Management Principles and Practice - Methods and Tools
Koontz and O’Donnell - First Edition
Weihrich, Cannice and Koontz - 14th Edition, 2013
Available: MBA management theory revision notes by Narayana rao K.V.S.S. , Professor, NITIE
All Core Management Subjects - One Year Revision Planhttp://nraomtr.blogspot.com/2015/01/mba-core-management-knowledge-one-year.html
Management - Definition
It is a process of designing and maintaining environment in which individuals, working together in groups, efficiently accomplish selected aims.
Effectiveness: Accomplishment of selected aims.
Efficiency: Accomplishment of aims with the least amount of resources.
Management is the process of designing and maintaining the environment.
Environment – External and Internal
External – Society, Government, Physical environment, Customers, Suppliers
Internal – Selected objectives, goals, mission, technology, equipment, tools, materials, accepted orders, staff, training, reward systems, recognition and discipline systems, communication systems
The functions of managers
Planning involves selecting missions and objectives as well as the actions to achieve them.
Planning involves decision making.
The decisions require commitment of resources – human and material.
Planning identifies and prescribes actions to achieve the objectives of the organization.
These actions have to be split into tasks that can be accomplished by equipment and man combinations.
The men have to be grouped and managers have to be assigned to groups to help the operators with daily plans, training, material flow, coordination with other groups etc.
Staffing involves filling, and keeping filled, the positions in the organization.
This is done by identifying workforce requirements, inventorying the people available, and recruiting, selecting, placing, promoting, appraising, planning the careers of, compensating, and training or otherwise developing recruits and job holders.
Leading is influencing people so that they will contribute to organizational and group goals.
Leadership is interpersonal aspect of managing.
Leader needs followers.
People tend to follow those who offer means of satisfying their own needs, wishes and desires.
Leading involves concepts and processes of motivation, leadership styles, and communication.
Controlling is observing and correcting actions to make sure that they follow designed processes and measuring and correcting individual and organizational performance to ensure that events conform to plans.
Managerial functions at different organizational levels
All Managers carry out all managerial functions.
Top level managers spend more time on planning and organizing and direct and control middle mangers.
Middle managers take more active role in staffing and direct and control supervisors or first level managers.
First level managers spend more time in directing and controlling the activities of front line employees who actually produce products or services.
Conceptual skills (Business Model – Market, Technology and Financial Returns)
Problem solving skills (Solving challenges that appear periodically by analyzing the problem and synthesizing the solution. The solution is to be tested and validated).
Management Methods – Management Process
Management Methods – business functions
Supply Chain Management
Human Resource Management
Information Systems Management
Chapter 4 essentials of planning and managing by objectives
Missions or Objectives – Objectives or Goals
Strategies – Policies – Procedures – Program
Steps in Planning
Management planning tool – management by objectives (mbo)
The Nature of Objectives
Hierarchy of Objectives
Multiplicity of Objectives
How to Set Objectives
Quantitative and Qualitative Objectives
Guidelines for Setting Objectives
Evolving Concepts in MBO
Benefits and weaknesses of mbo
Case – Developing Verifiable Case
5. Strategies, policies and planning premises
Role of Planning Premises to Guide Planning
The strategic planning process
Inputs to the organization
Orientation, Values and Vision of Executives
Mission (Purpose), Major Objectives, and Strategic Intent
Present and Future External Environment
Development of Alternative Strategies
Evaluation and Choice of Strategies
Consistency Testing and Contingency Planning
The tows matrix: a modern tool for analysis of the situation
External Opportunities SO WO
External Threats ST WT
Tows matrix strategic alternatives
SO – Vigorously pursue the opportunity
WO – Take up measures to reduce weakness
ST – Challenge the threat
WT – Withdraw from the activity
Blue ocean strategy –pursuit of opportunities in uncontested market
The authors suggested a framework called strategic canvas.
The portfolio matrix: a tool for allocating resources
Major kinds of strategies and policies
Products or Services
Hierarchy of Strategies
Porter Generic Competitive strategies
Premising and forecasting
Forecasting of Economic, Social, Political/Legal and Technological Environments
Forecasting with Delphi Technique
6. Decision making
Rationality in Decision Making
Limited, or”Bounded,” Rationality
Development of Alternatives and the Limiting Factor
Heuristics in Decision Making
Evaluation of Alternatives – Quantitative and Qualitative Factors
Cost Effective Analysis
Three Alternatives Approaches for Decision Making: Experience, Experimentation, Research and Analysis using Mathematical and Simulation Models.
Programmed and Nonprogrammed Decisions
Decision Making under Risk and Uncertainty
Creativity – Making People Creative and Harnessing Their Creativity
Brain Storming – Creative Manager
Invention and innovationInvention is a technical achievement.
Innovation is a business achievement.
Inventions are done by technical people
Innovations are done by business managers.
For Innovation managers have to understand the needs of the customers and then use existing technical alternatives to develop a new solution.
Managers can fund a research and development solution as a part of innovation project.
7. The Nature of organizing
Henri Fayol said organization involves decisions regarding material organization and human organization.
Management theory has not developed adequately in material organization.
Organizational Division – The Department
Organizational Levels arise due to Span of Management
Factors Determining an Effective Span
The Process of organizing
There will be opportunities of reengineering during the life of an organization.
Reengineering emphasizes the deep understanding of the capabilities of a new technology and redesigning the processes of an organization to make the best use of the new technology.
Organization structure: departmentation
Departmentation by Business Functions or Enterprise Functions
Departmentation by Territory or Geography
Departmentation by Customer Group
Departmentation by Product
Strategic Business Units
The virtual organization
Group of people connected through information technology.
Independent firms of suppliers, customers can also form virtual network of organizations.
The technological possibilities are exciting, but how do we manage people we never see? This is a topic that needs development.
The boundaryless organization
Jack Welch, CEO of General Electric stated this idea.
He wanted GE to be boundaryless organization.
It is a global organization.
An idea can generate in any unit of GE.
It can be sold to the global market.
Procedure - departmentation
The aim: Achieving Objectives
Mixing Types of Departmentation: The first level of departmentation can be on one basis and sections within departments can be organized on a different basis.
9. Line/staff authority, empowerment, and decentraliztion
Authority and Power
Line/Staff Concepts and Functional Authority
Decentralization of Authority: Federal Government – Different powers by constitution.
Delegation of Authority – Organization by an individual manager
10. Effective organization and organization culture
Avoid Mistakes in Organizing – Planning Stage
Planning for the ideal
Modification for the Human Factor
Avoid Inflexibility – Make it Flexible
Readjust as needed.
Making staff work effective
Make everybody understand authority relationships.
Make line listen to staff when specialist studies were done by staff and advice is given.
Keep staff informed of the developments in the organization.
Require Complete Staff Work: Staff must give a recommendation that is complete and implentable.
Making staff work acceptable and useful.
Tools of organization
Avoid conflict in organization through clarification of roles, authority and reporting relationships.
Ensure Understanding of the organization Design by teaching people – Explain to people the basis and expected benefits (sell the design).
Informal organizationRecognize its inevitable formation.
Recognize its benefits to members.
Use it for organization benefit appropriately.
Promoting an appropriate organizational culture
Defining organization cultureCulture is the general pattern of behavior, shared beliefs and values explicitly declared and assumptions that are not stated but can be diagnosed which are shared in the members of an organization.
One can observe some common elements of behavior, common beliefs and values and even common assumptions.
The Influence of the leader on organization cultureWhat is Value?
It is a fairly permanent belief about what is appropriate and what is not that guides the actions and behavior of employees in performing processes to achieve the objectives of the organization.
The values of top managers are accepted by large number of people and are implemented.
Value driven corporate leaders serve as role models and transform their employees.
The ideal organization culture created by corporate leaders can result in managerial functions being carried out in quiet different ways.
11. Human resource management and selectionSystems approach to HRM
Factors Affecting the Number and Kinds of Managers Required
The Management Inventory
Promotion from Within
The Policy of Open Competition
Responsibility for Staffing
Matching Job requirements and Candidate Competence
Job design and job requirements
Skills and personal characteristics needed in managersAnalytical and problem solving abilities
Desire to manage
Communication skills and empathy
Integrity and Honesty
Integrity: The quality of being honest and firm in moral principles
Honesty: telling the truth, not breaking the law, and not deceiving others
Past performance as Manager
Orienting and Socializing New Employees
EIU Survey – Managing in 2020Areas that have the greatest potential for improving productivity are:
Providing services and support to customers.
Improving operations and production processes
Developing businesses and strategies
Managing marketing and sales activities
Managing human resources and training
12. Performance appraisal and career strategy
Choosing Appraisal Criteria
Performance in Accomplishing Goals
Performance as Managers
Three Kinds of Review or Appraisal
1. Comprehensive 2. Progress or periodic 3. Continuous monitoring
Appraisal process and issues
Self appraisal versus Judging
Subjective versus Objective Evaluation
Assessing Past Performance
Assessing Future Oriented Development Activities
Strengths and Weaknesses of Appraisal against Verifiable Objectives
Formulating the career strategy1. Preparation of a personal profile
2. Development of long-range personal and professional goals
3. Analysis of Environment: Threats and opportunities
4. Analysis of personal strengths and weaknesses
5. Development of strategic career alternatives
6. Consistency training and strategic choices
7. Development of Short-range career objectives and action plans
8. Development of contingency plans
9. Implementation of the career plan
10. Monitoring progress.
11. Write your own biography
13. Managing change through manager and organization development
Approaches to Manager Development for Current Job, Next Job and Future Needs of the Organization.
On the Job Training
Creation of “Assistant-to” Positions
Committees and Junior Boards
Internal and external manager training
University Management Programs
Readings, Television, Video Instruction, and Online Education
Special Training Programs
Techniques for initiating change
Resistance to change
Sources of conflict
The organization development process
A learning organization is one that can adapt to changes in the external environment through continuous through continuous renewal of its structure and practices.
Case: Jack Welch Leading organizational change at GE
18. The System and process of controllingThe Basic Control Process
Establishment of standards
Measurement of performance
Correction of deviations
Critical control points, standards, factors
Every objective and goal is a standard against which actual or expected performance has to be measured by an organization.
But these 8 categories of standards are important
Physical 2. Cost 3. Capital 4. Revenue
5. Program 6. Intangible 7. Goals 8. Strategic plan
Benchmarking: it is finding best practices of other companies and using them as base for planning to do better.
Real time information and control
Real time information helps in quick control action and correction of deviation.
It helps to keep plans on track more closely.
New computer integrated information systems are providing real time information and thus helping real time control.
Preventive control or feedforward control
If expectation of results can be made, managers can judge whether current or proposed actions result in planned results.
If the expectation is not as per plans they can change actions to accomplish plans.
Control of overall performance – profit center control
Profit and loss control
Return on Investment control
Requirements for effective control
Tailoring controls to plans and positions
Tailoring controls to individual managers
Designing controls to point up exceptions at critical points
Seeking objectives of controls
Ensuring flexibility of controls
Fitting the control system to the organizational culture
Achieving economy of controls
Establishing controls that lead to corrective actions
Case: Walmart in America and Around the Globe
19. Control techniques and information technologyThe Budget as a Control Device
Zero base budgeting
Traditional Nonbudgetary Control Devices
Time-event network analysis
The balanced scorecard
Customer Assets – Brand Value
Internal Processes – Are they improving providing more value to customers and becoming more efficient?
Organizational Learning – Are you able to learn new things and innovate? – Serve customers through new products and processes
Basic Data Capture and Storage
Information Indigestion and Intelligence Services
Managing by the Numbers
The Twitter Phenomena
Opportunities and challenges created by information technologies
Innovation through analytics
Speech recognition devices
Intranet and Extranet
The digital economy, e-commerce and M-commerce
The emerging digital economy
M-Commerce and Wireless Communications
Problems as Opportunities in Web Connections
Customer Relationship Management (CRM)
20. Productivity, operations management and total quality management
Measurement of Productivity of knowledge workers
Production and Operations management
Manufacturing and Service
The Operations Management System
Production system design
Operating the system
Tools and Techniques for improving productivity
Inventory planning and control (Improving Inventory productivity – Japanese came with zero inventory system)
Just in Time Inventory System – MIT people named it lean system
Total quality management
Long term commitment to continuous improvement in quality.
Active participation of all members of the organization at all levels.
Ongoing data collection, evaluation, feedback and improvement programs
TQM benefits: greater customer satisfaction, fewer defects and less waste, increased total productivity, reduced costs and improved profitability.
MIT study of Automobile plants across the world showed that Japanese plants used.
Fewer workers, lower inventories, shorter development time, fewer suppliers, less production space.
Japanese also had much lower delivery time.
One MIT researcher called Japanese system as lean system as opposed to buffer stock system which is a bulk system.
Lean system is brought into existence by Japanese managers by creative use of industrial engineering principles, practices and objective of decreasing resources use by identifying waste and eliminating waste.
Computer Aided Techniques to improve productivityCAD/CAM
Computer aided Design
Computer Aided Process Planning
Computer Aided Production Planning
Automated Guided Vehicles
Automatic Storage and Retrieval Systems
Integration of the value chain with the managerial actions