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CH.1 MANAGEMENT: SCIENCE, THEORY AND PRACTICE! Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.

As managers, people carry out the managerial functions of planning, organising, staffing, leading and controlling.! -The aim of all managers is the same: to create surplus. -Managing is concerned with productivity, which implies effectiveness and efficiency. DECISION MAKING -> decide with the aim that output(revenue) are higher than input(cost) 1)Rationality 2)Intuition(Instinct/emotion) 3)Chance The base to make decision is Rationality. If I think by intuition that a product can help human needs, I should face my intuition with datas in order to decide with rationality. HIDDEN TRAPS OF DECISION MAKING Habits can become traps, if you follow habits you can arrive to be far from the rationality. For this reason a lot of organisation change the CEO in order to find new ideas and direction in moment of crisis. -Anchoring trap-> leads us to give disproportionate weight to the first information we receive. -Framing trap-> occurs when we misstate(esporre inesattamente) a problem, undermining(compromettendo) the entire decision making process. -Status Quo trap-> keep us toward maintaining the current situation even when better alternatives exist. (When your work position is not what you expected, but you rest in that position because you don’t take the responsibility to change because there is an uncertainty in changing). -The Confirming-Evidence Trap-> Decision makers sometimes prefer to take into account evidence confirming their instinct, rather than evidence that doesn’t, because they have already taken their decision at an unconscious level. BOUNDED RATIONALITY(H.Simon, Administrative behaviour 1947) The capacity of human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behaviour in the real world or even for a reasonable approximation to such objective rationality. -A manager must settle for limited or bounded rationality. In other words, limitations of information, time and certainty limit rationality, even if a manager tries to be completely rational. Since managers cannot be completely rational in practice, they sometimes allow their dislike of risk to interfere with the desire to reach the best solution under the circumstances. H.Simon called this “satisfying”, picking a course of action that is satisfactory or good enough under the circumstances. THE EVOLUTION OF MANAGEMENT TOUGHT -Frederick Taylor (Scientific Management) -Max Weber (Theory of Bureaucracy) -Henry Fayol (Modern Management Theory) -Chester Barnard (The Functions of the executive) -Herber Simone (Administrative Behaviour)!

HERBERT SIMON(key concepts) Prescriptive, Descriptive (normative) models (Hierarchy Structure)! Governance Level -> owner/shareholder, mains function is Strategy Planning -> they decide the strategy to follow, a long term goal. -> Where I am now? What I am now? -> Where and What I want to be in long term? -> Normally a long term is about 5 years, in hyper competition, especially high tech about 3 years.

G

Management Level -> Manager should achieve the goal, main function is Implementing Strategy -> How can I reach the goal?

G M

Suppose that CEO decide a strategy to reach the 10% more of the market share cars. The manager can have some solutions such as: we can reduce the cost of production to add value, we can produce more cars and increase the value, we can sell the cars to higher cost. At this point the CEO says, “ok!Give me the more reasonable solution!”

Goal (Strategy Planning)

G

How? (Implementing Strategy)

M O A u t h o r I t y

Operations -> the biggest part of the firms, the employees I n f l u e n c e

It’s hard for a start-up to have this structure at the start, on average there is an owner that merge in governance and management level decision. The problem is money, at the start the firms are limited in funding. The need to hire managers came later, when the firm start to grow and it need management with the main functions: Planning ->How to implement the strategy? Organising -> Understanding what’s structure is more appropriate. Staffing -> How many human resource needs? Leading -> Guiding the structure to work for the goal, inspire people to do that! Leading means have followers, no command other people.

Coordination(key word of a manager) -> The good manager coordinate

-We are satisfiers, not maximisers The total level of uncertainty is not totally avoidable, try to maximise your possibility, physiologically you can’t be perfect. -We discount the future We can’t see the future, but we can try to move it in our way. -Problem Solving Every decision to be taken can be seen as a problem to be solved “Problem solving”. Problem Logic(not always negative) X0 (The current state of something) —> X1 (The future state desired) The transformation represent the area where all the rational series of problem solving to move from X0 to X1. Manager in doing problem solving should put apart the emotion and he should use rationality, collecting datas and analysis. -We use heuristic Newell and Simone(1972) seminally conceived heuristics as those cognitive shortcuts(i.e. rules of thumb) that our mind is lead to adapt for supporting its decision making process, especially in situations of information asymmetry and time scarcity. The “availability heuristic” (Tversky and Kahneman, 1973) refers to those circuitnces in which a decision maker, “ex ante”, evaluates the probabilities that an event will occur mainly on the basis of how much his/her brain has recorded in terms of recent happening of that event. The “representativeness heuristic” (Nisbett and Ross, 1980) refers to those circumstances in which a decision maker instinctively judges someone or something that he/she counters for the first time mainly on the basis of the similarities with particular stereotypes that her/his mind has already developed before. TAYLOR’S PRINCIPLES OF SCIENTIFIC MANAGEMENTS 1)Replacing rules of thumb(general rules) with science(organised knowledge). 2)Obtaining harmony, rather than discord in group action. 3)Working for maximum output, rather than restricted output. 1)Ford applied for the first time the Taylor theory coming market leader for 50 years, introducing the mass production(producing how much you can). A(How many resources?How much cost?)+B(Mass Production)+C(Special Management)+D(Which people have to delivery it?) 2)Objective is to find a harmony in the group action, Taylor said that the worker is like a machine, he should act to achieve the maximise of the process, huge controversy on this point. MAX WEBER’S THEORY OF BUREAUCRACY 1)Rules everywhere. 2)Defined and standardised procedures(routines). 3)Hierarchy everywhere. A+B+C+D=E -> an equal amount of process low cost -> the goal is to maximise the standardisation High bureaucracy —> high performance This thought crate the behaviour like a machine that go against the human being.

FAYOL, FATHER OF MODERN MANAGEMENT THEORY 1)Authority and responsibility: Fayol suggests that authority and responsibility are related, with the latter arising from the former(precedente). He sees authority as a combination of official factors, deriving from the manager’s position and personal factors, “compounded of intelligence, experience, moral worth, past service etc…” 2)Unity of command: Employees should receive orders from superior only. 3)Scalar Chain: Fayol thinks of this as a “chain of superiors” from the highest to the lowest ranks. 4)Esprit De Corps(Group of spirit): This is the principle that “in union there is strength”, as well as an extension of the principles of unity of command, emphasising the need for teamwork and the importance of communication in obtaining it. CHESTER BARNARD Key words: -Leadership -Cooperation logic(no competitive logic) -Organised equilibrium(the mother of all equilibrium of the firms) The main manager function is coordination incremented being a leader. INCENTIVES —> (acknowledgment of productivity) —>How the productivity can be increase? -Pay -Career progress -Productivity -Skill flexibility -Good social environment -Stock option: Pay the manager with a percentage on the growth of the stocks. Understand all this in advance is better. THE SYSTEM APPROACH TO THE MANAGER PROCESS An organisation depends on its external environment, it is a part of larger systems, such as the industry to which it belongs, the economic system, and society. Thus, the enterprise receive inputs, transforms them and exports the outputs to the environment. BASIC MODEL!

! !

Reenergising the! System

Transformation ! Process ! External Environment

INPUTS AND CLAIMANTS (STAKEHOLDERS) The inputs from the external environment may include people, capital, managerial skills. In addition, various claimants make demand on the enterprise. For example, employee want higher pay, more benefits and job security, consumer demand safe and reliable products at reasonable prices. Suppliers want assurance that their products will be bought; stockholder want not only a high return on their investment but also security for their money; Governments depend on taxes paid by the enterprise, but they also expect the enterprise to comply with their laws. Many of these claims are incongruent, and it is the management’s job to integrate the legitimate objectives of the claimants. OUTPUTS It is the task of managers to utilise inputs to the enterprise to transform them through the managerial functions, with due consideration for external environment, into outputs(products, services, profits, satisfaction and integration of the goals of various claimants to the enterprise). THE COMMUNICATION SYSTEM Communication is essential to all phases of the managerial process for 2 main reasons: 1)It integrates the managerial function, the objectives set in planning are communicated, communication is essential in the selection, appraisal and training of managers to fill the roles in this structure; similarly, effective leadership and the creation of an environment conducive to motivation depend on communication. 2)The second purpose of the communication is to link the enterprise with its external environment, where many of the claimants are. It is through the communication system that the needs of customer are identified. EXTERNAL VARIABLE Effective managers will regularly scan the external environment. They don’t have the power to change the external environment, but they should respond to it. REENERGISING THE SYSTEM In the systems model of the management process, some of the outputs become inputs again. -The satisfaction and new knowledge or skills of employees become important human inputs. -Profits, the surplus of income over costs, are reinvested in cash and capital goods, such as machinery, equipment, buildings and inventory.

THE MANAGERIAL FUNCTION -Planning It involves selecting missions and objectives as well as the actions to achieve them, it requires decision making, choosing future course of action among alternatives. -Organising Establishing an intentional structure of roles for people to fill in an organisation. All the task necessary to accomplish goals are assigned and assigned to people who can do them best. The purpose is to help create environment to human performance. -Staffing It involves filling and, keeping filled, the position in the organisation structure. It is done by identifying workforce requirements, inventorying the people available and recruiting, selecting, placing, promoting, appraising, planning the careers of, compensating and training candidates or current jobholders so that tasks are accomplished effectively and efficiently. -Leading It is influencing people so that they will contribute to organisational group goals, it has to do predominantly with the interpersonal aspect of managing. Leadership implies follower ship and people tend to follow those who offer means of satisfying their own needs, wishes, and desires, it is understandable that leading involves motivation, leadership style and approaches and communication. -Controlling It Is measuring and correcting individual and organisational performance to ensure that events conform to plans. Planning precede controlling, but plans are not self-achieving; plans guide managers in the use of resources to accomplish specific goals; then activities are checked to determine whether they conform to the plans. COORDINATION, THE ESSENCE OF MANAGERSHIP It is consider the essence of management, for achieving harmony among individuals efforts toward the accomplishment of group goals. Each of the managerial function is an exercise contributing to coordination. MANAGERIAL PERSPECTIVES THE INTERNATIONAL PERSPECTIVE Managers must develop their knowledge, attitude and skills necessary to operate in the international environment requiring an understanding of the political, social, cultural and technological forces that affect management. They need to understand not only the forces in the developed countries, but also in emerging and developing countries. THE INNOVATIVE PERSPECTIVE Innovation is creating more effective and efficient processes, products, services by using creative ideas and solutions to solve problems, finding opportunities and enriching people’s lives. It is one of the most important elements in improving governments and businesses. It often means the difference between success and failure; it is important for enterprise and societies. THE LEADERSHIP PERSPECTIVE Leadership is influence, that is, the art of process of influencing people so that they will strive willingly and enthusiastically toward the achievement of group goals.

CH.2 MANAGEMENT AND SOCIETY: THE EXTERNAL ENVIRONMENT

ECONOMIC

TECHNOLOGICAL ! !

SOCIAL

ORGANISATION

ECOLOGICAL

POLITICAL AND ! LEGAL

ETHICAL

TECHNOLOGICAL AND INNOVATIVE ENVIRONMENTS Technologic refers to the sum total of the knowledge we have of ways of doing things. Its main influence is on ways of doing things, or how we design, produce, distribute and sell goods and services. INVENTION-> is finding new products, processes or ideas or combining them INNOVATION->is the commercialisation of new products, services, processes or ideas. A firm to be successful, the innovation should be continuous. Product Innovation-> can like apple that started with the computer, continued with iPod, the IPhone and the iPad. Service Innovation-> such as apple’s iTunes. Process Innovation-> produce high quality products effectively and efficiently. Incremental Innovation-> is the use of existing knowledge to make changes or continuous improvements of existing products or services. Disruptive/Breakthrough Innovation->are new and radical and can use new methods, material, products or services THE ECOLOGICAL ENVIRONMENT By ecology we mean the relationship of people and other living things with their environment, such as soil, water and air. Land, water and air pollution is of great concern to all people. A variety of legislation has been passed dealing with solid waste, water and air pollution. Managers must be aware of these laws and must incorporate ecological concerns into their decision-making. THE SOCIAL RESPONSIBILITY OF MANAGERS Today the social involvement of business is increased, the social responsibility received a major impetus with the book “Social Responsibility of the Businessman” by H.R.Bowen(1953), who suggested that business should consider the social implications of their decisions Corporate Social Responsibility->is the serious consideration of the impact of the company’s action on society. Social Responsiveness->is the ability of a corporation to release its operations and policies to the social environment in ways that are mutually beneficial to the company and to society.

ETHICS IN MANAGING The ethics is the discipline dealing with what is good and bad and with moral duty and obligation. Business Ethics-> is conceived with a systemic study of morals, truth and justice. In organisation, managers compete for information, influence and resources; the potential conflict is easy and the question of which criteria should guide ethical behaviour becomes acute. There are 3 basic types of ethical theories developed: Utilitarian Theory-> suggests that plans and actions should be evaluated by their consequences. The main idea should be that plans or action should produce the greatest good for the greatest number of people. Theory Based on Rights->all people have the right to freedom of conscience, free speech etc… Theory of Justice->the decision makers must be guided by fairness and equity. Managers have the responsibility to create an organisational environment that foster ethical decision making. T.Purcell and J.Weber suggest that this can be achieve in 3 ways: 1)By establishing an appropriate company policy or a code of ethics. 2)By using a formally appointed ethics committee. 3)By teaching ethics in management development programs. Most importantly managers must set a good example of behaviour and practices. Simply stating a code of ethics is not enough, an establishment of a committee is considered essential for institutionalising ethical behaviour. The function of a committee may include: 1)Holding regular meeting to discuss ethical issues. 2)Dealing with “grey areas”. 3)Communicating the code to all members of the organisation. 4)Checking for possible violations of the code. 5)Enforcing the code. 6)Rewarding compliance and punishing violations. 7)Reviewing and updating the code. 8)Reporting activities of the committee to the board of directors. WHISTLE-BLOWING-> Making known to outside agencies unethical company practices. Can be an employee who refuses to engage in and/or reports illegal or wrongful activities of his employer. THE PERSONALITY FACTOR

1.Lower age -> more risk 2.high finance background-> diversification-> a lot of products, more diversified, is call corporation 6.When tenure is low, he/she can see all objectively and there is possibility to have higher result. On other hand, he/she can spend time to understand the environment.

SHIFT TO DYNAMISM STRATEGY -Merge and Acquisition. -Flattuating Performance. Narcissism CEO bring strategic dynamism, he/she doesn’t bring superior performance. Narcissism is considered a personality factor, it consist in: 1) belief in one’s superior ability. 2) an intense, continuous need for affirmation and qualifying.!

MAIN PSYCOLOGICAL VARIABLES/INSTRUMENTS 1.LOC(Locus of Control) Internal vs. External control -Internal Control -> trust in individual’s own capacity to influence and control events. They are the most relevant responsible for what happens in their life, their future depends by their-self. -External Control -> the mindset is that I am the actor of my future, but there are many factor outside in the external environment that contribute. 2.NEED FOR ACHIEVEMENT Need for personal accomplishment through own efforts. I feel comfortable with myself only when I have tasks to reach. 3.MYERS-BRIGGS TYPE INDICATOR(MBTI) Personality theory of comprising 4 dichotomies: a)Extraversion vs. Introversion: -Extraversion-> tend to be manifested in outgoing, talkative, energetic behaviour. -Introversion-> is manifested in more reserved and solitary behaviour. b)Sensation vs. Intuition: The way how the data arrive to you, the way how you approach the situation from outside. c)Thinking vs Feeling: -Thinking->more weight on objectives principles and impersonal facts. -Feeling->more weight on personal concerns and the people involved. d)Judgment vs Perception: Depends on your life in human groups. The way how you perceive the person around you.

4.FIVE-FACTOR PERSONALITY MODEL(“BIG5”) Personality theory comprising 5 dimensions: -Openness to Experience-> reflects the degree of intellectual curiosity, creativity and a preference for novelty and variety. -Conscientiousness(Wisdom)->...