Modern Management Concepts & Skills PDF

Introducing Modern Management  Objectives 1.An understanding of the business environment - the external environments of business and how these environments affect the success or failure of any organization 2. An understanding of the importance of management...

Introducing Modern Management  Objectives 1.An understanding of the business environment - the external environments of business and how these environments affect the success or failure of any organization 2. An understanding of the importance of management to society and individuals 3. An understanding of the role of management – Presumes an ability to define management in several different ways and discuss the basic functions of management 4. Working definitions of managerial effectiveness and managerial efficiency 5. An understanding of basic management skills and their relative importance to managers 6. An understanding of the universality of management 7. Knowledge of skills that help managers become successful 8. Insights concerning what management careers are and how they evolve Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-2  General Observations Generally a healthy business climate also contributes directly to the quality of life and standard of living: - New technologies and business activity support production (provision of goods and services), consumption and employment - Business profits enhance the personal incomes and increased quality of life and standard of living of owners, stockholders and employees - Business taxes help to support government at all levels - Businesses tend to support charitable causes - Innovation and opportunities - Support for community leadership and programmes Copyright @ 2010 Pearson Education, 3 Inc. Publishing as Prentince Hall  Basic Business Concepts Business Versus An Industry – An organization that provides goods or services that are then sold to earn profits. A business entity can be oriented to earn profits or it can be a non-profit organization Profits – The difference between a business revenues and its expenses. The rewards owners get for risking their money and time. Consumer Choice and Demand – The freedom of consumers to choose how to satisfy their wants and needs. – The freedom of business owners to decide how to meet those wants and needs. Opportunity and Enterprise – Success in business requires spotting a promising opportunity and then developing a good Copyright @ 2010plan Pearsonfor capitalizing on it. Education, 4 Inc. Publishing as Prentince Hall  Organizational Environments All businesses— regardless of their size, location or mission— have an internal environment and also operate within a larger external environment The external environment is everything outside an organization’s boundaries that might affect it - The organizational boundary is that which separates the organization from its external environment Copyright @ 2010 Pearson Education, 5 Inc. Publishing as Prentince Hall  The External Environments of Business External Environment – Everything outside an organization’s boundaries that might affect it the domestic business environment the global business environment the technological environment the political-legal environment the sociocultural environment the economic environment Copyright @ 2010 Pearson Education, 6 Inc. Publishing as Prentince Hall  The External Environment (cont’d) Domestic Business Environment – The home based environment in which a firm conducts its operations and derives its revenues by: Seeking to be close to its customers Establishing strong relationships with its suppliers Distinguishing itself from its competitors Copyright @ 2010 Pearson Education, 7 Inc. Publishing as Prentince Hall  The External Environment (cont’d) Global Business Environment - The international forces that affect a business: The whole world has become a single interconnected and interdependent entity – trends and happenings in any one area affects others - The pace of development and construction in China affects world demand, supply and prices of selected goods such as steel and cement Economic trends, decisions taken and laws passed etc. in any one part of the world – no matter how seemingly remote can and often do affect lives in many other countries International trade agreements e.g. tariffs/duties International economic conditions e.g. monetary/fiscal policies Political unrest – disturbance/turmoil International market opportunities Suppliers Cultures Competitors Currency values Copyright @ 2010 Pearson Education, 8 Inc. Publishing as Prentince Hall The External Environment (cont’d) Technological Environment – All the ways by which firms create value for their constituents: Human knowledge Work methods e.g. safety/procedure Physical equipment Electronics and telecommunications Various business activity processing systems Copyright @ 2010 Pearson Education, 9 Inc. Publishing as Prentince Hall  The External Environment (cont’d) Political-Legal Environment – The regulatory relationship between business and the government (legal system) and its agencies that define what organizations can and can’t do: Product identification laws Local zoning requirements Advertising practices Safety and health considerations Acceptable standards of business conduct – Pro- or anti-business sentiment in government and political stability are also important considerations, especially for international firms. Copyright @ 2010 Pearson Education, 10 Inc. Publishing as Prentince Hall  The External Environment (cont’d) Sociocultural Environment – The customs, beliefs, values, practices, behaviors and demographic characteristics of the society in which an organization functions. Customer preferences and tastes vary both across and within national boundaries. Consumer preferences can vary widely within the same country. Consumer preferences and tastes change over time. – The Socio-cultural processes determine the goods and services as well as the standards of business conduct a society is likely to accept Copyright @ 2010 Pearson Education, 11 Inc. Publishing as Prentince Hall  The External Environment (cont’d) Economic Environment – The relevant conditions that exist in the economic system in which a company operates – Example: If an economy is doing well enough that most people have jobs, a growing company may find it necessary to pay higher wages and offer more benefits in order to attract workers from other companies. If many people in an economy are looking for jobs, a firm may be able to pay less and offer fewer benefits. Copyright @ 2010 Pearson Education, 12 Inc. Publishing as Prentince Hall The External Environment (cont’d) Economic System – A nation’s system for allocating among its citizens, both individuals and organizations the resources (factors of production e.g. land, labor, capital) it owns/uses in the production of goods Three (3) Economic Systems: 1. Planned economic system 2. Market economic system 3. Mixed market economic system Copyright @ 2010 Pearson Education, 13 Inc. Publishing as Prentince Hall  Types of Economic Systems – Planned Economies Planned Economy - A centralized government controls all or significant portions of production and makes all or most production and allocation decisions for the economy Economic systems and Political Ideologies - Different economic systems are supported by different political ideologies: – Communistic and socialistic communities support Planned Economies (NB – socialism exist in both planned and mixed economies). – Communism - A system Karl Marx envisioned in which individuals would contribute according to their abilities and receive benefits according to their needs. The government owns and operates all factors of production. The government assigns people to jobs and owns all businesses and controls business decisions. Few countries today pursue PURE communism or socialism and indeed even those that do are allowing for some free enterprise system Copyright @ 2010 Pearson Education, 14 Inc. Publishing as Prentince Hall  Types of Economic Systems – Market Economies Market Economy Relies on individuals to control production and allocation decisions through supply and demand Capitalism is the driving force and provides for entrepreneurship and private ownership of production and encourages entrepreneurship by offering profits as an incentive. The focus is on competing with other industry players to make a profit. Natural market forces prevail - Individuals choose where to work, what to buy, and how much to pay. Producers choose who to hire, what to produce, and how much to charge Copyright @ 2010 Pearson Education, 15 Inc. Publishing as Prentince Hall  Types of Economic Systems – Market Economies Mixed Market Economy – Features characteristics of both planned and market economies - A co-existence of the 2 extremes – Privatization: The process of converting government enterprises into privately owned companies. – Socialism: Is a partially planned system in which the government owns and operates some major industries such as banking and transportation. Smaller businesses are privately owned. Copyright @ 2010 Pearson Education, 16 Inc. Publishing as Prentince Hall  The Management Task Whatever type of economy one operates a business in there is a strong need for management The Management Task embraces: - Definition of management - Process of management (revolves around the functions of management) - Role of management - Use of organizational resources and relatedly, concepts of effectiveness and efficiency - Management skills Copyright @ 2010 Pearson Education, 17 Inc. Publishing as Prentince Hall  The Basics…The Management Task – Definition and Process of Management Management may be defined in different ways, but essentially it involves the process of reaching organizational goals by working with and through people and other organizational resources The management process is composed of the four integrally-related management functions: (1) planning, (2) organizing, (3) influencing, and (4) controlling Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-18  The Management Task The Management Task never loses sight of: – Goal Attainment – the goals set the tone for everything the managers do – The interrelated nature of the 4 functions Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-19  The Basics…The Management Task – Process of Management Management Functions & How Interrelated They Are Planning – The primary activity of defining goals and establishing strategies and tasks to achieve these goals; outlining how and when the tasks must be performed. – Planning activity focuses on setting and attaining goals. Planning is essential to getting the right things done in the short term, medium as well as long term. Organizing - Establishing the orderly use of all organizational resources. It is about arranging and structuring work to accomplish the planned organizational goals as developed during planning. Organizing creates a mechanism to put plans into action. – Organizing ensures that people within the organization are given work assignments and allocated other organizational resources so as to achieve the set goals. 20  The Basics…The Management Task – Process of Management Management Functions & How Interrelated They Are Cont’d Influencing - Is primarily concerned with people within organizations. Working with and through people to accomplish goals. Influencing guides the activities of organization members in appropriate directions. An appropriate direction is any direction that helps the organization accomplish its goals. Primary ‘influencing’ activities include motivating, leading, communicating, encouraging innovation and creativity, considering groups and building the corporate culture. - The ultimate goal of ‘influencing’ is to increase productivity Controlling – The systematic effort to track and compare actual performance with planned goals and standards. Variances are identified and appropriate corrective actions taken. May also involve possible modifications to existing plans, organizational structure, or the motivation system used to develop more successful effort - Monitoring, comparing and correcting work. 1-21  The Management Task Classic and Common Mistakes Made By Managers Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-23  The Basics…The Management Task – Who Are Managers? Manager – Someone who coordinates and oversees the work of other people so that organizational goals can be accomplished. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-24  Where Do Managers Work? Organization - A deliberate arrangement of people assembled to accomplish some specific purpose (that individuals independently could not accomplish alone). Common Characteristics of Organizations – Have a distinct purpose (goal) – Are composed of people – Have a deliberate structure Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-25 Characteristics of An Organization Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-26  The Basics…The Management Task – Classifying The Levels of Management First-line Managers - Individuals who manage the work of non-managerial employees. Middle Managers - Individuals who focus on implementation of strategic plans set by top management and manage the work of first-line managers. Top Managers - Individuals who are responsible for making organization-wide decisions and establishing plans and goals that affect the entire organization. 1-27 The Levels of Management Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-28  Importance of Managers Managers influence all phases of modern organizations Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-29  The Basics…The Management Task – The Role of Management It is the Role of Management: 1. To guide organizations toward goal accomplishment 2. To combine and use resources for attainment of organizational purpose 1-30  The Management Task – Management & Organizational Resources Organizational Resources: 1. Human - the physical and mental capabilities of people as they contribute to economic production 2. Monetary – Money used to purchase goods and services 3. Raw materials – ingredients used directly in the transformation process – extended to include natural resources, office and production facilities, parts and supplies 4. Capital – Machines and equipment needed to create and operate a business enterprise Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-31 The Management Task – Management & Organizational Resources Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-32 Management & Organizational Resources – Managerial Effectiveness – Managerial Efficiency Efficiency Effectiveness – “Doing things right” – “Doing the right – Getting the most things” output for the least – Attaining inputs organizational goals Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-33 Effectiveness and Efficiency in Management Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-34  The Management Task Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-35  Universality of Management Key Management principles: – Apply to all organizations The Theory of Characteristics - Henri Fayol (1841 – 1925) was a French mining engineer who developed a general theory of business administration He was one of the most influential contributors to modern concepts of management Stated all managers should possess certain characteristics such as positive physical and mental qualities and special knowledge related to the specific operation 1-36  Universality of Management B. C. Forbes - Bertie Charles Forbes (1880 – 1954) was a Scottish financial journalist and author who co- founded Forbes Magazine Emphasized the importance of certain more personal qualities enthusiasm, earnestness of purpose, confidence, and faith in their own worthiness are primary characteristics for all successful managers - Personal qualities - Enthusiasm - Earnestness of purpose - Confidence - Faith in their own worthiness 1-37 The Management Task – Management Skills Management skills – the ability to carry out the process of reaching organizational goals with and through people and other organizational resources The Classical View Versus the Contemporary View Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-38  The Management Task – Management Skills The Classical View – put forward in a formal way by Robert Katz (‘Skills of An Effective Administrator’ and ‘People: Managing Your Most Important Asset’) – wrote the most widely accepted early article about management skill. Managers' ability to perform is a result of their managerial skills. A manager with the necessary management skills will perform well and be successful, one without them will perform poorly and be unsuccessful – Three types of skills are necessary: Technical skills, human skills and conceptual skills 1-39  Classical Management Skills Technical skills – Knowledge and proficiency in a specific field Human skills – The ability to work well with other people Conceptual skills – The ability to think and conceptualize about abstract and complex situations concerning the organization Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-40 Classical Management Skills – At Different Management Levels Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-41 Classical Management Skills: The Key To Management Success Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-42  Contemporary Management Skills The 21st Century and Digital nature of our lives move us beyond just the 3 classical management skills Now link major typical managerial activities with particular skills The major typical managerial activities which managers perform: 1. Task related 2. People related 3. Change related Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-43  Contemporary Management Skills Task related activities are aimed at carrying out critical management related duties such as: – Short term planning – Clarifying objectives of jobs – Monitoring operations and performance People relative activities are aimed at managing people in organizations and include: – Support and encouragement to others – Providing recognition for achievements and contributions – Developing skills and confidence of organizational members – Consulting with others to arrive at decisions – Empowering others to determine solutions 1-44  Contemporary Management Skills Change related activities are aimed at modifying organizational components and include: – Monitoring the organization’s external environment – Proposing new strategies and vision – Encouraging innovative thinking taking risks to promote and facilitate change Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-45  Contemporary Management Skills To increase the probability of being successful, managers should have competence in: Copyright @ 2010 Pearson Education, 46 Inc. Publishing as Prentince Hall Some Additional Contemporary Management Skills …1. Managing human capital: it is essential to manage the organization’s workforce as the firm’s goals are achieved through the efforts of people …2. Managing change: this is an integral part of every manager’s job as change is unavoidable. The manager is the ultimate change agent/catalyst in the firm …3. Conflict management: a substantial portion of a manger’s time is devoted to this …4 Managing Decision-making Processes: while everyone in the organization makes decisions, decision making is particularly important for the manager. …5. Consulting: checking with people before making decision that affect them, encouraging participation in decision making and using the ideas and suggestions of others …6. Supporting: acting considerate, showing sympathy and support when someone is upset or anxious and providing encouragement and support when there is a difficult, stressful task …7. Managing Strategy and Innovation: innovation is essential to organizational success in a dynamic marketplace …8. Managing Logistics and Technology: innovation technology has had a tremendous impact on the business world. Logistics management is also vital (logistics speak to the flow of resources between the point of origin and the point of destination …9. Communication: the process of sharing information with other individuals; considered a fundamental managerial skill. Managers accomplish much of their primary ‘influencing’ activities by interaction with org. members by communicating with them 1-47  Management Careers A Career - the sequence of work-related positions over a person’s working life. Career Stages, Life Stages, and Performance – Exploration Stage – Establishment Stage – Maintenance Stage - Career plateauing – Decline Stage Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-48  Management Careers Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-49  Management Careers Promoting Your Own Career: – Tactics – Development of career path – Proactively viewing one’s self as a business to develop – Working for others who can help in your development Special Career Issues – Women Managers – Dual-Career Couples – both heads of households pursue careers same time to maintain a family life together How Dual-Career Couples Cope Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-50  Gender Salary Gap Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-51  Management Careers Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-52  Weekly class presentation Homework – present on the following: Henri Fayol Bertie Charles Forbes Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 1-53