January 27, 2016

January 4th Week - MBA Knowledge Revision

The Nature and Purpose of Planning - Review Notes

The Nature and Purpose of Planning

Every manager has to select objectives for his enterprise, department, section, unit or group. Based on the objectives he has to set goals for a specific period and make plans that contain ways of reaching the set goals. Planning in general is explained as generating alternatives and selection of the most suitable alternatives from among them for solving a problem. The problem in this context has positive connotation also. How to achieve growth is a problem which has a positive implication only.

Therefore planning is deciding in advance what to do, how to do it, when to do it, and who is to it.

Essential nature of planning can be described by four major aspects:
1. Its contribution to objectives.
2. Its primacy among the manager's tasks.
3. Its pervasiveness
4. The efficiency of plans

1. Its contribution to objectives (Plans must have effectiveness).

Every major plan and its supporting plans should contribute to the accomplishment of the purpose and objectives of the enterprise. It means plans have to be effective.They have to deliver the required output. Organized enterprise exists for the accomplishment of group purpose through deliberate cooperation that is voluntary involvement of people in the enterprise for achieving the objectives and sharing the rewards.

2. Its primacy among the manager's tasks.

Managerial operations of organizing, staffing ( resourcing), leading (executing) and controlling are done to accomplish the objective through plans. Hence planning logically precedes the execution of all the other managerial functions.  Planning is primary task of managers.

3. Its pervasiveness

All managers from the first line supervisor to the chief executive officer of a company are to do planning. At lower levels we may term it as operational planning and at higher levels we may term it as strategic planning. The amount of time spent in planning may vary with the level. CEOs may spend more time planning and organizing and departmental heads may be there to take care of resource acquisition, leading people in their departments and controlling the department performance. But policy making and administering policies can be differentiated. Some managers at higher levels may be more involved in policy making and some other managers are more involved in taking decisions based on the policy.

4. The efficiency of plans

The effectiveness of a plan pertains to the degree to which it achieves the purpose or objectives. The efficiency of the plan refers to the contribution to the objectives, offset by the costs and other factors required to formulate and operate it. More simply stated if sales is taken as an objective, the total sales revenue is the contribution of the plan to the objective and the profit which is the difference between sales revenue and total cost is the efficiency. A plan may enhance the attainment of an objective, say in can get more sales but at an unnecessarily high cost. Hence as a part of planning, efficiency of the plan has to be analysed and improved. Industrial engineering discipline focuses  primarily on  the efficiency of engineering activities and plans and it was extended to other areas like business processes and managerial processes in industrial and commercial concerns. Industrial engineering was also embraced by hospitals in a big way.

Koontz and O'Donnell specially observed that efficiency aspect has to be applied not only in money terms to various resources used in production and service activities but also to the individual and group satisfaction of human resources.

Types of Plans


Objectives are the ends toward which the activity of an organization is aimed.


Goals represent the rate at which objectives of an organization are achieved. Goals quantify the objective with a time frame. For example, if a country has the objective of switching to unconventional sources of energy, the goals could specified as so many gigawatts of energy by end of year 2012.


Values represent stable long lasting belief about what is important. They are evaluative standards that help us define what is right or wrong, good or bad, in the world. Some organizations declare their values and make them known to all. They are also subject to the planning process.

Grand strategies

According to R.N. Anthony strategies result from the processes  of deciding "on objectives of the organization", "on changes in these objectives", "on the resources used to attain these objectives", and "on policies that are to govern the acquisition, use, and disposition of these resources." The main meaning and usefulness of grand strategies are to describe a type of planning program of a broad nature which gives over-all direction to the other and more detailed programs of an enterprise.
The emphasis in grand strategies is on the pattern of basic objectives of the organization and goals and the major policies and plans for achieving them.

The purpose of grand strategy of an enterprise is to determine and communicate, through a system of major objectives and policies, a picture of what kind of enterprise is envisioned. A framework is given in the grand strategy which is a useful plan to guide company thinking.

Koontz and O'Donnell give the opinion that strategy is not a new type of plan actually. It is a program. But the concept of strategy is practically very useful and its importance in guiding detailed planning justify its separation as a different type of plan.

Competitive strategies

Competition exists where two or more persons strive for the same goals under conditions in which not all can gain from them. Competitive strategy is a plan made in the light of the plans of a competitor. The plans are made either with an estimate of plans or competitor or plan is a reaction to the strategic move of competitor either announced or executed.  To estimate the competitor's plans, a manager has to put himself in his competitor's place and develop a set of plans for his competitor, using the knowledge has regarding the objectives and the circumstances in which the competitor is operating. No doubt some industrial espionage will be tried to get an understanding of competitor's plans.


Policies are general statements which guide or channel thinking in decision making of subordinates. Policies delimit an area within which a decision is to be made and assure that the decision will be consistent with and contribute to objectives. Policies tend to predecide issues, and avoid repeated analysis. Polices are based on analysis and once pronounced avoid repeated analysis.


Procedures are plans and they establish a method of handling activities. They specify a chronological sequence of required actions.


A rule is the simplest type of plan. A rule requires that a specific and definite action be taken or not taken with respect to a situation.


A program is a complex of policies, procedures, rules, task assignments assembled to carry out a given course of action. A program is supported by necessary capital and operating budgets.


A budget is a plan. It is a statement of expected results expressed in numerical terms.


Objectives are referred to some authors with different terms. Purposes, missions, goals or targets are the terms used to refer to objectives. Mission is usually used in military enterprises and occasionally in churches and government. "Goals" and "targets' often carry the notation of specific quantitative end. Sometimes the end can be qualitative also. Koontz and O'Donnel used the chapter on objectives to discuss all the various types of terms used in relation to objectives.

Social objectives

It is interesting to note that the discussion of objectives is started with the section social objectives.The objectives of a private enterprise have to be in harmony with the ends for which a society is organized. Whenever the actions and objectives of a private enterprise are thought be against the objectives of the society, legal action is initiated to regulate it or suppress it.

United States has a statement of nation purpose set forth in the Declaration of Independence. The preamble of the Constitution of USA states:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.
All subordinate enterprises in USA, be it a school, church, hospital, government agency or business firm should have objectives which are harmonious with and supportive to national objectives.

Enterprise Objectives

The plural form is used to stress the fact that enterprises have mutliple objectives. Drucker asserted that there are eight areas in which objectives of performance and results have to set by all enterprises. They are: Market Standing, Innovation, Productivity, Physical and Financial Resources, Profitability, Manager Performance and Development, Worker Performance and Development, and Public Responsibility.

For each area or function that company identifies as necessary for survival there has to be objective.

Principles to be followed in setting objectives:

1. Objectives have to be practically achievable. The organization must be able to do some thing to achieve each objective that it has set.
2. The objectives have to support the enterprise purpose, its contribution to the customer.
3. If long range objectives and short range objectives are specified, there must be integral relationship between them.
4. At various points of time prioritization among objectives may be required.
5. Objectives have to be specific and actionable and verifiable
6. Objectives have to planned. There are the result of planning process or activity.
7. Objectives have to be communicated to those charged with building plans to meet them. 

These different types of plans once again described in details in later articles which are summaries chapters written on them.

It is important to remember that planning is rational approach to goal achievement.

Another interesting question is what should be the planning period.

Koontz and O'Donnell advise us to use commitment principle to answer that. The principle says logical planning encompasses a future period of time necessary to fulfill, through a series of actions, the commitments involved in decisions made today.

They clarify saying that long range planning is not really planning for future decisions, but visualising the future impact of today's decisions and satisfying ourselves that impact contribute to the achievement of our objectives. A plan is actually a decision. Certain commitments of resources can only be recovered over  a long period of time and such decisions require long range planning. Certain commitments are recovered quickly and can be reversed quickly also and short range planning is sufficient for them.

Whenever a long term plan exists, short range plans must be in alignment with them. Therefore, all managers must be informed of the long range plans adequately.

Related topics

The Nature and Purpose of Planning
The Nature of Organizing
Resourcing - A Function of Management
Leading - Introduction
Planning and Execution - Theory and Practice
The System and Process of Controlling


27 Jan 2016, 16 Jan 2014, 22 July 2014, 12 Dec 2011

January 24, 2016

Planning and Execution - Theory and Practice

Based on Making Strategy Work: Leading Effective Execution and Change By Lawrence G. Hrebiniak
Google Book Preview of the title

Making strategy work is more difficult than the task of strategy making

Execution is critical to success. Execution represents a disciplined process or a logical set of connected activities that enables an organization to take a strategy and make it work. Without a careful, planned approach to execution, strategic goals cannot be attained.

Execution represents a formidable challenge to management. Execution function of the management has to take into account a host of factors, including politics, inertia, and resistance to change.

Managers still don't know a great deal about the execution of strategy. Management literature has focused over the years primarily on planning and strategy formulation and neglected execution.

The execution of strategy is not nearly as clear and understood as the formulation of strategy. Much more is known about planning than doing, about strategy making than making strategy work. There is lack of education and training in execution. Some of  the problems or hurdles affecting implementation or execution are:

Managers Are Trained to Plan, Not Execute

One basic problem is that managers know more about strategy formulation than implementation. They are trained to plan, not execute plans.

In most MBA programs, students learn a great deal about strategy formulation and functional planning. There are courses on competitive strategy, marketing strategy, financial strategy, and so on. Courses dealing  execution or implementation are absent. Execution is  certainly touched in some integrated courses in management, but not in a dedicated, elaborate, purposeful way. Emphasis clearly is on conceptual work, primarily planning, and not on doing. At Wharton, there is at least an elective on strategy implementation, but this is not typical of many other MBA programs.

Most MBA programs emphasize developing strategies, not executing them. In the real world, e many managers have rich conceptual backgrounds and training in planning but not in "doing." The lack of formal attention to strategy execution in the classroom obviously must carry over to a lack of attention and consequent underachievement in the area of execution in the real world.  Therefore execution has to be  learned in the "school of hard knocks," and its results in more failures. .

Attitude Problem: Let the "Grunts" Handle Execution

Another problem is that many managers actually believe that strategy execution or implementation is "below them," something best left to lower-level employees. The prevailing view  is that one group of managers does innovative, challenging work (planning) and then "hands off the ball" to lower levels for execution.

Every organization, of course, has some separation of planning and doing, of formulation and execution. However, when such a separation becomes dysfunctional—when planners see themselves as the smart people and treat the doers as lower level —there clearly will be execution problems. When the "elite" plan and see execution as something below them, detracting from their dignity as top managers, the successful implementation of strategy obviously is in jeopardy.

From the CEO on down, sound execution demands that managers roll up their sleeves and pitch in to make a difference. The content and focus of what they do may vary between top and middle management. Nonetheless, execution demands commitment to and a passion for results, regardless of management level.

Another way of saying this is that execution demands ownership at all levels of management. From C-level managers on down, people must commit to and own the processes and actions central to effective execution. Ownership of execution and the change processes vital to execution are necessary for success. Change is impossible without commitment to the decisions and actions that define strategy execution.

The execution of strategy is not a trivial part of managerial work; it defines the essence of that work. Execution is a key responsibility of all managers, not something that "others" do or worry about.

Planning and Execution Are Interdependent

Planning and execution tasks are highly interdependent. Planning affects execution. The execution of strategy, provides inputs to future planning.  This relationship between planning and doing suggests two critical points to keep in mind.

Successful strategic outcomes are best achieved when those responsible for execution are also part of the planning or formulation process. The greater the interaction between "doers" and "planners" or the greater the overlap of the two processes or tasks, the higher the probability of execution success.

A related point is that strategic success demands a "simultaneous" view of planning and doing. Managers must be thinking about execution feasibility and ease even as they are formulating plans. Execution is not something to "worry about later." While all execution decisions and actions cannot be taken at once along with the plan, execution issues or problem areas must be anticipated, however, as part of a "big picture" during  planning. Formulating and executing are parts of an integrated, strategic management approach. This dual or simultaneous view is important.

Execution Takes Longer than Formulation

The execution of strategy usually takes longer than the formulation of strategy. Whereas planning may take weeks or months, the implementation of strategy is usually played out over a much longer period of time. The longer time frame can make it harder for managers to focus on and control the execution process, as many things, some unforeseen, can materialize and challenge managers' attention.

Steps taken to execute a strategy take place over time, and many factors, including some unanticipated, come into play. Interest rates may change, competitors don't behave the way they're supposed to, customers' needs change, and key personnel leave the company. The outcomes of changes in strategy and execution methods cannot always be easily determined because of "noise" or uncontrolled events. This obviously increases the difficulty of execution efforts.

Long-term needs must be translated into short-term objectives. Controls must be set up to provide feedback and keep management abreast of external "shocks" and changes. The process of execution must be dynamic and adaptive, responding to and compensating for unanticipated events. This presents a real challenge to managers and increases the difficulty of strategy execution.

Execution always takes time and places pressure on management for results. But the longer time needed for execution also increases the likelihood of additional unforeseen problems or challenges cropping up, which further increases the pressure on managers responsible for execution results. The process of execution is always difficult and sometimes quarrelsome, with problems only exacerbated by the longer time frame usually associated with execution.

Execution Is a Process, Not an Action or Step

Execution is a process. It is not the result of a single decision or action. It is the result of a series of integrated decisions or actions over time. Execution is a process that demands a great deal of attention to make it work. Execution is not a single decision or action.

Execution Involves More People than Strategy Formulation Does

In addition to being played out over longer periods of time, strategy implementation always involves more people than strategy formulation.  Communication down the organization or across different functions is a challenge. Making sure that incentives throughout the organization support strategy execution efforts becomes a necessity and, potentially, a problem. Linking strategic objectives with the day-to-day objectives and concerns of personnel at different organizational levels and locations becomes a legitimate but challenging task. The larger the number of people involved, the greater the challenge of effective strategy execution.

Obstacles to Strategy Execution - Survey Results

Wharton-Gartner Survey (n = 243) and  Wharton-Executive Education Survey (n = 200)

1. Inability to manage change effectively or to overcome internal resistance to change
2. Trying to execute a strategy that conflicts with the existing power structure
3. Poor or inadequate information sharing between individuals or business units responsible for strategy execution
4. Unclear communication of responsibility and/or accountability for execution decisions or actions
5. Poor or vague strategy
6. Lack of feelings of "ownership" of a strategy or execution plans among key employees
7. Not having guidelines or a model to guide strategy- execution efforts
8. Lack of understanding of the role of organizational structure and design in the execution process
9. Inability to generate "buy-in" or agreement on critical execution steps or actions
10. Lack of incentives or inappropriate incentives to support execution objectives
11. Insufficient financial resources to execute the strategy
12. Lack of upper-management support of strategy execution

Based on the discussion of survey results, the author provided the following steps for achieving the success of execution.

1. Developing a model to guide execution decisions or actions

2. Understanding how the creation of strategy affects the execution of strategy

3. Managing change effectively, including culture change

4. Understanding power or influence and using it for execution success

5. Developing organizational structures that foster information sharing, coordination, and clear accountability

6. Developing effective controls and feedback mechanisms

7. Knowing how to create an execution-supportive culture

8. Exercising execution-biased leadership


Full article

Seven Strategy Questions: A Simple Approach for Better Execution

Robert Simons, Professor, HBS

Revision/Review article on Strategic Management

Crafting and Executing Strategy - Book Information and Chapter Summaries

“many people regard execution as detail work that is beneath the dignity of a
business leader. That’s wrong— it’s a leader’s most important job.”

CEOs and their leadership teams say excellence in execution and consistent execution are their top two
challenges, according to a recent Conference Board study (2008)

Updated 24 Jan 2016,    16 Sep 2015, 12 Sep 2015

January 22, 2016

Peter Drucker - Business Organization - Economic Function - Social Responsibility

In the book, In The End of Economic Man, published in 1939, Drucker explained what had happened when central European managers had failed to meet social responsibilities. The managers had valued people only for their labor and treated them as factors of production. As they were treated like things, people had felt isolated and governed by irrational, "demonic forces" that do not think of their weillbeing. Society had ceased to be a community of individuals bound together by a common purpose in various institutions.

In a desperate situation, some were drawn to Marxism, which in turn undercut traditional values and institutions and paved the way for Fascist dictatorships. Both Fascism and Marxism, as Drucker saw them, were escapist; they could thow out established order using existing discontent as leverage but never fulfill human needs.

People need a society that could provide freedom, "status," and "function," and it is the task of business managers to help create such a society by shaping the workforce into the industrial citizens and the company into a community.

In subsequent works, particularly in The Future of Industrial Man (1942), Concept of the Corporation (1946), and The New Society (1949), Drucker emphasized that only satisfying work could fulfill the needs of individuals for autonomy, security, dignity, usefulness, belonging, and peer respect. Work was needed as much to provide "status and function" as income. People will be frustrated when managers valued labor only as a commodity. Through responsible acts of "citizenship" by manager and worker alike, the social and the economic needs of the individual, could be brought into "harmony" and thus fulfilled in the business organization.

In the case of managerial goals, Drucker acknowledged that economic goals must come before social ones. If the firm went bankrupt, managers would be unable to sutain the corporate community. Corporate "survival" depended on making a profit that not only covered costs but provided insurance against future risks. To make such a profit, managers must "create" customers by providing them with useful products and services.

The primacy of economic performance, however, should not obscure the thought that the business corporation was "as much a social organization, a community and society" as it was "an economic organ." In the "new society," which was an employee society, the firm had a responsibility to realize social values and fulfill individual needs.

Drucker expanded his ideas in later years by insisting that managers select socially responsible goals for the enterprise. He rejected the power of the market and the notion that a "hidden-hand" in the marketplace naturally converted "private vices" into "public virtues." He had never believed that competition automatically solved social problems. He diagreed with Milton Friedman's argument that businessmen should stick to "business" and should refrain from appointing themselves guardians of the common good. According to Drucker, business men were running social organizations that could help society and realize "social values." Like anyone else, they also had "a self-interest in a healthy society," and so they should follow normal ethical imperatives. Moreover, for Drucker, managers were the only true "leadership group" in modern society. If they did not "take responsibility for the common good," then no one else could or would.

Stephen P. Waring, "Peter Drucker, MBO, and the Corporatist Critique of Scientific Management" in

Joint article for Management Revision of the day: Business Conceptualization - Management Insights from Economics, Engineering Economics, Managerial Economics, Industrial Economics

January Month Management Knowledge Revision Plan

MBA Core Management Knowledge - One Year Revision Schedule

Updated 22 Jan 2016, 28 Nov 2011

January 21, 2016

Systems Approach in Management

Business organizations are systems. Management of an organization can also be viewed as a system.

A system may be defined as an assemblage of objects or functions united by some interaction or interdependence. The action in one or of one causes a reaction in another.

Systems may be open loop or closed loop. In the closed-loop systems, there is a feedback of information to correct errors that are detected in output of the system. In the case of a production system, when defects are noticed by the inspectors, if the system is examined and adjusted, there is a closed loop system in operation. If simply, the rejected are thrown out and nothing else is done, the closed loop is not operating.   In management functions, control is the function that measures results and further plans are made in the light of plan-results gaps.

Also, systems can be open systems. Business organizations are open systems, they are part of industrial systems, which are parts of social systems

The effective manager must in a very real sense, be a scientific and creative designer of workable systems. Systems composed of subsystem which are run by various people and having relations. Any problem in one subsystem has an effect on other subsystem and therefore on the output of the whole system. If a task is achieved by people are made unhappy in the process, for the next task the system will be full of unhappy people who may not even listen to what the managers are saying.

Kotler and Keller recommend system approach to marketing as one aspect of holistic marketing which they recommend as the appropriate concept for the 21st Century in their 14 Edition of Marketing Management.

Integrated Marketing

Entire marketing function or mix is to be treated as a system and each activity has an effect on other activities. Synergy can be created among the activities and the overall effect can be magnified when integrated marketing or systems thinking based marketing is practiced.

Management Systems

Based on Management Systems: A Viable Approach

by Maurice Yolles, 1999
Pub by Financial Times Pitman

Management can be argued as being concerned with inquiry and action.  Inquiry occurs through planning and by defining organisational mission, goals and manager aims. It subsequently results in action and involves the cybernetic processes of control and communications.

All strategies are influenced by worldviews of individuals and of groups. Each individual perceives the world in his own  way, that perception  determines how he responds to it. No doubt, the worldview is influenced by the socialization that starts with the family  and is further affected by experiences of each individual. Organizations also have unique worldviews. Worldviews are regarded as informal and are called weltanschauungen whether they belong to either an individual or a group. Some beliefs, values, attitudes, and concepts that are part of worldviews can be made more or less transparent to others. When this occurs we say that that they have been formalised, and turned into paradigms. Weltanschauungen are not transparent to others, and are informal. Worldviews are manifested as behaviour  which is a result of the interplay between weltanschauungen of those individuals or organisations and the paradigms around.

Management systems describe the process of management through the application of systems metaphors. It was initiated in the 1930s with the work of Barnard, where organisations are seen as cooperative systems. All managed organisations are seen as systems that share certain conceptual elements. These include input, process, output, and feedback. The inputs in the manufacturing firm, for instance, consist of raw materials, technical knowledge, labour, equipment, and financing, all of which are combined under managerial direction into a process that results in a finished output or product. The market acceptance of the product and resulting sales give a financial return (feedback) to the firm which reactivates the cycle. Low sales indicate that a change in the input or process is necessary to produce a more acceptable output. Through cycles such as these, organisations learn and maintain their existence.

Business systems are seen to be open to their environment. They import inputs, export outputs, and interpret the feedback they receive from the environment. What happens in the environment affects them, and as the environment changes, management must monitor the changes and adapt the organisation to the new situation.

 In the business systems, to achieve organisational goals, people must perform tasks, using technical knowledge and equipment, and they must work together in structured relationships. Human beings enter into social relationships, both formal (job-related) and informal (non-job-related) at the work place. The task of management is to coordinate all of these parts and plan future activities. It also involves decision-making and regulation of the organisational system. Managers are involved in planning, implementing, and controlling to achieve the set goals.

There are two important lessons for the manager in open systems theory of management. The first is that no organisation exists in a vacuum. The environment constrains what the manager can do, but it only offers opportunities and potentialities. Managers must be aware of and understand environmental events and trends because the organisation's well-being and even survival depend upon appropriate adaptation to change.

The second lesson of the systems approach is its stress on the interrelatedness of the parts of an organisation. Lower level managers  are often tempted to see organisational problems and activities in isolation. In an extreme case, a manager may concentrate upon the efficient functioning of his or her own department and give only secondary attention to its relationships with other parts of the organisation. Any neglect of important relationships results in some degree of inefficiency or effectiveness of the organization.

Open Systems Theory

An open system interacts with its environment. In particular, “with respect to its relations with the
environment, a system is called open that maintains exchanges with its environment - especially exchanges of matter, energy and information.

According to von Bertalanffy [1973] the theory of open systems represent generalisations of physical theory, kinetics, and thermodynamics, which led to new principles and insight. Negative feedback is one of these. It occurs when homeostatic maintenance of a characteristic state or goal is desired. It is based on circular causal chains and mechanisms monitoring and feeding back information on deviations from the state to be maintained or the goal to be achieved. Another is the idea of equifinity, where an open system has a tendency to move towards having final states that derive from different initial states and in different ways.

Adaptation is also seen as an important feature of open systems. Open systems theory recognises that systems are in dynamic relationship with their environment, and receive inputs that they transform in some way to create outputs. The open system is seen to adapt to its environment by responding to changes in the environment as well as response of environment to its output through changes in its form and processes. The open system is supposed to be in continuing interaction with its external environment and maintains homeostasis (desired state).

The terms used in Open Systems Theory

Inputs (resources): like raw materials, money, people (human resources), equipment, information, knowledge, legal authority from the environment for action.

Outputs: products, services, ideas as an outcome of organisational action; and organisation transfers its main outputs beck to the environment and uses others internally.

Technology: tools, machines, techniques for transforming recourses into outputs; techniques can be mental (e.g., exercising judgement) social, chemical, physical, mechanical, or electronic. Environment: the task environment includes all of the external organisations and conditions that are directly related to an organisation’s main operations and its technologies.

Goals and strategies: future states sought by the organisation’s dominant decision makers. Goals are desired end states, while objectives are specified targets and indicators of goal attainment. Strategies are overall routes to goals, including ways of dealing with the environment. Plans specify courses of action towards an end goal. Goals and strategies are the outcomes of conflict and negotiation among powerful parties within the outside organisation.

Behaviour and process: prevailing patterns of behaviour, interactions, and relations between groups and individuals - including corporations, conflict, coordination, communication, controlling and rewarding behaviour, influence and power relations, goal setting, information gathering, self-criticism, evaluation, group

Culture: shared norms, values, beliefs and assumptions, and the behaviour and artefacts that express these orientations - including symbols, rituals, stories, and language; norms and understanding about the nature and identity of the organisation, the way work is done, the value and possibility of changing or innovating, relations between lower and higher ranks, the nature of the environment.

Form: this is composed of structure - the enduring relations between individuals, groups, and larger units - including role assignments, grouping of positions in divisions/departments..., and process, such as standard operating procedures and human resource mechanisms.

The System Metaphor

A situation can be seen as a system if it can be associated with the accomplishment of some purpose. The system can be generically defined through the conceptualisation that is has:

1. a set of connected parts,
2. a complex whole,
3. a materially or immaterially organised body.


Once a boundary has been created, we can refer to the space of rich interactions as the system domain, and that of the poor interactions as its external environment. A system may be said to be purposeful when it pursues actions that in some way relate to goals that represent purpose. Entities in the environment are seen to influence the system or its parts.

A business system takes inputs from the external environment, and in return provides it with outputs. It is thus seen as a transformer of inputs to outputs. The processes that occur to enable this are said to be purposive. The inputs are resources that may be both material or non-material and may include: raw materials, equipment, people, money, information, knowledge, and energy. The outputs may be material (like roducts), or non-material (like services).

A system can be seen as a whole with a set of parts that may be systems in their own right, when they are called subsystems. Thus the system domain will be part of the environment of the subsystem. This idea is recursive, so that subsystems can themselves have subsystems.

Within the bounds of a system, the parts form a richly interactive group that has been bounded together holistically through purpose. They are said to be synergistic. The concept of synergy means that the value of the parts of a system is greater when they work together cooperatively as a whole. As the level of cooperation reduces, so the parts begin to operate for their own independent purposes (in pursuit of their unrelated goals), and this may be contrary to the purposes of the system as a whole.

We can talk of primary and secondary purposes. For example, in dentistry, the primary purpose is patient dental health care with a secondary purpose of patient dental education. A purposeful system is task orientated through its actions. A primary task enables the primary purpose to be accomplished.

An Organised Body

A coherent situation can be modelled to have a form and as such will be seen to be
organised. An organised body is something which
(a) has an orderly structure
(b) has a working order,
(c) is organic.

An orderly structure occurs if the parts of a whole can be seen to have a relationship that has a meaning for the perceiver. Normally, this means that the structure has a purpose that the order is responsible for. If a coherent situation has a working order, then it is engaged in processes that occur according to some progression such that a purpose can be identified. If a coherent situation is organic, then it has a set of parts that are constituent of the whole and are coordinated within it. If an organic whole continues to exist, then coordination implies that there will be some control and communications processes at work that contribute to its continuance.

An alternative expression for an organised body is an organisation.  It may be worth noting at this point that in the literature there is some difference over the definition of organisation and structure. Social structure refers to fundamental social relationships seen to apply to: any ordered arrangement of distinguishable wholes [Frith, 1949] that represent the principles underlying social relations, and not the content. The nature of structures is that they set bounds on, or limit, possible courses of organisational action.  Thus, structure can be seen to be devoid of action, but is related to action. Action that involves the transformation of something is referred to as process, and we may therefore see that structure and process can be differentiated.

Organisation has both structures and processes. The organisation of a body has conditionality. Consider that a system is seen as a whole with a set of parts. Without constraint, any activities can occur in any of the parts, and each part can be seen as a space of potentially unlimited possible activities. But how does the purpose of the system get achieved. To achieve the purpose, the activities of parts have to limited and ti is done through the process of communication that occurs between the parts, that enables activities in one part to be related in some way to those of another and vice versa. Communication thus acts as an enabling mechanism for organisation that constrains the potential for activities in the parts so as to facilitate them to work together as whole. A whole is said to be richly connected when the parts are not easily reducible so that separate individual examination can occur without reference to the other parts. Conversely, poorly connected situations occur where the parts of the whole are highly reducible. In richly connected situations,  we would expect to find a great deal of communication.

Ashby introduces the idea that organisation can have quality by distinguishing between good and bad organisation in relativistic terms.  In defining good and bad, Ashby interprets the idea of Summerhoff
[1950] who explains that good and bad organisation is determined through: (a) the relationship between the a set of perturbations that disturbs the situation in some way, and (b) the perceived goals that the organisation is seen to be attempting to achieve. If the nature of the perturbations change, then the organisation is said to be good if it responds to the change, and bad if it does not.

Ashby has created a view of what constitutes a good or a bad organisation through a model that has become central to managerial cybernetics as it has to other fields of management theory. It has done this because it generates a satisfactory way of looking at them.  This view is consistent with much of the recent management theory literature in that it promotes the idea that it is through the institutionalisation of innovation [Drucker, 1985]  organisations have to respond to an uncertain and unpredictable environment. Innovation promotes survivability.


A Systems Approach to Management
G. M. Jenkins and P. V. Youle
Vol. 19, Special Conference Issue: Decision-Making (Apr., 1968), pp. 5-21
Published by: Operational Research Society

Systems approaches to management Michael Jackson

The Basic Management Cycle: A Systems Approach to the Management Process
W.R. Allen

January Month Management Knowledge Revision Plan

MBA Core Management Knowledge - One Year Revision Schedule

Updated  21 Jan 2016,   17 Sep 2015, 10 Jan 2015

Control of Variation in Inputs and Outputs - Management Insights from Statistics

Like many other professionals of various subjects, Statisticians also contributed to theory and practice.

Decision making under risk uses expected values based on the probability distributions of the variables involved.

Planning requires forecasts and statistics provides forecasts based on past using techniques like time series analysis and regression models.

Walter Shewart came out with idea that a process is under control as long as measurements of output units are falling within 3 sigma (standard deviation) limits. If the output measurement falls outside the limits, the setup needs investigation and correction. This guideline provided for economical process control and is considered valid even now.

Motorola executives came out with a different perspective. Reduction of variance or standard deviation of a process.  It is possible to design a process with minimum variance by experimenting on the process with various levels of variables involved. Six sigma, the technique that helps in variance reduction is proving billions in benefits to the companies producing goods as well as services by reducing defects drastically. Consumers are getting more consistent quality products.

We are going to revise basics of statistics and application in management practice in our one year revision schedule.

Related  Articles

Total Quality Management: Focus on Six Sigma

Second Article for Revision on the Day:  Systems Approach in Management

January Month Management Knowledge Revision Plan

MBA Core Management Knowledge - One Year Revision Schedule

Updated 21 Jan 2016, 30 Dec 2014

January 20, 2016

Alternative Economic Systems - Review Notes

The system described in detail by Samuelson is Mixed Capitalist Economy.

This is the economic system of advanced democracies of world today. It accounts for 60 percent of world income.

Marxism and socialism are important alternative economic systems.

Development or Evolution of Economic Thought

Aristotle wrote on economic issues also.

First systematic thinkers were mercantilists of the 17th and 18th centuries. They advocated the accumulation of gold and silver to improve the military and economic power of a state.

David Hume (1711-1776) showed how gold inflow would eventually end up raising prices rather than output. Physiocrats put forward arguments against mercantile thought excesses and argued that agriculture is the only source of economic surplus.

Modern economic claims its roots to 'The Wealth of Nations' by Adam Smith published in 1776.

T.R. Malthus (1766-1834) enuniciate the iron law of wages.

David Ricardo (1772-1823) believed that there were basic errors in Smith's analysis and attempted to provide alternative ideas. He wrote Principles of Political Economy and Taxation in 1817.

One of his major achievements was to analyze the laws of income distribution in a capitalist economy.

John Stuart Mill wrote his classic 'Principles of Political Economy'.

Economics developed a branch with the writings of Marx, Capital (1867, 1885, 1894). But the tradition of Adam Smith and David Ricardo was continued by W.Stanley Jevons, Carl Menger, and John Maynard Keynes.

The Keynesian Revolution

The great depression made Keynes to come out with General theory of Employment, Interest, and Money (Macmillan,1936). Economists were inspired to understand why wages and prices tend to be sticky, why nominal variables like money have real impacts, and how government fiscal and monetary policies affect the macroeconomy.

Criticism of Capitalistic System by Some Economists  (Characterised as Dissent from Left by Samuelson)

John Kenneth Galbraith: Wrote American Capitalismm, The Affluent Society, and the New Industrial State.

Todays economies are directed by large bureaucracies and perfectly competitive markets do not exist.
Consumers are not masters of their own minds. Advertising shapes preferences.
Public sector is starving and private sector is flourishing. Parks, roads, and bridges etc. are not built adequately and maintained properly.

MIT's Lester Thurow, Harvard's Robert Reich, and others argued for redesigning the work place on cooperative rather than competitive lines.

One important suggestion of this group of economists is introduction of profit sharing in place of fixed wages. MIT's Martin Weitzman has analyzed this type of system According to him profit sharing system,will result in lower marginal cost of labor.


Marx's advocated labor theory of value. what gives value to a product is the amount of direct labor and indirect labor embodied in it. In the capitalist system, profit is earned by paying only part of the labor value to the workers. As capital goes on accumulating, profits fall and capitalist pay less and less to workers and make them live a subsistence life.


Socialists believed that the role of private property should be reduced and key industries should be run by government.


Paul Samuelson and William D. Nordhaus, Economics, 13th Edition, McGraw-Hill, 1989

Originally posted in

Updated 20 January 2016, 11 Dec 2011


In view of the birth centenary year of Pt. Deendayal Upadhyaya, (Propounder of Ekatma Manav-vad), Deendayal Prerana Kendra and Ekatma Prabodh Mandal have organized a seminar on Ekatma Manav Darshan as per details below:



Time: WEDNESDAY, 10TH FEBRUARY 2016, 4.30 TO 7.45 PM

Session 1: Ekatma Manav Darshan & Capitalism by Dr. KVSS Narayana Rao
Session 2: Ekatma Manav Darshan & Globalization by Dr. Varadraj Bapat
Session 3: Ekatma Manav Darshan – In Practice by Dilip Kelkar
Session 4: Samarop: DR. SATISH MODH,  Director, Vivekanand Institute of Mgt, Chembur

DEENDAYAL PRERANA KENDRA 2/27 Kalpana Sahaniwas, Sahyog Mandir Path, Naupada, Thane (W)

EKATMA PRABODH MANDAL (Activity of Ekatma Vikas Samiti, Public Trust) B105 Vatsalyadeep, Krantiveer Phadke Marg, Mulund East, Mumbai 400081 Tel: 25639654, Email: ekatmaprabodh at the rate gmail.com

Mathematical Models and Optimization of Production and Distribution Systems

There are management theorists who see management problem solving  as development of a system of mathematical models and solving them for a solution. The most widely known of this thinking are the operations researchers, or operations analysts who are also referred to as management scientists.

There group of scholars have made substantial contribution to orderly thinking in management practice. They have forced on people in management the means and desirability of seeing many problems more clearly; they have pressed on both students and managers the need for establishing goals and ways of measuring effectiveness; they have been extremly helpful in promoting the concept of management as a logical system of relationships; and they have caused people in management to review and occasionally reorganize information sources and systems so that mathematics can be given sensible quantitative meaning.

Important OR Models and Techniques

Linear Programming, Integer Programming, Non Linear Programming, Geometric Programming

Transportation and Transshipment Problems

Assignment Problem

Inventory Problem


Queueing - Design of Service Stations and Waiting Lines

Game Theory

January Month Management Knowledge Revision Plan

MBA Core Management Knowledge - One Year Revision Schedule

Updated 20 Jan 2016, 30 Dec 2014

January 19, 2016

Importance of Human Relations in Management

There has been a tremendous influx of behavioral scientists into the study of management.

Behavioral scientists cite Hawthorne experiments as the seminal work for their contribution to management field. It brought out the fact that attitudes toward people, people being regarded as people, are also important to efficiency and productivity apart from such material factors as rest periods, illumination, and money.

According behavior school of scholars, management theory before their intervention assumed that people were "inert" and the human organism is also a simple machine.

Psychologists have contributed to the management understanding through their illumination of the aspects of rational behavior and influence, the sources of motivation, and the nature of leadership. Among the many in the area of individual and social psychology who have contributed materially to management are McGregor, Likert, Argyris, March and Simon, Leavitt, Blake, Sayles, Tannenbaum and his associates and Bennis.

Articles on Human Issues in Management

Introduction to Organizational Behavior

Motivational Needs and Processes - Review Notes

Positive Psychology Approach to OB: Review Notes

Managing the Employee Relationship

Other References

The Human Problems of an Industrial Civilization
Elton Mayo
Preview Google Book: https://books.google.co.in/books?id=OQcBYqgKh5cC

Management and the Worker: A Note 1920 - HBS

MBA Core Management Knowledge - One Year Revision Schedule

Updated 19 Jan 2016, 30 Dec 2014

January 18, 2016

Evolution of Management Thought and Theory - Review Notes

2015 - Start of Management Knowledge Revision for the Year on 18 January 2016
January Month Management Knowledge Revision

Organization of human beings for the attainment of common objectives is ages old. But in the scientific tradition, development of management theory is only around 100 years old.

Adam Smith did mention issues of entrepreneurship and increased efficiency due to specialisation. Marshall also touched upon efficiency in industrial work. But serious attention to individual firm issues in economics occurred only after 1840s.

Henry Varnum Poor discussed issues of managing a big business concern especially in railroad business during the period 1850 to 1862 as editor of American Railroad Journal.

Charles Babbage documented some issues related to efficiency of manufactures. But it was F.W. Taylor who gave the call for development of science by managers for all human activities in production processes and by implication for all man-machine activity and laid the foundation for development of theory in management in 1911. Following the scientific method,  subsequent to Taylor number of books and monographs appeared.  Henri Fayol in 1916, came out with the explanation for management as an activity distinct from other industrial activities - technical, commercial, financial, accounting and security.

Fayol came out with the list of functions of management as planning, organizing, command, co-ordination and control.  L. Gulick and L. Urwick expanded it to POSDCORB. Koontz and O'Donnell suggested planning, organizing, staffing, directing and control. This approach of explaining management theory is being called operational approach. Professor Narayana Rao suggests planning, organizing, resourcing, executing and controlling as the appropriate steps for operational approach.

Professors and researchers belonging to Psychology field have developed management related theories practices related to human behavior in organizations. Sociologists also brought in their knowledge of group behavior.

Statisticians found that management requires forecasting and statistical forecasting techniques have application. Then they developed application of statistical samples in process control and in reducing 100% inspection to inspections based on samples. Quality management area has benefitted a lot form statistical thinking. Six sigma, a technique to investigate the process to reduce its variance based on experiments and the statistical analysis of resulting data has given significant benefits to organization to reduce defects and costs.

Operations research is application of scientific method to business decision making thought earlier to be complex. OR scholars formulated the complex decision making situations into mathematical models involving objective functions and constraints and developed procedures to find optimal combinations of decision variables. A large number of business decisions became better and managers were forced to include quantitative methods in their day to day functioning.

The advent of computers also brought a change in management practice. Commercial transactions are being now done using computers at both ends. Data is being captured and analyzed by the computer programs. Hence lot data processing earlier done human component is now being done by computers. Hence there was a drastic reengineering of business processes.

The development of management through various disciplines is being described in more detail in individual articles.

Scientific Management

Scientific management - Taylor

F.W. Taylor identified that efficiency of processes is not getting adequate attention of the managers. He focused his attention on using machine tools in machines shops more efficiently by employing higher cutting speeds, feeds and depths of cut. For that purpose he conducted number of experiments and from the data, he developed the laws of economic machining.

From the success, that he has achieved in improving the efficiency of use of machine tools, Taylor's attention moved to other production processes.  Taylor recognized the importance of man's effort in man-machine systems and he came to the conclusion that completing an activity in less time leads to efficiency. That insight led to the development of time study. Taylor developed the technique of time study and starting doing time studies of various ways of doing the same work. That helped in identifying the most efficient method of doing that element of the work and Taylor advocated that management train all the operators doing that activity in the most efficient method. Time study also allowed study of various operators doing the same activity and helped in identifying the most efficient method and in training all other operators in that method. Using time study as the foundation, Taylor varied sizes and shapes of various hand tools used by workmen and came out with identifying the best tools to be used in an activity.

Thus, management has to take care of efficiency,  is the first major development in modern management thought. Taylor being an engineer, advocated the teaching of principles of efficiency to engineers through a subject named industrial engineering.

More detailed article: Scientific Management - Foundation and Development of the Approach

General management - Fayol

Fayol is the CEO and Chairman of a mining company. He brought out the fact that management is not being taught as a subject. He advocated that management can be taught as a subject.

He presented a paper outlining the content that can be taught. Fayol discussed the ideas of Taylor in his paper and advocated that Taylor's ideas are applicable in many more work systems.

Contribution of Behavioral school

The behavioral school identified more variable capable of increasing productivity apart from the technology or process improvement and financial incentives identified and advocated by Taylor, other proponents of scientific management and industrial engineering.  They found that the improvement in productivity is also due to such social factors as morale, satisfactory interrelationships between members of  work group (a sense of belonging), and effective management - a kind of managing that takes into account human behavior, especially group behavior and maintains a climate where the worker feels psychologically and socially satisfied.

In terms of scholars and managers who contributed to the behavioral school, Hugo Munsterberg published Psychology and Industrial Efficiency in 1912. Lillian Gilbreth published Psychology of Management in 1914. Elton Mayo, F.J. Roethlisberger and others undertook famous Hawthorne experiments during 1927 to 1932.

Quantitative School

The contributors from this school converted many management problems into mathematical models and solved them for coming out with optimal decisions. Decisions that will provide maximum profits for the given or assumed situation or minimum costs.

Systems Approach

Systems approach in one way is an extension of mathematical approach whereby, the entire working of an organization is modeled and its working over a period of time is visualized through repeated cycles. Many times the outputs of the system feed into the system as inputs for the next period and system behavior can change based on these inputs. For example, profits are ploughed back and capital of the organization increase enabling the organization to grow. Customer happiness or unhappiness becomes an input for the next period. Similarly job satisfaction of the employees is also a variable which is an output in one period and becomes input for the next period.  Government,  general public and media may also become stakeholders and have their impact on the organization.

More detailed article on system approach is now developed.

See what this lecture on A Systems Approach to Airport Systems Planning, Design and Management explains the approach


MIT Systems Design Management Course Video
Prof Richard de Neufville

Management Timeline - From Ancient Days


Approaches to Management Analysis
(List given by Heinz Weihrich, Mark V. Cannice and Harold Koontz)

Empirical or Case Approach

Managerial Roles Approach

Contingency or Situational Approach

Mathematical or Management Science Approach

Decision Theory Approach

Reengineering Approach

Systems Approach

Sociotechnical Systems Approach

Cooperative Social Systems Approach

Group Behavior Approach

Interpersonal Behavior Approach

McKinsey's 7-S Framework

Total Quality Management Approach

Management Process or Operational Approach

Koontz and O'Donnell now  Weirich, Cannice and Koontz integrate and discuss the important ideas of all  the above approaches and present it under the

Management process framework - Koontz, Weirich and Cannice

Planning - Organizing -Staffing - Leading - Controlling

Management process framework - Narayana Rao

Planning - Organizing - Resourcing  - Executing - Controlling


Management: A Global and Entrepreneurial Perspective
Henry Weihrich, Mark V. Cannice and Harold Koontz
13 Edition, 2010
McGraw Hill

Second article of the day for revision: Scientific Management - Foundation and Development of the Approach

MBA Core Management Knowledge - One Year Revision Schedule

Evolution of Strategic Management Concepts

Updated  18 Jan,  9 Jan 2016, 17 Sep 2015, 29 Dec 2014

January 14, 2016

Evolution of Strategic Management Options - Concepts

1. 1958  Ansoff Matrix
2. 1959 Industrial Organization
3. 1962 Diffusion of Innovations
4. 1962 Scenario Planning
5. 1962 Strategy and Structure
6. 1965 Gap Analysis
7. 1965 Product Life cycle
8. 1967 PEST
9. 1968 Experience Curve
10. 1969 SWOT Analysis
11. 1970 BCG Portfolio Matrix
12. 1971 Andrews's Strategy Framework
13. 1973 Red Queen Effect
14. 1974 PIMS
15. 1976 Real Options
16. 1976 Rule of Three and Four
17. 1978 Deliberate and Emergent Strategies
18. 1979 5 Forces
19. 1980 Four phases of strategy
20. 1980 Logical Incrementalism
21. 1981 BCG Advantage Matrix   https://www.bcgperspectives.com/content/classics/strategy_strategy_in_the_1980s/
22. 1982 3Cs  - Customer, Competition, Corporation (Ohmae)
23. 1982 7S
24. 1982 Diversification Strategy and Profitability
25. 1982 Niche Strategy
26. 1982 Technological paradigms and Technological Trajectories
27. 1982 TQM
28. 1984 Resource Based View
29. 1986 Fish Bone Diagram
30. 1986 S Curve
31. 1986 Six Sigma
32. 1987 Mintzberg's 5Ps
33. 1988 First Mover Advantage
34. 1988 Time Based Competition
35. 1989 Benchmarking
36. 1989 Core Competencies
37. 1990 Diamond Model
38. 1990 Reengineering
39. 1991 Commitment
40. 1991 Transformational Change
41. 1992 Capabilities Competition
42. 1992 Mass Customization
43. 1993 Ecosystem Strategy
44. 1994 Competing for the future
45. 1994 Hypercompetition
46. 1995 Disruptive Innovation
47. 1995. Return on Quality
48. 1995 Value Migration
49. 1996 Bowman's Strategy Clock
50. 1996 Co-opetition
51. 1996 Leading Change
52. 1996 Paranoid Company
53. 1997 Dynamic Capabilities
54. 1997 Triple Bottom Line
55. 1998 3 Generic Strategies
56. 1998 Value Chain
57. 1998 Value Chain Deconstruction
58. 1999 Continuous Strategy Process
59. 1999 Delta Model
60. 1999 Digital Strategy
61. 1999 Dynamic Strategies
62. 1999 Profit Patterns
63. 1999 Temporary Advantage
64. 2000 Tipping point
65. 2001 Strategy as Simple Rule
66. 2002 Bottom of the Pyramid
67. 2002 Serial Temporal Advantage
68. 2003 Open Innovation
69. 2004 Hardball
70. 2004 Strategy Maps
71. 2004 Value Innovation
72. 2005 Blue Ocean Strategy
73. 2005 Strategic intent
74. 2006 Shared Value
75. 2008 Distinctive Capabilities
76. 2009 Business Model Innovation
77. 2009 Strategy without Design
78. 2010 Adaptive Advantage
79. 2011 Competitive Strategy: Options and Games
80. 2013 Algorithmic Strategy
81. 2013 Transient Competitive Advantage

Figure to be removed after checking once more

Source of the picture:  https://hbr.org/2015/12/charts-2015

January 13, 2016

Interesting Quotations by Adam Smith - From The Wealth of Nations

In the progress of society, philosophy or speculation becomes, like every other employment, the principal or sole trade and occupation of a particular class of citizens. Like every other employment too, it is subdivided into a great number of different branches, each of which affords occupation to a peculiar tribe or class of philosophers; and this subdivision of employment in philosophy, as well as in every other business, improves dexterity, and saves time. Each individual becomes more expert in his own peculiar branch, more work is done upon the whole, and the quantity of science is considerably increased by it.  (I.1.9)

The improvements in agriculture and manufactures seem likewise to have been of very great antiquity in the provinces of Bengal in the East Indies, and in some of the eastern provinces of China; though the great extent of this antiquity is not authenticated by any histories of whose authority we, in this part of the world, are well assured. In Bengal the Ganges and several other great rivers form a great number of navigable canals*56 in the same manner as the Nile does in Egypt. In the Eastern provinces of China too, several great rivers form, by their different branches, a multitude of canals, and by communicating with one another afford an inland navigation much more extensive than that either of the Nile or the Ganges, or perhaps than both of them put together. It is remarkable that neither the antient Egyptians, nor the Indians, nor the Chinese, encouraged foreign commerce, but seem all to have derived their great opulence from this inland navigation. (I.3.7)

Every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry. (I.4.2)

Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet in old times we find things were frequently valued according to the number of cattle which had been given in exchange for them. (I.4.3)

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. (I.4.4)

Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the antient Spartans; copper among the antient Romans; and gold and silver among all rich and commercial nations. (I.4.5)

As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials. In exchanging the complete manufacture either for money, for labour, or for other goods, over and above what may be sufficient to pay the price of the materials, and the wages of the workmen, something must be given for the profits of the undertaker of the work who hazards his stock in this adventure. The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced. He could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock. (I.6.5)

The profits of stock, it may perhaps be thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction. They are, however, altogether different, are regulated by quite different principles, and bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour of inspection and direction. They are regulated altogether by the value of the stock employed, and are greater or smaller in proportion to the extent of this stock. (I.6.6)

The market price of any particular commodity, though it may continue long above, can seldom continue long below, its natural price. Whatever part of it was paid below the natural rate, the persons whose interest it affected would immediately feel the loss, and would immediately withdraw either so much land, or so much labour, or so much stock, from being employed about it, that the quantity brought to market would soon be no more than sufficient to supply the effectual demand. (I.7.30)

In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him. (I.8.2)

Book I, Chapter IX
Of the Profits of Stock

It may be laid down as a maxim, that wherever a great deal can be made by the use of money, a great deal will commonly be given for the use of it; and that wherever little can be made by it, less will commonly be given for it.*51 According, therefore, as the usual market rate of interest varies in any country, we may be assured that the ordinary profits of stock must vary with it, must sink as it sinks, and rise as it rises. The progress of interest, therefore, may lead us to form some notion of the progress of profit. (I.9.4)

Book I, Chapter X
Of Wages and Profit in the Different Employments of Labour and Stock

Book I, Chapter XI
Of the Rent of Land

I shall conclude this very long chapter with observing*217 that every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people. (I.11.255)

Book II
Of the Nature, Accumulation, and Employment of Stock

There are two different ways in which a capital may be employed so as to yield a revenue or profit to its employer.

First, it may be employed in raising, manufacturing, or purchasing goods, and selling them again with a profit. The capital employed in this manner yields no revenue or profit to its employer, while it either remains in his possession, or continues in the same shape. The goods of the merchant yield him no revenue or profit till he sells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continually going from him in one shape, and returning to him in another, and it is only by means of such circulation, or successive exchanges, that it can yield him any profit. Such capitals, therefore, may very properly be called circulating capitals.

Secondly, it may be employed in the improvement of land, in the purchase of useful machines and instruments of trade, or in suchlike things as yield a revenue or profit without changing masters, or circulating any further. Such capitals, therefore, may very properly be called fixed capitals.

Book II, Chapter II
Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital

Book II, Chapter III
Of the Accumulation of Capital, or of Productive and Unproductive Labour

Book IV

Mr. Colbert, the famous minister of Lewis XIV. was a man of probity, of great industry and knowledge of detail, of great experience and acuteness in the examination of public accounts, and of abilities, in short, every way fitted for introducing method and good order into the collection and expenditure of the public revenue. That minister had unfortunately embraced all the prejudices of the mercantile system, in its nature and essence a system of restraint and regulation, and such as could scarce fail to be agreeable to a laborious and plodding man of business, who had been accustomed to regulate the different departments of public offices, and to establish the necessary checks and controls for confining each to its proper sphere.

The industry and commerce of a great country he endeavoured to regulate upon the same model as the departments of a public office; and instead of allowing every man to pursue his own interest in his own way, upon the liberal plan of equality, liberty, and justice, he bestowed upon certain branches of industry extraordinary privileges, while he laid others under as extraordinary restraints.

Mr. Quesnai, who was himself a physician, and a very speculative physician, seems to have entertained a notion of the same kind concerning the political body, and to have imagined that it would thrive and prosper only under a certain precise regimen, the exact regimen of perfect liberty and perfect justice. He seems not to have considered that, in the political body, the natural effort which every man is continually making to better his own condition is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political œconomy, in some degree, both partial and oppressive. Such a political œconomy, though it no doubt retards more or less, is not always capable of stopping altogether the natural progress of a nation towards wealth and prosperity, and still less of making it go backwards. If a nation could not prosper without the enjoyment of perfect liberty and perfect justice, there is not in the world a nation which could ever have prospered. In the political body, however, the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man, in the same manner as it has done in the natural body for remedying those of his sloth and intemperance. (IV.9.28)

Online copy of the book

January 7, 2016

Zuckerberg - Narayana Rao Reading Challenge

Every Year Reading Challenge for MBA Graduates

Management Articles Reading Challenge for all Management Professionals and Graduates


2016 Reading Challenge by Narayana Rao K.V.S.S.

January 2016

1. Managing Research and De4velopment by John E. Gibson, A wiley interscience publication, 1981.

Zuckerberg Practicing Stephen Covey's 7th Habit for Effectiveness

Sharpen the Saw

Zuckerberg announced his reading challenge for the year 2015. It is good. It will give good advertisement to reading books. These days it was forgotten. Independent of it I started my reading challenge of management books for the year 2015. I hope to read many books to update this blog this year in a serious manner.  I started a facebook to post my reading of management books.


It will have information regarding Zuckerberg's reading activity also. Hope Facebook retains the page.

Books I am reading or read in 2015 (Narayana Rao K.V.S.S.)

I also do Revision of Core MBA Management Knowledge according to one Year Plan

1. Principles of Management by Koontz and O'Donnell - 4th Edtion and 13 Edition

2. Marketing Management by Kotler and Keller, (12,13and 14 Editions, 9th Edition by Kotler)

3. Started Reading Big Data Big Analytics - Michael Minelli, Michele Chambers and Ambiga Dhiraj 30 January 2015

4. Operations and Supply Management by Richard B. Chase, F. Robert Jacobs, and Nicholas J. Acquilano

5. Product Development and Design by Karl T. Ulrich and Steven D. Eppinger

6. Zero Defects: A New Dimension in Quality Assurance by James Halpin (Studied for delivering talk on National Productivity Week 2015 - Theme: Zero Defect - Zero Effect)

7. Quality Without Tears by Philip B. Crosby, McGraw-Hill Book Company, 1984

8. The Certified Six Sigma Black Belt Handbook, Donald W. Benbow and T.M. Kubiak, ASQ, 2005


10. Principle-Centered Leadership, Stephen Covey, 1990
To post summary of 31 chapters in
Stephen Covey's Principle-Centered Leadership Model - Summary

11. Supply Chain Management - April 2015

12. Yajurved

13. Vedic Management by Kannan Srinivasan

14. A Guide to the Project Management Body of Knowledge by PMI

15. Qualitative Research Design  by Joseph A. Maxwell, 2013, Sage Publications

Output of Reading Challenge
New Blogging Project from Narayana Rao
30 Day MBA Self Study Course - Free Notes - Recommended Texts

Koontz - 14 Edition - Principles of Management - Brief Notes
Kotler and Keller 14 Edition - Marketing Management - Issues and Topics Explained in Brief - 20 Feb, 21 Feb

April 2015

17 April - Yajurved - Chapters 39 and 40.

9 April - Transportation in the Supply Chain - Chopra and Meindl

Reading Plan up to 13 March 2015

Management by Weihrich, Cannice and Koontz - 13 and 14 editions
Browsed the Book and Made Slides for all chapters.
Management - 14th Edition by Koontz, Weihrich, Cannice - Chapter-wise Presentation Slides

Product Development and Design by Karl T. Ulrich and Steven D. Eppinger
Marketing Management by Kotler and Keller
Principle-Centered Leadership, Stephen Covey, 1990
Stephen Covey's Principle-Centered Leadership Model - Summary

1 March 2015 - Sharpen the Saw -  Chapter of Stephen Covey's Book - Wrote a blog post also.
28 Feb - Full Day Spent in Listening to the Budget Commentary. Made a blog post on Budget.

The Certified Six Sigma Black Belt Handbook, Donald W. Benbow and T.M. Kubiak

Project Management
1. Enterprise-wide Deployment 19 Feb 2015

Quality Without Tears by Philip B. Crosby

13. Team Execution 16.2.2015
12 Team Actions 15.2.2015
11. Implementation 15.2.2015
6. The First Absolute: The Definition of Quality 14.2.2015
5. Determination 13.2.2015
3. Demotivation 13.2.2015
2. The Quality Vaccine 12.2.2015
1. The Profile of a Problem Organization  12.2.2015

Zero Defects: A New Dimension in Quality Assurance by James Halpin

16. The Future of Zero Defects 18.2.2015
15. Directing a Continuing Program 17.2.2015
10. Program Kickoff 11.2.2015
9. Kickoff Readiness 11.2.2015
8. Techniques of Product and Quality Awareness 11.2.2015
2. The Evolution of Zero Defects 10.2.2015
1. Zero Defects: A Search for Perfection 9.2.2015

Product Development and Design

16 chapters studied

16. Managing Projects 14 March 2015
15. Product Development Economics 14 March
14. Patents and Intellectual Property
13. Robust Design 14 March
12. Prototyping
11. Design for Manufacturing
10. Industrial Design
9. Product Architecture  14 March
8. Concept Testing 14 March
7. Concept Selection  - 27 Feb 2015
6. Concept Generation - 26 Feb
5. Product Specifications 8.2.2015
4. Identifying Customer Needs 7.2.2015
3. Product Planning  6.2.2015
2. Development Processes and Organizations
1. Introduction  6.2.2015

Operations and Supply Chain Management

Ch 17. Inventory Control  27 March
Ch. 16 Aggregate Sales and Operations Planning 27 March
Product and Service Design - Ch.5 - 5 Feb 2015
Project Management - 4 Feb 2015
Using Solver
Operations Strategy - 3 Feb 2015
Introduction to the Field - 2 Feb 2015

Marketing Management by Kotler and Keller

Managing Holistic Marketing Organization - 1 Feb
Global Marketing - 31 January
Marketing New Products - 30 January
Managing Personal Communications    29 Jan
         Sales Force Management - Kotler and Keller Book Chapter Summary
Managing Mass Communications: Advertising, Sales Promotions, Events and Public Relations 28 Jan 2015
Designing and Managing Integrated Marketing Communications
Managing Retailing, Wholesaling and Logistics
Designing and Managing Retail and Distribution Channels
Developing Pricing Strategies and Programs 24 Jan
Setting Product Strategy 23 Jan
Dealing with Competition 22 January
Crafting Brand Positioning 21.1.2015
Creating the Brand Equity 20.1.2015
Identifying Market Segments and Targets - 19.1.2015
Analyzing Business Markets  - 18.1.2015
Analyzing Consumer Markets
Scanning the Marketing Macroenvironment - Philip Kotler's Book Chapter 
Managing Marketing Information and Measuring  Market Demand
Marketing Strategy - Marketing Process - Kotler's Description

Zuckerberg's Reading

Picture source: Facebook photos of Zuckerberg https://www.facebook.com/zuck

1. The End of Power by Moises Naim

2. The Better Angels of Our Nature by Steven Pinker.


4. On Immunity Eula Biss

5. The Creativity Inc. by Emma Catull (Founder of Pixar along with Steve Jobs)

Alejandro Melo Florian's Reading


Management Articles Reading Challenge for all Management Professionals and Graduates