PRINCIPLES OF MANAGEMENT
Management:
Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.
Management is defined as working with and through individual;s and groups to accomplish organizational goals.
Distinction between Management and Leadership:
Management and Leadership are one and the same thing, except that there is an important distinction between the two concepts.
Leadership is a broder concept than Management. Management is thought of as a special kind of leadership in which the accomplishment of organizational goals is paramount. The key difference between the two concepts lies in the word organization.
Leadership is any time one attempts to impact the behavior of an individual or group regardless of the reason. It may be for one’s own goals ora a friend’s goals, and they may or may not be congruent with organizational goals.
Functions of Management:
a. Planning.
b. Organizing.
c. Staffing.
d. Leading.
e. Controlling.
THE TEN MANAGERIAL ROLES IDENTIFIED BY MINTZBERG:
Interpersonal Roles:
1. The figurehead role(performing ceremonial and social duties as the organization’s representative)
2. The Leader Role.
3. The Liaison Role(communicating particularly with outsiders)
Informational Roles:
1. The recipient role (receiving information about the operation of an enterprise)
2. The disseminator role(passing information to subordinates)
3. The spokesperson role (transmitting information to those outside the organization)
Decision Roles:
1. The Entrepreneurial role.
2. The Disturbance-handler role.
3. The resource allocator role.
4. The negotiator role (dealing with various and group persons)
Managerial Skills:
Identified by Robert L. Katz.
1. Technical Skills.
2. Human Skills.
3. Conceptual Skills.
4. Design Skills.
Ingredients for Effective Human Skills:
1. Understanding Past Behavior.
2. Predicting Future Behavior.
3. Directing, Changing, and Controlling Behavior.
Productivity:
It is defined as the Output-input Ration within a time period with due consideration for quality.
Productivity = outputs
inputs
Productivity can be improved by:
1. By increasing outputs with the same inputs.
2. By decreasing inputs but maintaining the same outputs.
3. By increasing outputs and decreasing inputs to change the ration favorably.
Productivity implies effectiveness and efficiency in individual and organizational performance.
Effectiveness:
It is the achievement of Objectives.
Efficiency:
Is the achievement of the ends with the least amount of resources.
Managing: Science or Art?
Managers can work better by using the organized knowledge about management. It is this knowledge that constitutes a science.
Managing as practice is an ART. The organized knowledge underlying the practice may be referred to as a SCIENCE.
Principles:
Principles in Management are fundamental truths, explaining relationships between two or more ser of variables, usually an independent variable and a dependant variable.
Principles may be descriptive or predictive, and not prescriptive.
Principle of Unity of Command:
States that the more often an individual reports to a single superior, the more likely it is that the individual will feel a sense of loyalty and obligations and the less likely it is that there will be confusion about instruction.
Management Techniques:
Techniques are essentially ways of doing things, methods of accomplishing a given result.
Types:
a. Budgeting.
b. Cost Accounting.
c. Network Planning.
d. Control Techniques.
- Program Evaluation and Review Technique (PERT).
- Critical Path Method (CPM).
- Rate-of-return-on-investment control.
- Various devices of Organizational development.
Different Approaches to the Analysis of Management:
1. The Empirical or Case Approach.
2. The interpersonal Approach.
3. The Group Behavior Approach.
4. The cooperative Social Systems Approach.
5. The Sociotechnical Systems Approach.
6. The Decision Theory Approach.
7. The Systems Approach.
8. The Mathematical Approach.
9. The Contingency or Situational Approach.
10. Mintzberg’s Managerial Roles Approach.
11. McKinsey’s 7-S Approach.
12. The Operational Approach.
Planning:
Planning involves selecting missions and objectives and the actions to achieve them; it requires decision-making, that ism choosing future courses of action from among alternatives.
Planning strongly implies managerial innovation.
Planning bridges the gap from where we are to where we want to go.
Planning is an intellectually demanding process; it requires that we consciously determine courses of action and base our decisions on purpose, knowledgem ad considered estimates.
Types of Plans:
a. Purposes or Missions.
b. Objectives.
c. Strategies.
d. Policies.
e. Procedures.
f. Rules.
g. Programs
h. Budgets.
Steps in Planning:
a. Being Aware of Opportunities.
b. Establishing Objectives.
c. Developing Premises.
d. Determining Alternative Courses
e. Evaluating Alternative Courses.
f. Selecting a Course.
g. Formulating Derivative Plans.
h. Numbering Plans by Budgeting.
Strategies:
1) General Programs of action and deployment of resources to attain comprehensive objectives.
2) The Program of Objectives of an organization and their changes, resources used to attain these objectives, and policies governing the acquisition, use, and disposition of these resources.
3) The determination of the basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals.
Policies:
Policies also are plans in that they are general statements or understandings which guide or channel thinking in decision making. Not all policies are “Statements”; they are often merely implied form the actions of managers.
Policies define an area within which a decision is to be made and ensure that the decision will be consistent with, and contribute to, an objective.
Policies help decide issues before they become problems, make it unnecessary to analyze the same situation every time it comes up, and unify other plans, thus permitting managers to delegate authority and still maintain control over what their subordinates do.
Procedures:
Procedures are plans that establish a required method of handling future activities. They are guides to action, rather than to thinking, and they detail the exact manner in which certain activities must be accomplished. They are chronological sequences of required actions.
Rules:
Rules spell out specific required actions or nonactions, allowing no discretion. They are usually the simplest type of plan.
Programs:
Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action; they are ordinarily supported by budget.
Budgets:
A Budget is a statement of expected results expressed in numerical terms. It may be referred to as a “numberized” program. In fact, the financial operating budgets is often called a “Profit Plan.” A Budget may be expressed either in financial terms or in terms of labor-hours, units of product, machine-hours, or any other numerically measurable term.
Budgets vary considerably in accuracy, detail, and purpose.
Types of Budget:
1. Variable Budget.
2. Program Budget.
3. Zero Based Budget.
Variable Budget:
Budgets that vary according to organization’s level of output are called Variable or Flexible budgets.
Program Budget:
In a Program Budget, the agency (and each department within the agency) identifies goals, develops detailed programs to meet the goals, and estimates the cost of each program.
To plan an effective program budget, a manager must do some detailed and thorough planning.
Zero Based Budget:
It’s a combination of the variable and the program budget.
A manager using this approach thinks of the goals and the programs needed to achieve them as a “work package,” as though the programs were started from scratch, or “base zero.”
The Strategic Planning Process:
Although specific steps in the formulation of the strategy may vary, the process can be built, at least conceptually, around the key elements:
a) Inputs.
b) Enterprise Profile.
c) Orientation of Top Managers.
d) Purpose and objectives.
e) External Environment.
f) Internal Environment.
g) Alternative Strategies.
h) Evaluation and Choice of Strategies.
i) Medium and Short range Planning, implementation and control.
j) Consistency and Contingency.
SWOT Analysis (TOWS Analysis):
-Used for analyzing the situation.
The TOWS Matrix is a conceptual framework for a systematic analysis thatfacilitates matching the external threats and oppurtunities with the internal weakness and strengths of the organization.
T - Threats.
O - Oppurtunities.
W - Weakness.
S - Strengths.
Figure represents the four alternative strategies of the TOWS Matrix. The strategies are based on the analysis of the external envronment (threats and oppurtunities) and internal environment (weakness and strengths).
ExternalFactors / Inrnal
Factors / Internal Strengths (S)
e.g., strengths in management, operations, finance, marketing, R&D, Engineering / Internal Weakness(W)
e.g., Weaknessesin areas shown in the box of “Strengths”
External Opputunities (O)
(Consider risks also) e.g.,
current and future economic conditions; political and social changes, new products, services and technology / SO Strategy:
Maxi-Maxi
Potentially the most successful strategy, utilizing thje organization’s strengths to take advantage of oppurtunities. / WO Strategy:
Mini-Maxi
e.g., development strategy to overcome weakness in order to take advantage of oppurtunities.
External Threats (T):
e.g. Lack of energy, co\mpetation, and areas similar to those shown in the “opputunities” box above / ST Strategy:
Maxi – Mini
e.g., use of strengths to cope with threats or to avoid threats / WT Strategy:
Mini – Mini
e.g., retrenchment, liquidation or joint ventures.
Three Generic Competitive Strategies by PORTER:
1. Overall Cost Leadership Strategy.
2. Differentiation Strategy.
3. Focused Strategy.
Failures of Strategic Planning:
1. Managers are inadequately prepared for strategic planning,
2. The information for preparing the plans is insufficient for planningfor action.
3. The goals of the organization is too vague to be of value.
4. The business units are not clearly identified.
5. The reviews of the strategic plans of the business units are not done effectively.
6. The link between strategic planning and control is insufficient.
Successful implementation of Strategies:
1. Communicating strategies to all key decision-making managers.
2. Developing and communicating planning premises.
3. Ensuring that action plans contribute to and reflect major objectives and strategies.
4. Reviewing strategies regularly.
5. Developing contingency strategies and programs.
6. Making the organization structure fit planning needs.
7. Continuing to emphasize planning and implementing strategy.
8. Creating a company climate that forces planning.
Planning Premises:
Planning Premises are defines as the anticipated environment in which plans are expected to operate. They include assumptions or forecasts of the futuer and known conditions that will affect the operation of plans.
Requirements of Effective Premising:
1. Selection of the premises which bear materially on the programs.
2. Development of alternative premises for contingency planning.
3. Verification of the consistency of premises.
4. Communication of the premises.
Forecasting
Steps for Forecasting Process:
1. Determine the objective of the forecast.(What is its use?)
2. Select the period over which the forecast will be made. (What are your information needs over what time period?)
3. Select the forecasting approach you will use. (Which forecasting techniques is most likely to produce the information you need?)
4. Gather the information to be used in the forecast. (Which data will most likely produce forecasts of greatest use to you?)
5. Make the forecast. (Which computational procedures will you have to use?)
Types of Forecast:
1. Judgmental Forecast. (DELPHI Technique)
2. Extensions of Past History. (Time Series Methods)
3. Causal Forecasting Models.
DELPHI Technique:
Description:
It is developed at the RAND Corporation in 1960. Here a panel of experts are interrogated by a sequence of questionnaires in which the responses to one questionnaire are used to produce the next questionnaire. Any set of information available to some experts and not others is thus passed on to the others, enabling all the experts to have access to all the information for forcasting. This technique eliminates the bandwagon effect of majority opinion.
Accuracy:
Short Term (0-3 months) : Fair to very good.
Medium Term (3months-2 years) : Fair to very good.
Long Term (2 years and above) : Fair to very good.
Identification of turning point : Fair to good.
Typical Application : Forecasts of long range and new product sales, forecasts of
margins.
Data Required:
A coordinator issues the sequence of questionnaires, editing and consolidating the responses.
Cost of forcasting with a Computer: $2000 +
Is Calculation Possible without a computer: Yes.
Time required to develop an application and make forecasts : 2 months +
Decision Making:
Decision Making is defined as selection of a course of action from among alternatives.
The process leading to making a decision might be thought of as:
1. Premising.
2. Identifying alternatives.
3. Evaluating Alternatives in terms of the goal sought.
4. Choosing an alternative, that is, making a decision.
Limiting Factor
Is something that stands in the way of accomplishing desired objective. Recognizing the limiting factors in a given situation makes it possible to narrow the search for alternatives to those that will overcome the limiting factors.
Principle of the Limiting Factor:
By Recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected.
Evaluation of Alternatives:
1. Quantitative and Qualitative Factors.
2. Marginal Analysis.
3. Cost Effective Analysis.
Cost Volume Profit Analysis (Cost Effective Analysis):
Cost Volume Profit Analysis (often referred to as breakeven analysis) allows management to determine in advance (with at least a worthwhile degree of accuracy) the effects that certain contemplated decisions or expected states of nature will have on revenues, cost, and therefore profits.
In Cost Volume Profit Analysis, the breakeven point (the point at which total revenue equals total cost) can be expressed algebraically:
Breakeven Point (in units) = total fixed cost .
Price/unit – variable cost/unit
Steps involving the decision on Cost-Effective-Analysis:
1. Objectives are normally oriented to output or end result and are usually not precise.
2. Alternatives ordinarily represent total systems, programs, or strategies for meeting objectives.
3. The measures of effectiveness must be relevant to objectives and set in terms as precise as possible, although some may not be subject to quantification.