with First-line Mangers
First-line Managers: these link the Managers with Non-Managers
Non-Mangers

Top
Managers
Middle
Mangers
First-line Mangers

Non-Managers

TOP MANAGERS
These are responsible for overall direction, strategy and operations and organisation
...
Top managers include the President/ Vice-President/ CEO/ Managing Director
...
They devise the policy to reach the organisation’s aims: increase profits,
reduce costs, and increase market-share
...
They make long-term plans and objectives
...


Middle Managers receive broad strategies/ policies from top management and translate them into specific
goals/ plans for first-line management to implement
...
These include Department Head/ Plant Manager/ Director of
Finance
Direct and co-ordinate first-line managers as well as non-managerial staff
...

Major difference to first-line managers is the management of group performance and resource
allocation
Most time spent planning, organising and leading
...
They spend
a lot of time with people who do not direct – employees within that department ecc
...

These are directly responsible for the production of goods or services
...

This level of management is the link between the operations of each department and the rest of the
organisation
Employees reporting to these managers to basic production work – goods or services
...
These normally
spend much time with other first-line mangers and with their own department i
...
non-managers
Most time spent with the people they supervise and other first-line managers
...

Strong on technical expertise to teach and supervise subordinates
...

With growth things MUST change!

11

In small companies, 1 person (usually the founder/ owner) often carries the whole load – Jack of all trades
There is no differentiation between levels of management
With growth this must change however
...

Possible problems with ‘relinquish’ control can be incurred
...
the owner should focus on a particular competency:
however should also oversee the company’s direction, results and stance
...

Principle agent problem arises from the fact that when u are the owner, you are the principle u have
a lot of interest in the bank, because if the business fails you have lost all your investments
...
Managerial jobs differ from each other in various ways:
Functional managers: narrow scope/ specialised tasks
Managers who supervise employees having specialised skills in a single areas of operation, such as
accounting, human resources, finance, marketing, production or IT
...
The general manager is not focused on a particular issue
...

Managers responsible for the overall operations of a complex unit such as a company or a division
...
These basically the most important sectors of the organisation
...
All sectors have their various level of
operation
...
It must be customer-focused
...
Quality needs
to satisfy the needs of the customers
...

Pricing: price must be reasonable for the product offered
Promotion: the consumers must know about your product and its quality
Place and Distribution: it must be available to your customers
Marketing is not just advertising, it is product development
...
Pricing, price tactics and price strategy is very important
...
The Finance Manager is concerned with managing the
flow of funds into and out of the organisation
...

The Finance Manager is responsible for:
Granting and using organisation’s credit
Investing the organisation’s funds: excess cash in hand is doing nothing and thus should be invested
Safeguarding the organisation’s assets
Keeping track of financial health: The balance sheet
...

Finance manager is responsible to take care of accounts and cash flow
...
The responsibility of the finance manager is to manage those flows
...


14

OPERATIONS MANAGER
The operations manager is concerned with creating and managing systems that create the organisations’
products and services
...
Excess stock is dead
money
...

Determining factory layout
Scheduling production: taking care of the shifts
Maintaining equipment: especially production machinery which is switched on all day long
...


HUMAN RESOURCES MANA GER
Responsible for building and maintain a competent and stable workforce
...
Looking ahead into the future
...
It
also involves various costs: advertising, selection costs, and training costs
...
It is the gateway into the organisation
...
There shouldn’t be any
misleading agreements
Training and Development: is the employee performing wrongly because of training or because he is
not capable of doing the job? Training improves skills
...

Overseeing relations with unions within legal regulations
Increasingly nowadays, the employees are the most important resource in the organisation
...


15

INFORMATION TECHNOLO GY MANAGER
Information Technology helps organisation: e-mails, stock-keeping, pay-rolls, on-line bank transactions,
printing, and instantaneous communication with customers
...

Information is a value-added resource derived from data
...

Through real-time communications networks, basic managerial functions are dr amatically changing rapidly
improving or quickly becoming more closely linked
...

Although functional managers are specialised and focused they cannot operate oblivious (unaware) of the
organisations’ wider goals and strategies
...

Cross-functional interaction and communication are essential
...

To become a successful manager one must acquire necessary skills
...
We learn through mistakes
...
We learn from other people’s experience
...
Everything
changes because of technology for example and
so we need to continue learning
...


learning process
...


17

Therefore, running an organisation effectively has 2 main components:

ORGANIZATIONAL SKILL

ENTREPRENEURIAL SENSE

[EDUCATION]
It involves principles and
techniques of management
This includes the ability to delegate
It is taught at colleges and business
schools

[EXPERIENCE]
Recognizing and making use of
opportunities, predicting market
needs and trends
Achieving one’s goal by sustained
drive and skillful negotiation
These natural tendencies and ‘gut’
feelings are not as easily taught

SKILLS FOR EFFECTIVE MANAGEMENT
There are 6 key competencies/skills necessary for effective management:
Communication Competency
Planning and Administration Competency
Strategic Action Competency
Self-Management Competency
Global Awareness Competency
Teamwork Competency
All these skills lead to Managerial Effectiveness
...


DIMENSIONS OF COMMUN ICATION COMPETENCY
Communication is the basis of every relationship
...

The Communication competency is the most fundamental competency necessary for the deployment of all
other competencies
...

Communication is associated with information and knowledge
...

Example: is a flexible and varies approach in different situations, promotes 2-way communication and
feedback, build relationships
...
The funds are finite and limited within the

18

organisation
...


Formal communication
Example: writes clearly, concisely and effectively, using traditional as well as elec tronic media, has presence,
high impact, persuasive
...


DIMENSIONS OF PLANNI NG AND ADMINISTRATIO N COMPETENCY
Deciding the task that need to be done, determining how to do them
...
Planning is preparing for tomorrow today
...

MBA – Masters in Business Administration

Information gathering, analysis, and problem solving
Example: takes calculated risks and anticipates consequences


All part of the planning process, especially in decision making

Planning and organising projects







Planning – start planning, having an idea what to do
...

To plan we need to take calculated risks, need information to do this
...
Multitasking
and being able and capable of handling several issues at the same time
...

Example: Microsoft just launched a new version of Internet Explorer and Firefox have been working to launch
their new version since November, since their competitor has launched already time is of the essence if Firefox
wish to be successful

Budgeting and financial management

19

Example: understands budgets, cash flows, financial reports, and annual reports and regularly uses such
information

DIMENSIONS OF TEAMWORK COMPETENCY
Accomplishing goals through small groups who are collectively responsible whose work is independent
...
Team must be empowered to act and decide on their ‘best judgement’
...

In the development of new products and ideas not everything is a success
...

Every success is trailed by several things that did not work out as planned
...

Having an effective team doesn’t mean that everybody agrees with one another, there tends to be rivalry
between them
...


Designing teams
Example: formulates clear objectives that inspire team members and motivate commitment, measures the
progress and performance
...
You must communicate with them: if
they need anything
...


Creating a Supportive Environment
Example: acts as a coach, counsellor, and mentor, being patient with team members as they learn, reward
‘teamwork’ not individuals

Managing team dynamics
Example: brings conflict and dissent into the open and uses it to enhance the quality of decisions, understands
strengths and weaknesses of individuals, facilitates open communication
...
It means ensuring that
actions are aligned with the company mission and values
...
Strategy refers to the objectives for our organisation
(Group of people working for the same goal)
...

As a manager you need to know what there is in your disposal
...
Having a good grasps on what are your
strengths and weaknesses
...
[See diagram below]

Understanding the Industry

20

Example: knowing industry history and evolution, informed of the actions of competitors and strategic
partners, analysis of trends and future implications
...
What if your dominant position in the market was to be eroded away overnight by having the
small organisations in the market joining together?

Understanding the Organisation
Example: balance shareholders’ concerns, understand strengths and weaknesses of various strategies, know
organisation’s core competencies of the organisation, reinforces culture
...

Strategy involves 2 components;
 Performance (Training and Development)
 Competitors
SWOT Analysis -

DIMENSIONS OF GLOBAL AWARENESS COMPETENCY
This refers to work entailing resources (Human, Material, Financial, and Information) from multiple countries
and serving markets spanning multiple countries (ex
...


Cultural Knowledge and Understanding



Example: stays informed of political, social and economic trends and events around the world
...
e
...

Understands how own cultural background affects own attitudes and behaviours



Can empathize and see from different perspectives while still retaining self confidence and
determination
...
Not blaming difficulties on personal situations
or on others
...
They’re only human
...


You have to remain up dated on the on-going developments in your area of specification
...

It is very important that an organisation’s goals are:
Communicated - Clearly Defined - Fully Understood
...
They
must know where they are going
...
otherwise, initiatives will be
disparate and lacking strategic-fit, thus disruptive and destructi ve to the organisation’s overall
direction

COMMUNICATION and effective FEEDBACK are imperative in reinforcing strategic aim
...

Its origins lie in planning and conducting military campaigns:
Displacing enemy powers
Gaining advantage and supremacy
Defending one’s position
Strategy is like a flag in the battle
...

The flag must be seen
...
The objective provides a plan which in turn
provides a direction
...

Without defined GOALS and a viable PLAN to achieve them an organisation will gradually come apart
...
anything not measured doesn’t get done
Possible promotes creativity and innovation towards a central purpose
No strategy means no vision and no direction
...


23

Important for an organisation’s long-term survival is flexibility
...

“
...
”
True for the turtles of the Galapagos as well as for organisations!

THE CHANGING CONTEXT OF MANAGERIAL WORK
The realm of management is constantly changing
Management is dynamic as:
The environment changes
People change
Conditions and rules change
Technologies change
Management evolves because the situation changes
...
e
...
In management, new theories and
practices are developed in the light of new challenges
...

This is often accompanied by downsizing i
...
laying off or early retirement
...


As a result of this trend, companies become flatter and smaller and so become less bureaucratic
...


The aim is towards flexibility aided by strategic alliances
...

Lean and Mean organisations
“In a strategic alliance, organisations agree to co-operate in a venture expected to benefit all participants
...


A CHANGING WORKFORCE
Change in age distribution of workforce: s hrinking number of new workers in the 18-24 year age
group increasing productivity among older workers
...

Increased immigration: mobility, langua ge, cross-border worker movement
...
to prevent discrimination
...


MANAGEMENT THOUGHT: PAST AND PRESENT
For many generations people believed the earth was flat and at the centre of the universe
...

One generation’s “fact” often becomes the next generation’s fiction
Each era’s conventional wisdom evolves, as cherished beliefs are challenged by new – leaving only beliefs that
stood the test of time
...
Preceding generations of managers have much
to teach
...


25

Environment changes with time
...
If we do not
change, management would not be effective anymore
...


26

EVOLUTION OF MANAGEMENT
Over the centuries 3 major forces shaped management thought:
Social forces: the norms and values that characterise a culture
Economic forces: associated with economic systems, economic conditions and trends
Political forces: governing institutions, policies, regulations, attitudes towards business
Management today:
Reflects the evolution of theories over many decades
Seeks to answer: “What’s the best way to manage an organisation?”
Continues utilising several models as they still apply to the manager’s job

HISTORY OF MANAGEMEN T THOUGHT
1980-2000

Quality theory

1960-2000

Contingency theory

1950-2000

Systems and Quantitative theories

1930 -2000

Behaviour theory

1890-2000

Traditional/ Classical theory

TRADITIONAL OR CLASS ICAL MANAGEMENT THEORY
This management theory began in late 1700s with the invention of reliable steam powered machinery
...
With the industrial revolution, production increased and from a small family business it became a
large business and so this required better management
...

Traditional or Classical management theory is focussed on:
Finding the “one best way” to perform and manage tasks
The manager’s role in a strict hierarchy
Efficient and consistent job performance
Classical management theory has 3 schools of thought:
Bureaucratic management
Scientific management
Administrative management
A common ideology is that they see the manager’s role in a strict hierarchy
...
The founding father of bureaucratic thought is Max Weber who was concerned with socioeconomic issues
...

Impersonality: as an employee you are based on your performance not on who you are related to
...

Division of labour: specialisation; simple tasks to each person
...

Authority structure: everyone has different authority
...


Top
Ma na ger
Mi ddle
Ma na ger
Fi rs t-Line
Ma na ger

Work
Group

Work
Group

Mi ddle
Ma na ger
Fi rs t-Line
Ma na ger

Work
Group

Work
Group

Fi rs t-Line
Ma na ger

Work
Group

Work
Group

Fi rs t-Line
Ma na ger

Work
Group

Work
Group

Pros of Classical Bureaucracy:
Efficiency
Consistency
Cons of Classical Bureaucracy:
Rigid adherence to rules for their own state
Managerial focus on authority not employee productivity
Slow decision making
Incompatible with changing technology
Incompatible with professional values of:
o Advancing knowledge
o Serving clients and customers
o Finding innovative solutions

28

Bureaucratic management is still widely and successfully used today
...

It is most effective when:
Large amounts of standard information must be processed
Efficient processing methods have been found
Customer’s needs are known and aren’t likely to change
Technology is routine and stable
Many employees are delivering a standardised product
Continuum of Bureaucratic Orientation:
Low Bureaucratic Structure

Mid-Range Bureaucratic Structure

Amazon, Starbucks, DreamWorks

Coca-Cola, Sony

High Bureaucratic Orientation
McDonald’s UPS

Scientific Management (focuses on the employee)
Focuses on:
Individual worker-machine relationship
Getting work done on the factory floor
Removing guesswork from management
Fred Taylor pioneered labour efficiency
...

Frank and Lillian Gilbreth used motion picture (filming people) to redesign jobs for greater efficiency
...
Once you find out the best method, then you need to
ensure that all the employees use that method
...



Pros of classical Scientific management:





Provides employees with skills and training
...


Cons of classical Scientific management:





Social needs, working conditions and job satisfaction often more important than money
Limits workers’ morale and participation affecting their performance
...

Seek one best way to perform each task
...


Administrative Management (focuses on the manager)
Administrative management focuses on the role of the manager within the organisation; the manager and
managerial functions
...
He emphasised
formal structures and process how individual tasks are geared to meet defined objectives
...
Division of Labour

8
...
Authority

9
...
Discipline: respect for rules

10
...
Unity of Command: not having conflicting orders Equity
5
...
Staff stability: keep labour turn over low

6
...
Initiative

7
...
Espirit de corps: foster the idea of teamwork

30

Pros of Classical Administrative management:
Provides a clear structure
Professionalization of managerial roles
Cons of classical Administrative management:
Internal focus: all of the other previous concepts focus within the organisation itself and exclude the
external factors
Overemphasises rational behaviour of managers

Traditional or Classical theory
Is still applied effectively today

31

BEHAVIOURALIST MANAGEMENT THEORY
During great depression of 1930s government, regulating entities and unions started taking a greater role in
the operation of organisations
...
If you adopt wrong managemen t theories,
then you would ruin the lives of many employees
...
When a company went bust, because of mismanagement, there were many who lost their jobs
and many investors lost all their weal th as well as there was not much respect for the investors and the
shareholders themselves
...
Unlike a project,
management knows no end as you are constantly trying to improve
...

Employees should be involved in problem solving
This contradicted the views of Classicists Weber, Taylor and Fayol!!
Importance of coordination is the principle point here
...

Follett’s 4 coordination principles for manager to apply
1
...

3
...


Coordination should be worked at continuously

Follett argued in favour of good working relations, proposing:
Communication: managers should talk with workers because they have useful information
...

This is different from the previous theories of management as an employee was only considered as a number,
an extension of a machine
...

Chester Bernard made 2 contributions:
1
...


Acceptance theory of authority:

Employees will follow management’s orders if they:
Understand what is required
Believe the orders are consistent with organisation’s goals
See benefit to themselves in carrying them out
The Hawthorne contributions
Illumination tests at Western Electric’s Hawthorne plant
...
contributed 3 observations:
Failure of classical scientific management principles: Scientific management failed to increase
productivity
Productivity – The Hawthorne Effect: Productivity was increased by receiving special attention NOT by
physical changes (such as lighting levels, heating, etc
...
It is not simply economic gains that make a difference in motivation
...


Pros of Behavioural management:
Considers motivation, group dynamics, and interpersonal processes
Focuses managerial attention on these processes
Employees are not tools but are valuable resources
Cons of Behavioural management:
Individual complexity makes behaviour prediction difficult
Many managers reluctant(unwilling) to practice such concepts as there was reluctance to consult
employees as this could be a treat to the managers’ authority
Assessing behavioural management:
Employees motivated by social needs, a sense of identity
...

o A system is a more holistic way of working
...
It can have sub systems in it
...

o An organisation in an internal system the employees, teams, departments, and levels linked to
achieve its goals
...

Basic Systems View of Organisation:

Environment

Inputs: human,
physical, financial,
and information
resources

Transform Process:
Technology,
Operating,
Administering, and
Contorl systems

Outputs: Products,
and services

QUANTITATIVE MANAGEMENT THEORY
This was developed in the World War II era
...

Government, scientists, and managers help military deploy resources efficientl y and effectively
...

After war, companies began using same techniques
...


Operations Management:
Techniques for the efficient production of goods and services
Less mathematically sophisticated

We want to make our system more efficient
...

2
...
The advantage of a simulator is that it can run much more tests than those that
would be performed in reality
...

Pros of Quantitative management:
Sophisticated decision making techniques
Models increase awareness of complex organisational processes
Very useful in planning and controlling processes
Cons of Quantitative management:
Cannot fully explain and predict people’s behaviour in organisations
Maths sophistication may come at expense of other skills
Models may require unrealistic/ unfounded assumptions
Models cannot account for human/ individual behaviour and attitudes
Assessing Quantitative management:
Used mainly in managing:
o
Transformation and change processes
o
Technical planning and decision making
Not used to deal with human aspects of management

CONTINGENCY MANAGEMENT THEORY
Performance Contingent Pay means that it depends on how much you work
...
We change according to
circumstances
...
If the situation changes, we have to change the tools i
...
management theories
...

The 3 other theories used independently or combined as necessary in dealing with various
situations
...
Q refers to quality
...

Rely on few Q suppliers not on delivery sampling: firstly, you are building a relationship with the
suppliers
...
If you buy from the same
person with volume, you might get lower prices
...
These might have no available stocks when they fail and you
would be left with no materials
...

Train employees for Q and empower them to decide and report on Q
Total Quality Management (TQM) Concepts
TQM is a continuous process ensuring all aspects of production build product quality
Quality = how well product/ service does what it is supposed to do
Customer ultimately defines quality in the market-place
The Quality Control Process
Focuses on measuring:
Inputs
Transformation operations
Outputs
Enabling managers and employees make decisions about product quality at each stage of the process
...


39

At the process stage, this involves quality control with the goal of eliminating defects and waste:
Waste of overproduction/ surges : overproduction leads to accumulation of unsold stock which could
possibly be sold at a lower price when the resources could be used to produce another product which
is sold immediately
...

Measure by variable:
o Assesses quantifiable product characteristics e
...
length, diameter, weight, etc
...
The 9 dimensions of Quality:
1
...

3
...

5
...

7
...

9
...

Managers must be effective within this dynamic environment
...

No organisation exists or operates in a vacuum
...

Managers must harness internal resources, exploiting strengths and shoring weakness toward addressing
opportunities and threats in the external environment
...
They did so because of changes happening in the external environment
...

To whom should the organisation be responsible?
The principle agent problem refers to the fact that the owners of the organisation invests in the organisation
and wants to maximise return on their investment
...
If the company goes bust, the manager loses his job while the
owners may lose everything
...

Organisations are also responsible to the overall society and to their suppliers
...
e
...

Managerial Capitalism:
Classic view of social responsibility that a firm’s primary purpose is to maximise shareholders’ wealth
It is not the responsibility of the organisation to care for society as this should be left to the
government
The organisation is in line with the law, pays taxes, provides employment, and then the government
has to distribute the wealth generated from the organisation
If the organisation grows, there is an increase in the overall wealth of the country
...

Stakeholder Theory:
Opposing view that organisations owe social responsibility to all stakeholders affected by its decisions
Shareholders are individuals or groups that directly and indirectly affect and are affected by the organisation
...
Shareholders, employees, environmental
groups, and suppliers are all stakeholders
...
There is some
kind of relationship going on between these stakeholders and the organisation; it is not a one way relationship
as any decision taken by any party is going to influence the other party
...
There are conflicting agendas which
cause problems with decision-making
...

For example, employees expect a good remuneration, profitability and stability of the organisation
...
The
customers expect good value for their money and a good service
Meeting responsibilities to stakeholders
Owners:
Businesses owe a fair return to investors
Managers must oblige to use resources efficiently and effectively
Managers must disclose an honest account of affairs (not only in the interest of the owners but also
because of suppliers, present and potential investors, etc
...
The Toyota workers are customers
and still require a safe work environment
...

Ethical right to fair, honest and equitable treatment
Suppliers
Need honest and open communication from organisation served
Deserve to be paid fairly for goods and services rendered
Should have the terms of their contracts honoured
Society
Fair employment practices
Donating funds and equipment
Preventing pollution
Offering communities kinds of assistance
These can serve as a form of advertisement

42

The organisation and its environments
External - General environment
o

International forces, Political – Legal forces, Economic forces, Social -Cultural forces, Technological
forces

External – Task environment
o

Owners (shareholders, not within the organisation), competitors, customers, suppliers, strategic
allies, regulators, unions

Internal environment
o

Organisation: Directors, employees, resources, culture

External General
Environment
External Task
Enviornment
Internal
Environment

The external environment is divided between the External General and Task environment
...
The externa l general environment is the furthest away
from the organisation
...
The external
macro-economic forces are referred to as PEST
...
If there is a change in the general
environment, there will be an effect on the other organisations as well
...
The effects are usually vague and long term: economic growth, consumption level, etc
...

Analysis of the General (macro environment) is done through PEST
...
It refers to the general relationship between the
business and the government
...

The laws dictate the laws of the game i
...
what can and what cannot be done
...
There is also a level playing field as the law applies to any
organisation
...
Focus on trends in how group or countries produce,
distribute, purchase, and use goods and services
...

Economic ideological structure:
Capitalism
Socialism
Communism
State of the economy:
Recession: unemployment, surplus production as people save
...
Discount supermarkets have developed
...

Recovery
Boom
Depression

44

Important issues are the level of:
Taxes

Tariffs

Wages

Unemployment

Interest rates: high interest rate reduces investment

Inflation

Standard of living

Personal spending/ saving

Government spending

Business spending and profits

Demand

Prices

Socio-cultural forces
Customs, values, trends and demographic characteristics of society in which the organisation functions
...
Opportunities for new products and services including design of products
with the older customers in mind
Gender
Race
Ethnic origin
Education level
Socio-cultural forces determine products/ services and standards that the society wil l value
...

The combined effects of processes, materials, knowledge and other discoveries result from research and
development
...
Not only does it improve efficiency, but it also
improves the products
...
If you do not change with the demand, you will not survive in the market
...


EXTERNAL TASK ENVIRO NMENT
External Task Environment is also referred to as the competitive environment
...
They are OUR customers, competitors, etc
...
You never know from where the competition is coming from
...

Threat of substitute products/ services: products and services which may be alternatives to those supplied by
the firm
Buyer bargaining power: try to force down prices, obtain more and higher quality products, and also increase
competition among sellers by playing them against each other
...

Supplier bargaining power: try to force down prices, obtain more and higher quality products, and also
increase completion among sellers by playing them against each other

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