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Principles of Management

Module 1 : Concepts of Management


Definition of Management Management Science or Art, Difference between Management and Administration, Management thoughts by Management Gurus, Functions of Management, Types of Business Organization,

Business Ethics and Social Responsibility: Concept,


Shift to Ethics, Tools of Ethics.
By : Monarch Anantkumar Joshi Asst. Prof. ; Indu Management Institute, Vadodara

Definition of Management
Koontz & ODonnel: Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.
Koontz : Management is art of getting things through and with people in formally organized groups. Peter Drucker : Management is multipurpose organ that manages a business, manages a manager and manages a worker and work.

Henry Fayol : To manage is to forecast, to plan, to organize, to command, to coordinate, and to control.
Frederick Taylor : Management is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Nature of management
1. 2. 3. 4. 5. 6. Multidisciplinary Dynamic nature of principles Relative not Absolute principles Management is both Science & Art Management as Profession Universality of Management

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Purpose of management
1. 2. 3. 4. 5. 6. Effective Utilization of Resources Development of Resources To Incorporate Innovations Growth & Expansion of Organization Integrating various Interest Groups Stability in the Society

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Features of Management
1. 2. 3. 4. 5. Organized Activity Existence of Objectives Relationship among resources Working with & through people Decision Making

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Management as Profession
1.Body of Knowledge

2.Development and updating the knowledge


3.Professional Journals 4.Professional Associations 5.Code of Conduct 6.Specialized Educational Qualification

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Management science or art


Management is Art : Management is Science :
Existence of Systematized Body of Existence of Theoretical Knowledge. Knowledge. Use of Scientific Methods of Personalized Application. Observation. Involves Practice & Creativity. Principles Based on Experiments. Universal validity of Principles.

Management is science & art


Koontz & ODonnell : Managing as practice is an art; the organized knowledge underlying the practice may be referred to as a science.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

management & Administration


In 1923 Oliver Sheldon raised conflict between the two terms in his book - The Philosophy of
Management

Three approaches emerged due to different views: 1. Administration is above Management. 2. Administration is part of Management . 3. Management and Administration is same.

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Difference between management & Administration


Basis of Difference 1. Level of Management Administration Top Level Management Middle & Lower Level

2. Major Focus 3. Nature of functions


4. Scope of functions 5. Factors affecting decisions 6. Employer Employee Relation 7. Qualities Required

Policy formulation and objective determination Determinative


Broad and conceptual External Entrepreneurs & Owners Administrative

Policy execution for objective achievement Executive


Narrow and Operational Internal Employee Technical

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Management thoughts by management gurus


Classification of Management Approach 1. Scientific Management Major Contributors Frederick W. Taylor Henry Gantt Franck & Lillian Gilbreth Henry Fayol Max Weber Elton Mayo Maslow Herzberg McGregor Likert Chester Bernard Russel L. Ackoff F. W. Lanchester Thomas A. Edision Churchman West Paul Hersey Vilfredo Pareto Herbert A Simon Mickensy William Ochi

A. Classical Approach
2. Administrative Management 3. Bureaucratic Management 1. Human Relation Approach 2. Behavioral Science Approach B. Behavioral Approach.

1. Quantitative Approach

2. System Approach C. Modern Approach. 3. Contingency Theory 4. Social System Approach 5. Decision Theory Approach 6. 7S Framework 7. Theory Z

Taylor's Principles of Scientific Management


1. Replacing rules of thumb with science (organized knowledge)
2. Obtaining harmony in group action, rather than discord 3. Achieving cooperation of human beings, rather than chaotic individualism 4. Working for maximum output, rather than restricted output 5.Developing all workers to the fullest extent possible for their own and their company's highest prosperity

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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14 principles by Henry Fayol


French industrialist Henry Fayol (1841-1925),a prominent European management theorist, developed a general theory of management. 14 principles are as follow..
1.Division of work: Work specialization results in improving efficiency of operations. 2.Authority and responsibility: Authority and responsibility are two side of a coins. when a manager exercise authority, he should be held responsible go for getting the work done in the desired manner. 3.Discipline: It is vital for running organization smoothly. 4.Unity of command: Each employee should receive orders or instructions from one superior only.

5.Unity of direction: Activities should be organized in such a way that they all come under one plan and are supervised by only one person.
6.Subordination of the individual interest to the general interest: Individual interest should not take precedence over the goals of the organization. 7.Remuneration: The compensation paid to employee should be fair and based on factors like business conditions, cost of living, productivity of employees and the ability of the firm to pay.

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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8. Centralization: Depending on the situation, an organization should adopt a centralized or decentralized approach to make optimum use of its personnel. 9. Scalar chain: This refers to the chain of authority that extends from the top to the bottom of an organization. 10 Order: This refers to follows order. Either they may be social or material. 11. Equity: All employees should be treated fairly. A manager should treat all employees in the same manner without prejudge. 12. Stability of tenure of personnel: A highly labor turnover should be prevented and manager should motivate their employees to do a better job. 13. Initiative: Employees should be encouraged to give suggestion and develop new and better work practices. 14. Esprit de crops: This means a sense of union. There should have harmony and coordination between all.

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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MAX WEBER theory of Bureaucracy


Bureaucracy can be considered to be a particular case of rationalization, or rationalization applied to human organization.
Bureaucratic coordination of human action, Weber believed, is the distinctive mark of modern social structures. In order to study these organizations, both historically and in contemporary society, Weber developed the characteristics of an idealtype bureaucracy:

Hierarchy of authority
Impersonality Written rules of conduct Promotion based on achievement Specialized division of labor Efficiency
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Human Relation Approach:


Hawthorne studies consist of four interrelated experiment.

1.

Illumination Experiment Relay Room Experiments Bank Wiring Observation Room Experiment Interview Program

Behavioral science approach


Contribution of Maslow Basic physiological needs Safety & Security needs

Social needs
Ego needs Self actualization 2. Contribution of Herzberg Motivational Factors Hygiene Factors Contribution of McGregor Theory x & Theory y
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

3.

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Managerial Skills and the Organizational Hierarchy

The four skills required of administrators: Technical skills Human skills Conceptual & Design skills

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Functions of management
The five managerial functions around which managerial knowledge are organized: planning, organizing, staffing, leading, controlling. Planning involves selecting missions and objectives and the actions to achieve them, which requires decision making.
Organizing involves establishing an intentional structure of roles for people to fill in an organization.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Staffing involves filling, and keeping filled, the positions in the organization structure. Leading is influencing people so that they will contribute to organization and group goals. Controlling is measuring and correcting individual and organizational performance to ensure that events conform to plans.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Time Spent in Carrying Out Managerial Functions

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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The Systems Model of Management and Organization

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Roles of Managers (10) : by Mintzberg


Figurehead
INTERPERSONAL Performs ceremonial and symbolic duties such as greeting visitors, signing legal documents. Direct and motivate subordinates, training, counseling & communicating with subordinates. Maintain information links both inside and outside organization; use mail, phone calls, meetings. Seek & receive information, scan periodicals and reports, maintain personal contacts. Forward information to other organization members; send memos and reports, make phone calls. Transmit information to outsiders through speeches, reports, memos. Initiate improvement projects, identify new ideas, delegate idea responsibility to others. Take corrective action during disputes or crises, resolve conflicts among subordinates; adapt to environmental crises. Decide who gets resources, scheduling, budgeting, setting priorities. Represent department during negotiation of union contracts, sales, purchases, budgets; represent departmental interests.
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Leader Liaison Recipient

INFORMATIONAL

Disseminator
Spokesperson

Entrepreneur Disturbance Handler Resource Allocator Negotiator

DECISIONAL

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Types of business organization


Organization is a group of people working together to create a surplus / profit, satisfaction of needs, and achievement of goals viz. organizational as well as individual. ] Types of Organization 1. Proprietorship 2. Partnership 3. Joint Stock a) Private Ltd. b) Public Ltd. 4. Cooperative / Society / Trusts
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Concept of Business ethics & social responsibility


Ethics is the discipline dealing with what is good and bad and with moral duty and obligation. Business ethics is concerned with truth and justice.

Corporate social responsibility is seriously considering the impact of the company's actions on society.
Social responsiveness is "the ability of a corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and to society.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Areas of social responsibilities


Ecological & environmental quality Consumption Community need Government relation Minorities and backward communities Labor relations Share holders relations Corporate philanthropy

Interest Groups
Shareholders Workers Customers Creditors & Suppliers Government Society
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Arguments for social responsibilities


Business is part of Society. Avoidance of Government Regulations. Long run Self Interest of Business (Improves Public Image). Traditional Values. Better and supportive environment for business.

Arguments against social responsibilities


Against basic function of business (Profit Maximization). Domination of Business Values compared to Social Values. Inefficiency in Organizational System. Social Responsibility execution cost. Lack of broad support from all the groups of society.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Shift to ethics or Difference between SR & Ethics

Ethics 1. Provides guidelines for human behavior in every field. 2. Implications are wider. 3. Concerned with micro aspect 4. Related to daily operational decisions with limited social impact.

Social Responsibility 1. Works in organizational context. 2. Implications are narrow. 3. Concerned with macro aspects 4. Related to decisions with broad implications for a large segment of society.

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Theories of Ethics
1. The utilitarian theory suggests that plans and actions should be evaluated by their consequences. 2. The theory based on rights holds that all people have basic rights. 3. The theory of justice demands that decision makers be guided by fairness and equity, as well as impartiality.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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Institutionalizing ethics
1.By establishing an appropriate company policy or code of ethics. 2.By using a formally appointed ethics committee. 3.By teaching ethics in MDPs.

Factors to raise ethical standards


1) Public disclosure and publicity. 2) Increased concern of a well-informed public. 3) Teaching of ethics and values in higher education institutions.
Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

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1. VALUES : Values are set of emotional rules people follow to help make the right decision in life. 2. RIGHTS : Claims that entitles a person to take a particular action. 3. DUTIES : Obligation to take specific steps or obey the law. 4. MORAL RULES : Rules for behavior that often become internalized as moral values. 5. HUMAN Relationship : Web of relationship. 6. COMMON MORALITY : The body of moral rules governing ordinary ethical problem. BASIC PRINCIPLES OF COMMON MORALITY A. Promise Keeping B. Non - malevolence C. Mutual Aid D. Respect For Persons E. Respect For Property 7. MORALITY OF CARE : Common morality - the morality of rules and justice. TWO STRANDS OF MORAL THEORY A. Justice Perspective B. Care Perspective

Tools of ethics

Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara

Whistle-blowing
Whistle-blowing is making known to outside agencies what are considered unethical company practices.

References & Suggested Readings


1. 2. 3. 4. 5. Management - A Global and Entrepreneurial Perspective by Weihrich Heinz & Koontz Harold Principles of Management by Koontz Fundamentals of Management : Essential Concepts and Applications by Robbins S.P. & Decenzo David A Management by Stoner, Freeman & Gilbert Jr. Principles & Practice of Management by L. M. Prasad.

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Developed BY : Monarch A Joshi, Asst Prof, Indu Management Institute, Vadodara