Principles of Management Notes

Principles of Management

Chapter 1 Managing

Why Organizations Need Manager’s

Organization = an entity managed by one or more people.

Managers = People who allocate and oversee the use of resources.

Management = One or more managers setting and achieving goals by exercising

management functions of planning, organizing, staffing, leading, & controlling.

Goal = Outcome to be achieved over a period of time through the exercise of

management functions and expenditures of resources.

The Manager’s Universe

1) Managers & their organizations need to please customers by meeting or

exceeding their needs and expectations.

2) Managers should provide leadership.

3) Managers and organizations must act ethically.

4) Organizations should value diversity in their employees.

5) Managers and organizations must learn to cope with global challenges.

Customers mean the survival and profitability of the organization.

Quality- means that that your product or service satisfies the

requirements of those who use or consume them.

Customer- includes any person or group both inside and outside the

organization, who uses or consumes outputs from an organization or

its’ members.

Customer Relationship Management (CRM)- allows organizations:

• T track and analyze shifting customer needs

• Link marketing campaigns to sales results

• Monitor sales activities for improved forecasting accuracy.

The Need to Provide Leadership

• The ability to get people to follow voluntarily.

• Exhibit a set of values, skills, abilities, and traits that are needed by others.

• Gaining commitments from organizational members to achieve management’s

goals.

• Properly preparing subordinates to accomplish goals.

The Need to Act Ethically

Ethics is the branch of philosophy concerned with what constitutes right and

wrong, human conduct, values and actions, under a given set of circumstances.,

• Each employee must have and act on a personal ethical and moral code.

• An individual’s personal experiences combine to produce a personal moral code.

• Organizations must provide values and support systems to make certain that no

person is harmed by the organization’s or employee’s actions.

• Managers cannot be strong leaders without a strong set of moral and ethical

values.

The Need to Value Diversity in Their Employees

• Includes people from differing age groups, genders, ethnic and racial

backgrounds.

• Cultural & national origins.

• Mental and physical capabilities.

• Must integrate the diversity that exists in their communities and in their external

customers into their workforces.

• Learn about and understand their employees’ differences.

• Find ways for themselves, their employees, and their organizations to utilize and

celebrate these differences.

The Need to Cope with Global Changes

• Technological advances can lead to breakthroughs that save money and increase

productivity. This will require managers to learn new skills.

• Economic changes require managers to revisit their plans and make adjustments

in a variety of areas.

• Natural disasters can affect medical costs, interest rates, insurance premiums, and

employee availability. Companies must act immediately and decisively while

adjusting goals.

• Social & political changes to rethink practices adjust spending priorities and

implement new training programs.

The Three Levels of Management

Management Hierarchy:

1). Top Management

• The Chief Executive Officer and his/her immediate subordinates, usually

vice-presidents.

• Responsible to oversee the entire organization.

• Creates alliances and partnerships with outsiders.

• Establish long term strategic goals and oversees middle managers.

2) Middle Management

• Below top management and above the supervisory level.

• Translate top managements long term goals into shorter term objectives.

• Should be trained to be leaders.

3) First-Line Management

• Supervisory position with non-management people.

• Most concerned with day to day execution of on going operations.

• Executes tasks that most affect customers.

Functional Managers have expertise in one specialty area.

-Marketing

 -Operations

 -Finance

 -Human resource

Management Functions

1) Planning

2) Organizing

3) Staffing

4) Leading

5) Controlling

Functions & Levels of Management

Roles – set of expectations for a manager’s behavior.

Interpersonal Roles

• Figurehead – Head of a work unit.

• Leader – Creates an environment to improve performance, reduce conflict, and

encourage individual growth.

• Liaison – Builds contacts to interact with all levels.

Informational Roles

• Monitor – Collect information to determine what is going on.

• Disseminator – Passes on some information to subordinates that would not

ordinarily be accessible to them.

• Spokesperson – Speaks for the work unit outside the work unit.

Decisional Roles

• Entrepreneur – Sharing new ideas that may improve the work unit’s operations.

• Disturbance Handler – Deals with problems that decrease productivity.

• Resource allocation – Determines who in the work unit gets what resources.

• Negotiator – Has the information and authority required to perform this task.

Management Skills and Technical Skills

• Use the processes of the specialty area a manager supervises.

Human Skills

• The ability to interact and communicate successfully with other persons.

Conceptual Skills

• The mental capacity to conceive and manipulate ideas and abstract relationships.

Management Myths & Realities

1) Managers are reflective methodical planners.

2) Managers have no regular duties to perform.

3) Manager’ jobs are scientific and systematic.

4) Good managers seek out the information they need.

5) Competition among managers is good for business.

Evaluating a Manager’s Performance

• How effectively they play the three management roles.

• Whether they posses and properly apply needed management skills.

• How effective they are in setting goals and achieving goals.

• How efficiently they use their talents and resources.

• Whether they act ethically.

• How effectively they use the diversity of their people.

• How effectively do they please their customer’s?

Reasons for Failures - %40 fail within the first 18 months.

• Being uncertain about the expectations of their bosses.

• Being unable to make tough decisions.

• Taking too long to learn the job.

• Being unable to build partnerships with subordinates and peers.

• Lacking political savvy.

Chapter 1:

Global- offices all over the world.
† Means that a company’s talent can come from anywhere
† Internet makes globalization inevitable

Knowledge Management:
-Practices aimed at discovering and harnessing an organization’s intellectual resources
-Knowledge workers

Management
† The process of working with people and resources to accomplish organizational goals.
† Planning process involves management.
† Organizing process involves management.
† Leading process involves management.
† Controlling process involves management.

Top level managers
Middle level managers
Frontline managers

Common Practices of successful executives:
-They ask “What needs to be done?” rather than “What do I want to do?”
-They write an action plan. They don’t just think, they do, based on a sound, ethical plan.
-They take responsibility for decisions.
-They focus on opportunities rather than problems.

Chapter 2 The External Environment and Organizational Culture

Materials- metal
Services- Hair cut
Equipment- scissors
Capital- Money, investments
Information- Marketing information and studies

Open systems- Organizations that affect and are affected by their environment.
Microenvironment- Fundamental factors that affect all environments.

Demographic trends:
† Growth of the labor force
† Increasing education and skill levels
† Immigration
† Increased numbers of women in the workforce
† Increasingly diverse workforce

The competitive Enviroment:

Environmental uncertainty
† Lack of information needed to understand or predict the future

Benchmarking
† The process of comparing an organization’s practices and technologies with those of other companies.

Independent Action:

Cooperative Action:

Strategic maneuvering
† An organization’s conscious efforts to change the boundaries of its task environment.

Domain selection
† Entrance to a new market or industry with an existing expertise

Diversification
† Occurs when a firm invests in a different product, business, or geographic area
Mergers
† One or more companies combine with another
Acquisitions
† One firm buys another
Divestiture
† A firm sells one or more businesses
Prospectors
† Continuously change the boundaries or their task environment by seeking new products and markets, diversifying and merging, or acquiring new enterprises
Defenders
† Stay within a stable product domain as a strategic maneuver

Competing Values Model of Culture:

Chapter 3 Managerial Decision making

Characteristics of Managerial Decisions:

Lack of Structure:
*Programmed decisions
-Decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations.
*Nonprogrammed decisions
-New, novel, complex decisions having no proven answers

Comparisons of Types of Decisions:

Conflict- tension not always an argument.

The stages of Decision making:

(The Top red should be: Identifying and diagnosing the problem.)

Making the Choice:

*Satisficing
-Choosing an option that is acceptable, although not necessarily the best or perfect
*Optimizing
-Achieving the best possible balance among several goals

Implementing the Decision:
1.Determine how things will look when the decision is fully operational.
2.Chronologically order the steps necessary to achieve a fully operational decision.
3.List the resources and activities required to implement each step.
4.Estimate the time needed for each step.
5.Assign responsibility for each step to specific individuals.

Implementing the Decision continued:

-What problems could this action cause?
-What can we do to prevent the problems?
-What unintended benefits or opportunities could arise?
-How can we make sure they happen?
-How can we be ready to act when the opportunities come?

Barriers to Decision making:

Pros and Cons of using Group decsion making:
Managing Gruop Decsion making:

Constuctive Conflict:

*Cognitive conflict
-Issue-based differences in perspectives or judgments.
*Affective conflict
-Emotional disagreement directed toward other people.

*Devil’s advocate

-A person who has the job of criticizing ideas to ensure that their downsides are fully explored

*Dialectic
-A structured debate comparing two conflicting courses of action.

Brainstorming:

*Brainstorming
-A process in which group members generate as many ideas about a problem as they can; criticism is withheld until all ideas have been proposed.

Chapter 4 Planning and Strategic Management

Planning and Strategic Management:

*Situational analysis
-A process planners use, within time and resource constraints, to gather, interpret, and summarize all information relevant to the planning issue under consideration.

Alternative Goals and Plans:

*Plans
-The actions or means managers intend to use to achieve organizational goals.

*Contingency plans
-sets of actions to be taken when a company’s initial plans have not worked well or if events in the external environment require a sudden change.

Strategic Planning:

1.Where will we be active?
2.How will we get there?
3.How will we win in the marketplace?
4.How fast will we move and in what sequence will we make changes?
5.How will we obtain financial returns

Strategy Map:

Strategic Planning:
*Strategic management
-A process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies.

Strategic Management Process:

Internal Resource Analysis:

Analysis of Internal Strength and Weaknesses:

*Benchmarking
-process of assessing how well one company’s basic functions and skills compare with those of another company or set of companies.
-goal of benchmarking is to thoroughly understand the “best practices” of other firms and to undertake actions to achieve both better performance and lower costs.

SWOT analysis and Strategy Formulation:

*SWOT analysis
-A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.

Summary of Corporate Strategies:

Strategy Implementation:
1.Define strategic risks
2.Assess organization capabilities
3.Develop an implementation agenda
4.Create an implementation plan


BCG Matrix:

Chapter 5 Ethics and Corporate Responsibilities

*Ethics
-The system of rules that governs the ordering of values.

Caux Principles:

*Kyosei
-Living and working together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competition.

*Human dignity
-Concerns the value of each person as an end, not a means to the fulfillment of others’ purposes.

Ethical Systems:
*Egoism
-Ethical system defining acceptable behavior as that which maximizes consequences for the individual.
*Utilitarianism
-An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers.

*Relativism
-Philosophy that bases ethical behavior on the opinions and behaviors of relevant other people.
*Virtue ethics
-Classification of people based on their level of moral judgment.

*Kohlberg’s model of cognitive moral development
-Perspective that what is moral comes from what a mature person with “good” moral character would deem right.

The Ethics Enviroment:

*Sarbanes-Oxley Act
-An act passed into law by Congress in 2002 to establish strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence.

The Danger signs:
1.Excessive emphasis on short-term revenues over longer-term considerations.
2.Failure to establish a written code of ethics.
3.A desire for simple, “quick fix” solutions to ethical problems.
4.An unwillingness to take an ethical stand that may impose financial costs.

5.Consideration of ethics solely as a legal issue or a public relations tool.
6.Lack of clear procedures for handling ethical problems.
7.Responding to the demands of shareholders at the expense of other constituencies.

A process for Ethical decision making:

Ethical Decsion Making:
*Moral awareness
-Realizing the issue has ethical implications.
*Moral judgment
-Knowing what actions are morally defensible.
*Moral character
-The strength and persistence to act in accordance with your ethics despite the challenges.
The Business Costs of Ethical Failure:

Pyramid of Global Corporate SocialResponsibility and Performance:

*Ecocentric Management
-Goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders.
*Life-cycle analysis (LCA)
-A process of analyzing all inputs and outputs, though the entire “cradle-to-grave” life of a product, to determine total environmental impact

Chapter 6 International Management

*The Global Enviroment:


-Other developing countries and regions represent important areas for economic growth.
-The global economy is dominated by countries in three regions: North America, Western Europe, and Asia.

The Global Economy:

*European Unification:
-Europe is integrating economically to form the biggest market in the world.
-Certain structural issues within Europe need to be corrected for the EU to function effectively.

*U.S. Trading Partners Based on Total Imports and Exports:

*Consequences of a Global Economy:
-Expansion of international trade.
-Foreign direct investment (FDI) is playing an ever-increasing role in the global economy.
-Imports are penetrating deeper into the world’s largest economies.
-Companies are finding their home markets under attack from foreign competitors.

*Things to Consider for Off-shoring:
-What is the competitive advantage of the products they offer?
-Is the business in its early stages?
-Can production savings be achieved locally?
-Can the entire supply chain be improved?

*Organizational Models:

Comparison of Entry Mode:


Managing Across Borders:
 *Expatriates
-Parent-company nationals who are sent to work at a foreign subsidiary.

Identifying International Executives:

How to prevent failing on a global assignment:

 Understanding Cultural Issues:
*Ethnocentrism
-The tendency to judge others by the standards of one’s group or culture, which are seen as superior.
*Culture shock
-The disorientation and stress associated with being in a foreign environment.
*Power distance.
-The extent to which a society accepts the fact that power in organizations is distributed unequally.
*Individualism/collectivism
-The extent to which people act on their own or as a part of a group.
*Uncertainty avoidance
-The extent to which people in a society feel threatened by uncertain and ambiguous situations.
*Masculinity/femininity
-The extent to which a society values quantity of life over quality of life.

Chapter 7 Entrepreneurship

†Entrepreneurship:

§The pursuit of lucrative opportunities by enterprising individuals.

Who is The Entrepreneur?

The entrepreneur:

 
 

The Idea: 

†A great product, a viable market, and good timing are essential ingredients in any recipe for success.

What it takes personally:

1.Commitment and determination

2.Leadership

3.Opportunity obsession

4.Tolerance of risk, ambiguity, and uncertainty

5.Creativity, self-reliance, and ability to adapt

6.Motivation to excel

Entrepreneurial Strategy Matrix:

 

Management Challenges:

†-You might not enjoy it

†-Survival is difficult

†-Growth creates new challenges

†-It’s hard to delegate

†-Misuse of funds

†-Poor controls

-Mortality

†

*Business incubators

-Protected environments for new, small businesses.

Chances of Success:

*Opportunity analysis

-A description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, specification of activities and resources needed to translate your idea into a viable business, and your source(s) of capital.

Oppourtunity:

Outline of a business plan:

 Key Factors:

-The people

-The opportunity

-The competition

-The context

-Risk and reward

Non-capital Resources:

-Legitimacy

-Networks

-Top-Management Teams

-Advisory Boards

-Partners

Entrepreneurial orientation:
-The tendency of an organization to identify and capitalize successfully on opportunities to
 launch new ventures by entering new or established markets with new or existing good or
 services

Chapter 8 Organization Structure