management process and organizational behavior 5
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PRINCIPLES OFMANAGEMENT
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Features of Management Management is universal
Management is purposeful
Management is a unifying force
Management is a social process
Management is multidisciplinary
Management is a continuous process
Management is intangible
Management is situational
Management is essentially an executive function
Management is an are as well as science
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Management as an artThe main elements of art
Personal skills
Practical know-how
Result orientation
Creativity Constant practice aimed at perfection
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Why mgmt is an art? A manager applies his knowledge and skills to
coordinate the efforts of his people
Management seeks to achieve concretepractical results
Management is creative
Management is a personalized process Effective management leads to realization of
organizational and other goals.
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Management as a ScienceThe essential elements of science are:
Science is a systematized body of knowledge
pertaining to a particular field of inquiry It contains underling principles and theories
developed thru continuous observation,experiments & research
They have universal applicability
It can be learnt in and out the classroom
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Why mgmt is a science? Systematized body of knowledge is
available
Pples of mgmt have been evolved thrupractical experience and theoreticalresearch
wide and repetitive application Management theory can be taught in
classrooms and in industry
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Management as social science It involves the study of human behavior
Its pples are not hard and fast laws. It is flexiblebased on situations
Validity of the pples cant be tested thru experiments
It cant explain clearly why and how a human beingbehaves in a particular , thereby making it a softscience.
It is an applied science. Therefore mgmt is a combination of art and science
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Schools of Management
Thought Empirical Approach Human Behaviour Approach
Social Systems Approach Socio technical Systems
Decision Theory
Management Science Systems Approach
Contingency/Situational Approach
Operational Approach
E i i
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EmpiricaApproach/Case/Management
experience Management is a study of managerial
experiences
Experience can be passed on
Studying from managers
Leads to generalisations
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Limitations No significant contribution to mgmt
A successful technique of the pastmight be of questionable use in future.
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Human Behavior Approach Developed by behavioral scientists
Managers should understand humanbehavior
Emphasis is put on increasingproductivity through motivation
Motivation,leadership,communication,parcipative mgmt and group dynamicsare the core
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Limitations Only human problems are taken into
account
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Social Systems Approach Vilfredo Paretos idea later on developed
by Chester Bernard
Organisation is a social system, a systemof cultural relationships
Relationships exist among the external aswell as internal environment
Co operation among group members forachieving organizational objves
For effective management, harmonywithin various groups is necessary
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Socio-Technical Systems
ApproachAn organization is a combination of
both social and technical systems
Social system is governed by social lawsas well as by psychological forces
Technical system consists of
technological like physical setting ofwork, rules , procedures etc
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Limitations Scope limited to shop floor level
Not a new concept
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Decision Theory Approach
Management is essentially decisionmaking
The members of the organization aredecision makers and problem solvers
Organization can be treated as a
combination of various decision centers Quality of decision affects effectiveness
All factors affecting decision making are
the subject matter of study of mgmt
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Management ScienceApproach
Management is regarded as the problemsolving mechanism with the help of
mathematical tools and techniques Managerial activity can be quantified
Covers decision making, systems analysis
and some aspects of human behavior OR, mathematical tools, simulation models
etc are basic methodologies
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Limitations
All managerial activities cannot bequantified.
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Systems Approach
A system is an assemblage of thingsconnected or interrelated so as to form
a complex unity.
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Features of a system
A system is basically a combination ofparts
Parts and sub parts are mutually relatedto each other
A system is not merely the totality of
parts and subparts but theirarrangement is more important
A system has a boundary
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Contd
Open & Closed system
System transforms inputs into output
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Management as System
Social System
Open system
Adaptive Dynamic
Probabilistic
Multilevel and multidimensional
Multivariable
Multidisciplinary
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Implications & Limitations
Integrated Approach
Organization-environment interaction
- Abstract Approach
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Lack of universality
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Pioneers of mgmt- F.W Taylor
Father of scientific management
Defined management as the art of
knowing exactly what you want men todo and seeing that they do it in the bestand cheapest way
Famous book-Principles of scientificmanagement 1911
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Pples of Taylor
Develop a true science for each element of aworkers job to replace rule of thumb
Scientific selection, training and developmentof workers for each job
An equal division of responsibility betweenmanagement and workers. Planning anddoing should be separated
Close co-operation between mgmt and labor.
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Techniques developed byTaylor
Functional foremanship (specialization)
Differential piece rate plan
Work scheduling
Time study
Motion study
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Criticisms against Taylor
Devoid of human touch (wage-incentive)
Narrow in scope ( applicable to factoryjobs)
Separation of planning from doing
Extensive use of specialisation
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Pioneers of mgmt- Henri Fayol
Famous book- Administration Industrielle etGenerale
Managerial skills can be taught in the classroom and then at work place
Contribution can be classified into 3 heads:
Classification of Business ActivitiesFunctions of management
Management principles
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Classification of businessactivities
Technical ( Manufacturing)
Commercial ( Buying, selling& exchange
Financial ( search for & optimumutilization of capital)
Security ( protection of property &
persons)Accounting
managerial
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Functions of management
Planning
Organizing
Commanding
Co-ordinating
Controlling
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Management principles
1. Division of work
2. Authority and responsibility
3. Discipline4. Unity of command
5. Unity of direction
6. Subordination of Individual to GeneralInterest
7. Remuneration of Personnel
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Contd..
8. Centralization
9. Scalar Chain Concept ofGang- Plank
10. Order11. Equity
12. Stability of tenure of personnel
13. Initiative14. Esprit de Corps (Team Spirit and co
operation)
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Evaluation Arguments for it
Universal applicability
Practical principles of management
The need for formal training for would-be managers is important
Its the core of modern management
education Father of administrative management
theory
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Evaluation Argumentsagainst it
Too formal
Did not pay much attention to workers
How to teach mgmt was not explained
Some terms have vague explanation
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Pioneers of mgmt- GeorgeElton Mayo
Father of Human Relations Movement
Professor at the Harward business
school
Leader of the Hawthorne Experiments
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Outcome of the Experiment
Productivity could be increased not onlyby improving working conditions but
thru informal social relations among themembers of the group
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Proof relay assembly TestRoom Experiment
A small homogenous work group was selected Introduced several new elements in the work
atmosphere ( Shorter working hrs, appropriate rest
periods, improved physical conditions, friendly andinformal supervision, free social interaction with theteam)
Productivity increased during the period of theexperiment
Productivity maintained even if improvements inworking conditions were withdrawn Concluded that Socio-psychological factors held the
key for higher productivity
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Proof- Mass Interviewingprogram
Large number of workers wereinterviewed and the results confirmed
the importance of informal relations andSocio-psychological needs
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Conclusions of the Hawthorneexperiments
A factory is not just a techno-economic unit Workers spontaneously form informal groups The norms and values of such group have significant
influence on the behavior and performance of theworkers Physical conditions of work does not influence
productivity as much as Socio-psychological needs Generally workers act or react as members of a
group Informal leaders play an imp role Workers are not mere economic beings Mgmt must understand and recognize interpersonal
and group relations on job
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Evaluation Arguments for it
Human aspects is considered
Several HR concepts was developed
following the experiment
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Evaluation Argumentsagainst it
Lack of scientific analysis
The researchers had certain
preconceived perceptions
The experiments were narrow
Workers were highly conscious when
being observed ( Hawthorne Effect)
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Pioneers of mgmt- Peter FDrucker
Management Guru
Considered mgmt as the dynamic and
life giving element in an orgn.
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Contributions
Nature of management Managerial functions includes:To manage managersTo manage workersTo manage work Organization Structure
Decentralization MBO Futurity
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Contd..
Drucker had identified 8 key result areas in whichclear objectives must be laid down:
1. Market standing
2. Innovation3. Productivity4. Physical and financial resources5. Profitability6. Managerial performance and development7. Worker performance and attitude8. Public responsibility
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Types of business entity-Soleproprietorship
type of business entity which legally has noseparate existence from its owner
Limitations of liability enjoyed by a corporation
and limited liability partnerships do not apply tosole proprietors All debts of the business are debts of the
owner
A sole proprietorship essentially refers to aindividual doing business in his or her ownname and in which there is only one owner
it does not pay corporate taxes
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Disadvantages
Will likely have a hard time raising capital Hiring employees may also be difficult
This form of business will have unlimitedliability, so that if the business is sued, theproprietor is personally liable
The life span of the business is alsouncertain
The business owner must also be an all-rounder
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Partnerships
Partnership is a type of business entity, where youpartner with other individuals to own and run thebusiness.
On a higher level, they can be viewed as collection ofsole proprietors.
By partnering with other individuals, you get accessto a bigger pool of capital, skills and other resourcesto fund and run your business.
All partners contribute capital equally, share profitsand losses equally and have an equal say in businessdecisions.
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Advantages
Access to larger pool of resources andcapital
You do not have the confidence to startthe business on your own and needsome one to shoulder the responsibility
Access to complementary skills
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Disadvantages
If your partner makes a business mistake,without your knowledge or consent, and itadversely affects your business, you are
equally liable to bear the consequences -even though you had no role to play in themistake
If your partner goes bankrupt, his share inthe business can be seized by his creditors.
Although you are not liable for his personaldebts, your business may be put into
jeopardy
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Legal side of partnership
have a legal document that highlightsthe partnership agreement between
partners - the profit sharing, duration ofpartnership, admitting-expellingadditional partners, dissolving the
partnership etc.
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Limited company
Alimited company is whose liability islimited by law
There are three main types of limitedcompanies:
1. private company limited by shares(Ltd.)
2. private company limited by guarantee
3. public limited company
Wh P bli P i
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What are Public or Privatecompanies? These companies are also know asjoint stock companies.
The companies in India are governedby the Indian Companies Act, 1956
company is an artificial person createdby law, having a separate legal entity,with perpetual succession and acommon seal
the company is different from the
investors
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Characteristics
Legal formation
Artificial person
Separate legal entity
Common seal
Perpetual existence
Limited liability
Democratic management
S i l h t i ti f P t
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Special characteristics of PvtLtd Co.
These companies can be formed by at least twoindividuals having minimum paid-up capital ofnot less than Rupees 1 lakh.
As per the Companies Act, 1956 the totalmembership of these companies cannot exceed50.
The shares allotted to its members are also not
freely transferable between them. These companies are not allowed to raise money
from the public through open invitation.
They are required to use Private Limited after
their names.
S i l h t i ti f
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Special characteristics ofPublic Ltd Co.
A minimum of seven members are required to form apublic limited company.
It must have minimum paid-up capital of Rs 5 lakhs.
There is no restriction on maximum number ofmembers. The shares allotted to the members are freely
transferable. These companies can raise funds from general public
through open invitations by selling its shares oraccepting fixed deposits. These companies are required to write either public
limited or limited after their names.
P i t li it d b
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Private company limited byguarantee
This type of Company does not haveshare capital but is guaranteed by its
"members", who agree to pay a fixedamount in the event of the company'sliquidation
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Cooperative
an autonomous association of persons unitedvoluntarily to meet their common economic,social, and cultural needs and aspirations
through a jointly-owned and democratically-controlled enterprise A cooperative may also be defined as a
business owned and controlled equally by thepeople who use its services or who work at it
Cooperatives may be generally classified aseither consumer cooperatives orproducer cooperatives.
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Cooperatives are based on the values of self-help, self-responsibility,
democracy and equality.
In the tradition of their founders, cooperative members believe in the
ethical values of honesty, openness, social responsibility and caring for
others.
Membership is open.
Economic benefits are distributed proportionally according to each
member's level of participation in the cooperative, for instance by a
dividend on sales or purchases, rather than divided according to capital
invested.
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Multinational Corporations
Multinational corporation (MNC) ortransnational corporation (TNC) is a
corporation or enterprise that managesproduction or delivers services in morethan one country
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Many MNCs are large in relation to thenational income of the countries in whichthey are located
MNCs generate jobs and incomes
MNCs help training of local workers in newand potentially transferable skills
Technology transfer is also an incentive The local community would benefit since land
would develop
attractive both for the company and a host
country's government
M lti ti l t
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Multinational corporatestructure
Horizontally integrated multinationalcorporations (example: McDonald's)
Vertically integrated multinationalcorporations (example: Adidas or Nike,Inc.)
Diversified multinational corporations(example: Microsoft )
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Threats caused by MNCs
The Rise of Corporations
Corporations and Human Rights
Market Withdrawal Evasion of Tax and Other Responsibilities
Corporations and the Environment
Corporate Influence on Children Corporations and Workers Rights
E ol tion of management
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Evolution of managementPre Scientific Mgmt Period
Period before Taylors Scientific era
Pioneers of this era includes Robert
Owen, Charles Babbage, Hendry VernunPoor, Hendry Robinson, James Watt,Mathew Boulton and Captain
HendryMetcalfe.
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Robert Owen - Contributions
Manager of a group of textiles in Scotland. Workers performance was influenced by the total
working atmosphere
Employees are vital machines Maintenance of workers are as necessary as that for
machines Co-operation between workers and management Human capital is the most worthy New ideas of human relation ( shorter working hrs,
housing facilities, canteens, education of children,rest places)
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Charles Babbage-Contributions
Prof of Mathematics in Cambridge University Use of science and mathematics in
manufacturing operations Division of work acc to skills Avoid opinions and intuitions while decision
making Emphasis on cost reduction Participative decision making and profit
sharing Invention of an analytical machine
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Hendry Vernun Poor
Editor of the American Railroad journal
He noticed the railroads being mismanaged
3 pples to railroad managers- organisation,communication and information
Need for a structured organisation structure
Unity and co operation among workers
James Watt & Mathew
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James Watt & MathewRobinson
Applied the following management techniquesin their Engineering Factory:
Market research and forecasting Standardisation of components and parts
Production planning
Elaborate statistical records Cost accounting procedures
Provision for employee welfare
Approaches to management-
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pp gClassical /Traditional/Empirical
approach Management is viewed as a systematic network of
inter related functions The mechanics with which each function is performed
and their inter relation is the core of classical app. Principles are developed based on experiences of
practicing managers Functions, principles and skills of management are
considered universal.
Formal education to would be managers (case studymethod) Emphasis is placed on economic efficiency and formal
organizational structure People are motivated by economic gains
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Uses and Limitations
Case study method used is very usefulwith future applicability
Focuses more on what mangers shouldactually do
Highlights the universal nature of
management It has a scientific base
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Devoid of human touch
The environment dynamics and their
effect on management is ignored Too much depending on past
experiences
Case study method is very effective inunderstanding the totality of thesituation
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Behavioral Approach
Emphasis is on the human aspects ofmanagement
Developed by George Elton MayoA developed version of HR movement
An extension of Hawthorne Experiments
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Basic Propositions
An organization is a socio technical system A wide range of factors influence
interpersonal and group behavior There should be a fusion between
organizational goals and human needs Several differences in attitudes, perceptions
and values of employees exist and influence
their behavior and performance Some degree of conflicts are inevitable and
even desirable in organizations
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HR v/s. Behavioral Approach
Human Relation
Focus on interpersonalrelations
Study of individual
Motivation and jobsatisfaction
Originated fromHawthorne exp
Behavioral
Focus on group relation
Study of groups andgroup behavior
Group dynamics andinformal organisationare main concepts
Wider version of HR
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Quantitative approach
Management is a series of decision making. The manger has to secure the best solution out of a
series of inter related variables These variables can be presented in a mathematical
model ( a prototype of the decision situation) If the model is properly formulated and equations
correctly solved, the best soln can be got Organizations exist for the achievement of specific
and measurable economic goals In order to achieve these goals optimal decisions
must be made The quality of management is judged by the qlty of
decisions made in diverse situations
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Uses and Limitations
Emphasis on diverse situational changesof decision making
Intuitions is replaced by factual dataand logical analysis
Thereby precision and perfection ofdecision making can be achieved
Several OR techniques have beenevolved from then.
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Systems Approach
A system is a set of distinguishable but interdependent and inter related parts operatingin a logical manner or sequence in order to
achieve a goal Each part affects the others and the system
as a whole
Every system operates in a wider system
Systems are of several types ( Static,Dynamic, Open and Closed systems)
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Basic Propositions
An organization is a system consisting ofseveral sub systems
The position and function of each sub systemcan be analyzed only in relation with othersub systems or the organization as a whole
An organizational system has a boundary
which separates it from other systems An organization is a dynamic system
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Limitations
Some concepts are vague and abstract
It cant be directly applied to problems
Contingency Approach /
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Contingency Approach /Situation Approach
Management is entirely situational
Fit the approaches acc to the situation
Sharpen diagnostic skills
No one best way to mange
Management techniques and tools arenot universal
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Uses and limitations
Emphasis on situation orientation
Open minded
Innovation and creativity power ofmanagers is necessary
Practical
Ifthen pple
Lacks theoretical base
Recent trend in Management
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Recent trend in Managementthoughts
Information Technology
Professionalisation
Flexible organization
Situational approach
HR
Futurology
Community Leader
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Vision statement
AVision statementoutlines what theorganization wants to be.
It concentrates on the future. It is a source of inspiration. It provides
clear decision-making criteria
A vision statement should be SMART(Specific, Measurable, Achievable,Relevant and Time bound)
Features of an effective vision
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Features of an effective visionstatement
Clarity and lack of ambiguity
Vivid and clear picture
Description of a bright future
Memorable and engaging wording
Realistic aspirations
Alignment with organizational valuesand culture
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McDonald's vision is to be the world'sbest quick service restaurant
experience.
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Mission statement
Amission statement is a brief statement ofthe purpose of a company, organization, orgroup
A mission statement should : Define what the company is Define what the company aspires to be Limited to exclude some ventures Broad enough to allow for creative growth Distinguish the company from all others Serve as framework to evaluate current activities Stated clearly so that it is understood by all
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It should be brief, flexible and distinctive
TCS MissionTo help customers achieve
their business objectives by providinginnovative, best-in-class consulting, ITsolutions and services, and to actively engageall stakeholders in a productive, collaborative,
and mutually beneficial relationship
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Values are guiding principles for theorganization to achieve its vision.
integrity, leading change, excellence,respect for the individual, and fosteringan environment of learning and
sharingTCS Values
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Objectives
Goals established to guide the efforts ofa company and each of its components
The activities of any organization isdirected towards the objectives
Characteristics of
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Characteristics ofOrganizational objectives
An orgn has multipleobjectives
Objectives have timespan
Objectives formhierarchy
CorporateObjective
s
Departmental
Objectives
Group Objectives
Individual Objectives
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Importance of Objectives
Legitimacy
Direction
Facilitates planning
Individual motivation
Performance control
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Essentials of Valid objectives
Clear and specific
Stated in measurable terms
Result oriented and time bound Challenging but realistic
Acceptable by employees
Social sanction Laid down in KRAs
Some flexibility
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Process for forming an
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Process for forming anorganization structure
A process involving decisions about six keyelements: Work specialization
Departmentalization Chain of command Span of control Centralization and decentralization
Formalization
Need and significance of
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Need and significance ofOrganization Structure
Facilitates administration
Facilitates growth and diversification
Permits optimum utilization oftechnological improvements
Greater employee satisfaction
Stimulates creativity
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Features of a good structure
Unity of objective Specialisation Span of control
Scalar principle Functional definition Exception principle(Authority level pple) Unity of command Efficiency Flexibility Facilitation of leadership Coordination
Simple Structure -
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S p e S uc u echaracteristics
Prime co-ordinating mechanism: directsupervision
Key part of organization: strategic apex Main design parameters: centralization,
organic structure
Situational factors: young, small,simple, non-complex technical system
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Simple structures lack:
support workers, formal structures,differentiated units, behaviour
formalization, hierarchies of managers,planning, training, liaison
The simple structure representeddiagrammatically
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diagrammatically
Operating core
Strategic
apex
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Simple structure - limitations
Limited by the ability of one person tocontrol everything
If the leader doesnt function, neitherdoes the organisation
Restrictive and un-democratic for
workers their decision makingcapability not called upon
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Advantages
It exists in all organizations at some level
Specialisation that leads to optimum
utilization It ensures the performance of all activities
It facilitates delegation of authority
Avoids duplication of work
It simplifies training
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Disadvantages
Too much emphasis on specialisation
There may be conflicts between depts
There may be problems in coordinatingthe activities of different depatments
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Multi divisional structure
1. Product departmentalisation
Every major product is organized as a
separate department Useful for organizations producing and
marketing products of significant
difference
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Advantages
All activities regarding a particularproduct line is well integrated
Facilitates product expansion anddiversification
The contribution of each product line to
overall results can be easily evaluated
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Disadvantages
There is duplication of functions
Advantages of centralisation of certain
activities are not available There may be under utilization of plant
capacity
More people are required
Product departmentalisation
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p
BOD
Managing director
Plastics division Metals divisionChemicals division
Finance
Production
Sales
Personnel
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Multi divisional structure
2. Territorial Departmentation
When the business is spread over in
large geographical areas One functional manager cannot
manage efficiently
Regional managers for differentregions
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Advantages
Local operations made easy
Savings in freight charges
Every regional manager can specializein the peculiar problems of his region
When business exists across borders
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Disadvantages
Communication problems
More number of people with managerial
skills are required Control of all branches from head office
can be less effective
Duplication of physical activities
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Multi divisional structure
3. Market Departmentation
Activities are grouped according to the
type of customers eg: Wholesale, retail, export etc
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Advantages
More attention can be given tocustomers
The benefits of specialisation can bederived
Customer needs can be more satisfied
thereby more profits
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Disadvantages
Departmentation is applied only to salesfunctions
Duplication of work
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Matrix Structure
Combination of two structures
For complex organizations
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Advantages
Oriented towards end results
Disadvantages Conflicts can arise
Matrix Structure
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Matrix Structure
Project D
Project A
Project B
Project C
Director
Chief ArchitectChief of
preliminary
Design
ChiefElectrical
Engineer
ChiefMechanical
Engineer
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MBO
Process whereby the superior and thesub ordinate managers of an enterprise
jointly identify its common goals, defineeach individuals major areas ofresponsibility in terms of the resultsexpected of him, and use these
measures as guides for operating theunit and assessing the contribution ofeach of its members
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Objectives
To measure and judge performance To relate individual performance to organizational
goals To clarify what is to be achieved To foster the increasing competence and growth of
the sub ordinates To serve as a basis for judgements about salary and
promotion To stimulate the sub ordinates motivation To serve as a device for organizational control and
integration
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Features
Goal oriented rather than work oriented Involves participation of subordinate managers in
goal setting MBO stresses measurable and verifiable goals in
KRAs MBO is a dynamic system Maximum utilization of resources is the overall
philosophy Linkage between organizational goals and individual
goals Continuous process It sets an evaluative mechanism
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Steps in MBO process
Preliminary goal setting
Setting subordinates goals
Recycling objectivesAction planning
Periodic performance reviews
Final appraisal
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f O
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Limitations of MBO
Goal setting problems
Time consuming
Increased paper work Pressure oriented
Undermining leadership
Participation problem
H k MBO ff i
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How to make MBO effective
Purpose
Top management support
Orientation and trainingAdequate time and resources
Decentralization
Timely feedback
PLANNING
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PLANNING
A function that determines in advancewhat should be done.
It consists of selecting enterpriseobjectives, policies, programmes,procedures and other means of
achieving these objectives.
N t f l i
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Nature of planning
Goal oriented
Planning is a primary function
Planning is all pervasive Planning is an intellectual or rational process.
It is a continuous process
Planning is forward looking
Planning involves choice
It is directed towards efficiency
I t f l i
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Importance of planning
Focuses attention on objectives and results Reduces uncertainty and risk Provides sense of direction
Encourages innovation and creativity Helps in coordination Guides decision making Provides a basis fro decentralization Improves efficiency Facilitates control
Problems in planning(Li it ti )
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(Limitations)
Lack of accurate info
Time and cost
Inflexibility Lack of ability to plan
False sense of security
Environmental constraints
P i i l f l i
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Principles of planning
Contribution to objectives
Efficiency of plans
Primacy of planning Principle of timing
Principle of alternatives
Principle of limiting factor
Principle of commitment
Principle of flexibility
Hi h f l i (S )
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Hierarchy of planning (Scope)
Corporate
planning
Divisional orfunctional planning
Group or sectional planning
Hi h f l i (Ti )
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Hierarchy of planning (Time)
Long range strategic planning
Medium term or Intermediate planning
Short term operational planning
St i l i
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Steps in planning
Identify goals
Develop planning premises
Determine alternative courses of action Evaluate the alternatives
Select a course of action
Formulate derivative plans
Li d t ff i ti
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Line and staff organization
Line organization- Features
i. Lines of authority are vertical flowing fromtop to bottom
ii. The command is through a straight ,unbroken line
iii. All persons at the same level areindependent of each other
iv. The authority and responsibility of eachposition is clearly defined
Ad t
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Advantages
Simple
Prompt decision
Effective discipline Orderly communication
Unity of command
Economical
Fixed responsibility
Co ordination
Disad antages
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Disadvantages
Lack of specialization
Overloading
Autocratic approach Low morale
Succession problems
Suitability
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Suitability
Small scale business
Routine nature of work
Where machines are used more thanexpertise of foremen
Line and staff
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Line and staff
Decision Making
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Decision Making
A decision is a course of action which isconsciously chosen from among a set of
alternatives to achieve a desired result. The process of doing it is decision
making
Features of decision making
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Features of decision making
Goal oriented process
Set of alternatives are available
Dynamic Environment related
Implies freedom to the decision maker
Continuous process
Intellectual process
Types of decisions
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Types of decisions
Programmed and non programmeddecisions
Organisational and personal decisions Individual and group decisions
Decision making process
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Decision making process
Identify the problem
Diagnose the problem
Discover alternatives Evaluation of alternatives
Risk
Economy of effort
Timing
Limitation of resources
Contd
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Contd..
Select the best alternative
Implementation and follow up
Summed to 3 phases: Intelligence activity
Decision activity
Choice activity
The Environment for decisionmaking
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making
Certainty
Risk
Uncertainty
Limitations of scientificdecision making
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decision making
Inadequate goal formulation
Vaguely defined problems
Imperfect knowledge Limited time and resources
Human limitations
Power politics
Environmental dynamics
Group think
Objectives- Strategies andPolicies
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Policies
A complex plan for bringing theorganization from a given posture to a
desired position in a future period oftime
A response to external environmentforces
Importance of strategies
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Importance of strategies
Helps in facing environmentalchallenges
Provides direction Optimum utilization of resources
Facilitates coordination and control
Competitive strength
Essentials of a good strategy
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Essentials of a good strategy
Internal consistency
Consistency with environment
Appropriate time horizon Realistic
Acceptable degree of risk
Feasibility
Social sanction
St i t t f l ti
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Steps in strategy formulation
Mission and objectives
SWOT analysis (Self appraisal &
Environmental analysis) Strategic decision making
Strategy implementation and control
Types of strategies
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Types of strategies
Stability strategy
Growth strategy
Retrenchment strategy Combination strategy
Competitive strategy
Grand or master strategy
Policies
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Policies
A broad statement formulated toprovide guidance in decision making at
lower levels of management
Importance of policies
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Importance of policies
Operationalise objectives
Save time and effort
Facilitate delegation of authority Speed up decision making
Types of policies
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Types of policies
Originated policy
Appealed policy
Imposed policy
Steps in policy formulation
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Steps in policy formulation
Defining the policy area
Identification of policy alternatives
Evaluation of alternatives Choice of policy
Communication of policy
Policy application
Policy review and appraisal
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Characteristics
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Characteristics
Superior grants a discretion to the subordinate
Entire authority cannot be delegated
The extent of delegation depends uponseveral factors
Delegation is not reduction in authority
Delegation does not mean abdication ofresponsibility
Delegation is an art
Importance of delegation
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Importance of delegation
Distribution of routine work
Quick decision making
Improves the work life of sub ordinates Increases interaction
Helps to ensure continuity in business
Process of delegation
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Process of delegation
Determination of results expected
Assignment of duties
Granting of authority Creating accountability for performance
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Delegation Decentralization
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Delegation Decentralization
It is a process
Denotes relationshipb/w a superior and
subordinate It is essential for
mgmt process
Delegation can
happen withoutdecentralization
It is the end resultof delegation
Denotes relationship
b/w the top mgmtand various depts
It is optional
Decentralization
cant happen withoutdelegation
Degree of decentralization ameasure
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measure
Number of decisions
Importance of decisions
Effects of decisions Checking of decisions
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Factors determiningdecentralization
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decentralization
Size and complexity of the orgn
Dispersal of operations
Degree of diversification Outlook of the top mgmt
Availability of competent personnel
Nature of functions
Communication system
Span of management
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Span of management
Number of sub ordinates that reportdirectly to a single manager
Factors determining span
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Factors determining span
Nature of work
Type of technology
Ability of manager
Capacity of sub ordinates
Degree of decentralization
Policies and procedures
Staff assistance
Time available for supervision
Empowerment
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Empowerment
giving employees power and authority tomake decisions on their own
When people are allowed to work with
minimal interference from their superiors andare given the authority and responsibility tomake decisions, they are said to beempowered
Employees can be empowered by ensuringtheir participation in decision-making
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Pre-requisites essential forparticipation
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participation
adequate time
potential benefits of participation should
be greater than the costs involved the employees must also have the
relevant abilities and skills
should be interested in that particulararea of work
Effectiveness
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Effectiveness
doing "right" things, i.e. setting right targets toachieve an overall goal
Effectiveness is a quality metrics meaning how gooda person is at doing a task.
Efficiency Vs Effectiveness Efficiency is a quantity metrics Efficiency = output (number of customer service calls
taken per hour)
Effectiveness = outcome (customers who aresatisfied with the answers received)
Management by restructuring-Benchmarking
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Benchmarking
process of comparing the cost, time orquality of what one organization doesagainst what another organization does
Its a continuous process Involves measurement
Comprehensive
Self examination
Goal oriented
Types
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ypes
Internal benchmarking
Functional benchmarking
Competitive benchmarking
Phases and steps inbenchmarking process
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g p
Planning
Analysis
IntegrationAction
Maturity
Steps
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p
Identify what is to be benchmarked
Identify best competitor
Determine data collection methodology
Determine current performance GAP Project future performance levels
Communicate benchmark findings
Establish functional goals
Implement specific action and monitor progress Recalibrate benchmarks
Maturity
Management by restructuring-BPR
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The fundamental rethinking and radicalredesign of business processes toachieve dramatic improvements incritical, contemporary measures ofperformance, such as cost, quality,service and speed
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Fundamental rethinking: Why does the companydo what it does? Why does it do it the way it does? Itconcentrates on what should be done.
Radical Redesign: Discard all existing oldstructures and procedures and invent new ways ofdoing things
Dramatic improvements: No marginal
improvements only quantum leaps Key processes
Companies that go for it
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p g
Companies that are in deep trouble
Companies that foresee trouble
Companies that are aggressive andambitious
Objectives of BPR
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j
Redesigning the key business processto improve quality and reduce cost
Flattening the organization and
encouraging teamwork Training and developing HR
Improving information technology
Identifying core competencies andmanaging environmental changes
Entrepreneurship
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p p
Entrepreneurship is the practice ofstarting new organizations orrevitalizing mature organizations,particularly new businesses generally inresponse to identified opportunities
Advantages ofentrepreneurship
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p p
Self-employment, offering more jobsatisfaction and flexibility of the workforce
Employment for others, often in betterjobs
Income generation and increased
economic growth More goods and services available
Entrepreneurs...Traits
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Self-confident and optimistic
Able to take calculated risk
Respond positively to changes Flexible and able to adapt
Knowledgeable of markets
Abl t t l ll ith th
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