Why study management theory?

1. Guides management decision

-Comes out of Practice
Assumption
Relationships
2. Provides a stable focus for understanding what we
experience
-We get ideas about organizations and the people
-1908 Henry Ford- Apostle of mass production
- First model took 121/2 hours
- 12 Years later in 1920 - one per minute
-In 1925 Model T was rolling off one every 5
seconds
Henry Ford born in 1863 grew in Michigan when he died
in 1945 he was worth $600 million.
3. Theories makes us challenge
- to keep learning
4. Theories area sources of ideas
- Alfred Sloan vs Henry Ford

5. Coherent Group of assumption put forth to explain the

relationship between two or more observable facts and
to provide a sound basis for predicting future events.
Evolution of management theory

Three established school

Scientific
- Classical
Organizational

- Behavioral

- Management science school

Historically not replaced - layered
- supplemented

Frederick TAYLOR- [1856-1915]

1. Development of a true science of management to
identify the best way
2. Scientific selection of workers
3. Scientific education and development
4. Initiate friendly cooperation
between management and workers
Contribution
“ Production” miracle
Use for fast food industry to training of surgeons
Use rational approach to solve

Problem Solving – balanced – no emotions

Limitations
Human being are assumed rational, motivated.

Productivity to profitability
Labour
exploitation
Customers
 Henri Fayol[1841-1925]
• Disprove managers were/are born and
they are made
• Divide business operations functionally:
3. Technical
4. Commercial
5. Financial
6. Security
7. Accounting
8. Management
 14 Principles
1. Division of Labour-
Specialise
2. Authority- Right to give
orders
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of
individual goal to
common
7. Remuneration
8. Centralization:Retain
Central Authority
9. Hierarchy- Neat box
10. Orderliness: materials
and people at the right
place
11.Equity- Fair, firm,
friendly
12. Stability of staff
13. Initiative- freedom
conceive & carry out
14. Esprit-de-corps
 Bureaucracy Max Weber
(1864-1920)

• A bureaucratic managerial style

• Rationally thought out
• Emphasize technical competence for
evaluation
• Good for large organisations, Ford
benefited, GM, GE, Xerox trusted it
 Main characteristics are

• Rules and regulations

• Impersonality
• Division of labor
• Hierarchical structure
• Life long career
• Rationality
Believes in authority – charisma
sound’s legal

• Compliance based
- ideal for governments
- inflexible
inhibits productivity
 Behavioural school

Organisation is people
Classical school – ‘people side’ neglected
Use sociology psychology and related fields
to purpose more effective ways to manage
people.
 Hawthorne Experiments
1. Sympathetic supervision reinforced
motivation – Employee works harder if
they believed that management was
concerned about their welfare and special
attention was paid
2. The social environment of employees
have a positive influence on productivity
• Work is dull
• Coworkers influence
• Shared antagonism
• Peer pressure, group pressure has a stronger
influence

From HR to Behavioral Sciences

What motivates people?

Maslow’s Theory: Douglas McGregor
• Physiological Needs • Theory X- Work is
• Safety Needs distasteful, Motivate by
• Social Needs force, money, Power,
Praise- Stick
• Esteem Needs
• Theory Y- Public is
• Self-Actualization
inherently motivated to
do good work - Carrot
 Scientific system approach
Organization as a limited purposeful system composed of
inter related parts.
Neo Human relations
From a rational man
- motivated by fear
understand they are emotional, intuitive,
creative
We all like to think ourselves as winners
Shared values : Peters & Robert Waterman
Eight attributes of excellence
 A bias for ACTION
 Close to the customer
 Autonomy and entrepreneurship
 Productivity through people
 Hands on value driven
 Stick to the knitting
 Simple form, lean staff
 Simultaneous loose tight properties
If treated well
- enhanced responsiveness
- respond to opportunities
Not replacement parts like a machine part in a
corporate machine.
- continuous retraining – automate
increased flexibility
Labors concern for job security
- eg. Lucas TVS
 Mc KINSEY 7 -S F RAME WO RK
Structure

Strategy Systems

Shared
Values

Skills Style

Staff
 SYSTEMS APPROACH
• Organization considered as unified
purposeful system composed of interrelated
parts.
- Activity of one affects the others
- meshed – integrated – coordinated
made up of subsystem
- those that make up the whole
system.
Each subsystem works independently.
 SYNERGY

• Whole is greater than the sum of its parts as

separate departments cooperate and interact,
they become more productivity than if they
each were to WORK in ISOLATION.
Open system
Interacts with environment
- automobile plant

CLOSED SYSTEM – Does not

A prison or church
 External Environment
INPUT OUTPUT
HUMAN • GOODS
CAPITAL • SERVICES
LAND Process • OTHERS
BLDG transformation
EQUIPMENT
Technology
Information Feedback
Managers plays dominant role
- in inputs
- in transformation process
- uses feedback continual to improve inputs/
transformation

University system vs fast food joint

High Performance
- Japanese management idea
- TQM
- Re engineering
- Bench marking
- Learning Organisation
 Management Defined
Process of working with and through others to
achieve organizational objectives in a changing
environment.

Derailed
• Problem with interpersonal
• Failure to meet business objectives
• Failure to build & lead a team.
• Inability to change and adapt during a transition
 Effectiveness and efficiency

• Do right things
• Do things right
• Choose right goals
• Limited Resources
• Concentrate resources are underutilized or
and efforts on them wasted.
• The job gets done
but…..
 Balanced emphasis
The job gets Limited resources
done and are not
………. wasted
Key Aspects
Getting the most
of limited resources

Achieving
organizational
Working with &
objectives Balance
effectiveness
through others
efficiency
Management Process
- Planning
- decision making
- organising
- staffing
-communicating
- motivating
- leading
-controlling
Managerial Roles: ten roles
 Figurehead ceremonial.
 Leader
 The liason role;
communicating particularly with external,
horizontal and vertical
 Informational Role (securing information
above the operation

 The disseminator
- to subordinates
 The Spokesperson role
- external
 Decision role
 The entrepreneur role
 The disturbance handler
 The resource allocator
 The negotiator
- dealing with others.
Claimants
Employees Inputs
Consumers
Suppliers Human
Government Capital
Shareholders Managerial
Community Technological

Scientific
Role of manager Basis of Management Orgn. theory
-Interpersonal Theory Systems theory
-Informational Bureaucratic
-Decision Contingency
Planning

Organising
 Staffing
Motivation

Actuating Leadership

Communication

Controlling
Products
Services
Outputs Profits
Satisfaction
Goal integration
Management Levels
First line – supervisors
Middle Managers – responsible for other
managers operating
employees

Top Managers
Overall management
Skills
Technical/procedural Conceptual

Human skills Human

Conceptual Technical
Company’s Mission
the … - specific purpose
1.Clear usually from the start becomes hazy over a period of
time
- need clarity when business grows

2. Unclear at the start- emerges as you learn

3.Mission becomes irrelevant

 Being aware of opportunity
In light of :
The market, competition
What customers want ?
Our strengths
Our weaknesses

Setting objectives or goals where we want to be

And what we want to accomplish and when ?
 Considering planning premises
In what environment – internal or external
Will our plans operate?

Identifying Alternatives
What are the most promising alternatives to
accomplishing our objectives?
 Comparing Alternatives
In Light of Goals Sought
which alternatives will give us the best
chance of meeting our goals at the lowest cost
and highest profit

Choosing an Alternative
Selecting the course of action we will pursue
 Formulating supporting plans to
buy equipments
buy materials
hire and train workers
develop a new product

Numberizing plans by making budgets

develop such budgets as:
-volume and price of sales
-operating expenses
-expenditure for capital equipment
Peter Drucker
1. What business are you in?

2. Who is our customer?

3. What value is delivered to the customer?

4. What business are we going to the in?

10. What business ought we be in?

The building blocks
- history of the organisation

values and policies

- current preferences of management-who pilot
e.g.……Nagar – Alcohol
- Environment considerations
- Resources
- distinctive competence
Mission statement reflects the – corporate philosophy
- identify
- character and
- image

It should feasible
precise –clear
motivating – distinctive
and strategic
ONGC: to stimulate, continue and
accelerate efforts to develop and maximise
contribution of the energy sector to the
economy of the country

INDAL: to be most innovative, diversified

aluminum company.

Bank of Madura: a vibrant bank

committed to excellence in performance
through customer satisfaction.
BARC – to attain self sufficiency in Atomic
energy programme
We are energy business
We are in baby business
We are in the business of cool clean an

ACC: to strive to maintain leadership in the

cement industry
 Four Steps in Planning
Step 1
Establish a goal or set of goals
Step 2
Define the present situation how far are we from the
present goals
What are the resources available for reaching the goals

Step 3
Identify the aids and barriers to the goals
Step 4
Develop a plan or set of actions for reaching goals
The Hierarchy of Plans

MISSION STATEMENT

STRATEGIC PLANS

Operational Plans
Commitment principle

- materials
- capital equipment
- recruitment engineering
- new product development
- plant
- production facilities
- financing