MGT 053 Notes - principles of marketing PDF

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1|Page PRINCIPLES OF MANAGEMENT INTRODUCTION TO THE STUDY OF MANAGEMENT VARIOUS CONCEPTS/ MEANING OF MANAGEMENT Management is defined contrarily by different scholars based on their own perspectives. There’s no one concrete definition or meaning of management. Below are some of the meaning of management by different philosophers: According to Harold Koontz, "Management is the art of getting things done through and with people in formally organised groups."According to Henri Fayol, "To manage is to forecast and to plan, to organise, to command, to coordinate and to control." According to Peter Drucker, "Management is a multi-purpose organ that manages business and manages managers and manages workers and work." According to Mary Parker Follet, "Management is the art of getting things done through people." According to Theo Heimann, management has three different meanings, i.e 1. Management as a Noun : refers to a Group of Managers. 2. Management as a Process : refers to the Functions of Management i.e. Planning, Organising, Directing, Controlling, etc. 3. Management as a Discipline : refers to the Subject of Management. 2|Page

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Management is an individual or a group of individuals that accept responsibilities to run an organisation. They Plan, Organise, Direct and Control all the essential activities of the organisation. Management does not do the work themselves. They motivate others to do the work and co-ordinate (i.e. bring together) all the work for achieving the objectives of the organisation.A MANAGER therefore is the person who oversees the application of planning, organizing, directing and controlling. THE NATURE, MAIN CHARACTERISTICS OR FEATURES OF MANAGEMENT: 1. CONTINUOUS AND NEVER ENDING PROCESS Management is a Process. It includes four main functions, i.e. Planning, Organising, Directing and Controlling. The manager has to Plan and Organise all the activities. He had to give proper Directions to his subordinates. He also has to Control all the activities. The manager has to perform these functions continuously. Therefore, management is a continuous and never ending process. 2. GETTING THINGS DONE THROUGH PEOPLE The managers do not do the work themselves. They get the work done through the workers. The workers should not be treated like slaves. They should not be tricked, threatened or forced to do the work. A favourable work environment should be created and maintained. 3. RESULT ORIENTED SCIENCE AND ART 2|Page

Management is result oriented because it gives a lot of importance to "Results". Examples of Results like, increase in market share, increase in profits, etc. Management always wants to get the best results at all times. 3|Page 4. MULTIDISCIPLINARY IN NATURE Management has to get the work done through people. It has to manage people. This is a very difficult job because different people have different emotions, feelings, aspirations, etc. Similarly, the same person may have different emotions at different times. So, management is a very complex job. Therefore, management uses knowledge from many different subjects such as Economics, Information Technology, Psychology, Sociology, etc. Therefore, it is multidisciplinary in nature. 5. A GROUP AND NOT AN INDIVIDUAL ACTIVITY Management is not an individual activity. It is a group activity. It uses group (employees) efforts to achieve group (owners) objectives. It tries to satisfy the needs and wants of a group (consumers). Nowadays, importance is given to the team (group) and not to individuals. 6. FOLLOWS ESTABLISHED PRINCIPLES OR RULES Management follows established principles, such as division of work, discipline, unity of command, etc. These principles help to prevent and solve the problems in the organisation.

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7. AIDED BUT NOT REPLACED BY COMPUTERS Now-a-days, all managers use computers. Computers help the managers to take accurate decisions. However, computers can only help management. Computers cannot replace management. This is because management takes the final responsibility. Thus Management is aided (helped) but not replaced by computers. 4|Page 8. SITUATIONAL IN NATURE Management makes plans, policies and decisions according to the situation. It changes its style according to the situation. It uses different plans, policies, decisions and styles for different situations. The manager first studies the full present situation. Then he draws conclusions about the situation. Then he makes plans, decisions, etc., which are best for the present situation. This is called Situational Management. 9. NEED NOT BE AN OWNERSHIP In small organisations, management and ownership are one and the same. However, in large organisations, management is separate from ownership. The managers are highly qualified professionals who are hired from outside. The owners are the shareholders of the company. 10. BOTH AN ART AND SCIENCE 4|Page

Management is result-oriented. Therefore, it is an Art. Management conducts continuous research. Thus, it is also a Science. 11. MANAGEMENT IS ALL PERVASIVE Management is necessary for running a business. It is also essential for running business, educational, charitable and religious institutions. Management is a must for all activities, and therefore, it is all pervasive. 5|Page 12. MANAGEMENT IS INTANGIBLE Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realized by its results. The success or failure of management can be judged only by its results. If there is good discipline, good productivity, good profits, etc., then the management is successful and viceversa. 13. USES A PROFESSIONAL APPROACH IN WORK Managers use a professional approach for getting the work done from their subordinates. They delegate (i.e. give) authority to their subordinates. They ask their subordinates to give suggestions for improving their work. They also encourage subordinates to take the initiative. Initiative means

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to do the right thing at the right time without being guided or helped by the superior. 14. DYNAMIC IN NATURE Management is dynamic in nature. That is, management is creative and innovative. An organisation will survive and succeed only if it is dynamic. It must continuously bring in new and creative ideas, new products, new product features, new adds, new marketing techniques, etc. DIFFERENT APPROACHES TO THE STUDY OF MANAGEMENT. There are four (4) main approaches/ theories to the study of management as follows: 1) CLASSICAL APPROACH. Classical management theory was introduced in the late 19th century and grew out of Frederick Taylors turn of the century. It became widespread in the first half of the 20th century. It focusses on issues of industrial management, including specialization, efficiency, higher quality, cost 6|Page reduction and management-worker relationships. While other management theories have evolved since then, classical management approaches are still used today by many small-business owners to build their companies and to succeed. The classical approach to management (1900-1930) was the product of the first concentrated effort to develop a body of management thought. In fact,the management writers who participated in this effort are considered the pioneers of management study.The classical approach recommends that managers continually strive to increase 6|Page

organizational efficiency in order to increase production. KEY PILLARS OF CLASSICAL APPROACH OF MANAGEMENT:  Hierarchical Structure (Structure-line and staff) One of the advantages of the classical management structure is a clear organizational hierarchy with three distinct management levels. Each management group has its own objectives and responsibilities. The top management is usually the board of directors or the chief executives who are responsible for the long-term goals of the organization. Middle management oversees the supervisors, setting department goals according to the approved budget. At the lowest level are the supervisors who oversee day-to-day activities, address employee issues and provide employee training. The levels of leadership and responsibilities are clear and well defined. While the threelevel structure may not be suitable for all small businesses, it can benefit those that are expanding.  Division of Labor One of the advantages of classical management approach is the division of labor. Projects are broken down into smaller tasks that are easy to complete. Employees' responsibilities and expectations are clearly defined. This approach allows workers to narrow their field of expertise and to specialize in one area. The division of labor approach leads to increased productivity and

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higher efficiency, as workers are not expected to multitask. Small-businesses owners can benefit from taking this approach if they are looking to increase production with minimal expense.  Rules and regulations. Standard operating procedures govern all organizational activities to provide certainty and facilitate coordination.  Scalar and functional processes such as unity of command, chain of command, delegation of authority, defining responsibility and accountability  Competence. Competence, not “who you know,” should be the basis for all decisions made in hiring, job assignments, and promotions in order to foster ability and merit as the primary characteristics of a bureaucratic organization.  Records. A bureaucracy needs to maintain complete files regarding all its activities. The classical approach believes in authoritarian and autocratic managerial style. DISADVANTAGES OF CLASSICAL THEORY 1. Ignores human behaviour and human relation. 2. Absence of rapid and free channels of communication. 8|Page 8|Page

3. Discounting innovation, initiative and change. 4. Lack of flexibility and adaptability. 5. Tight control through force and coercion. 6. Absence of intrinsic rewards. 2) SCIENTIFIC APPROACH OF MANAGEMENT The founding father of scientific management theory is Frederick W. Taylor (1856-1915). He was an American inventor and engineer. Scientific management theory seeks to improve an organization's economic efficiency especially labour production by systematically improving the efficiency of task completion by utilizing scientific, engineering, and mathematical analysis. The goal is to reduce waste, increase the process and methods of production, and create a just distribution of goods. This goal serves the common interests of employers, employees, and society. Scientific Management approach is also called Taylorism. This approach can be summarized by Taylors’ four principles as follows: 1. Managers should gather information, analyse it, and reduce it to rules, laws, or mathematical formulars 2. Managers should scientifically select and train workers, 3. Managers should ensure that the techniques developed by science are used by the workers, 4. Managers should apply the work equally between workers and themselves. Where 9|Page

managers apply scientific management theories to planning, the workers perform the tasks pursuant to the plan. 3) BEHAVIORAL APPROACH Behavioral management theory was developed in response to the need to account for employee behavior and motivation. The shift moved management from a production-orientation (classical leadership theory) to a leadership style focused on the workers' human need for work-related satisfaction and good working conditions. Long before theorists started writing about employee satisfaction and good working conditions, management considered classical leadership, with its sole interest in high production and efficiency, to be the most important to an organization's success. Later, it was concern for worker satisfaction and good working conditions that formed the foundation for behavioral management theory. Behavioral management theory relies on the notion that managers will better understand the human aspect to workers and treat employees as important assets to achieve goals. Management taking a special interest in workers makes them feel like part of a special group. As time went on, thinking shifted, and management started looking at employee satisfaction and working conditions as a way to increase productivity. BENEFITS OF A MOTIVATED WORKFORCE There are numerous benefits of having motivated employees: 10 | P a g e

 Cost savings: Motivated employees will not only work faster, but they will use their creativity to recommend process improvements that can lead to millions of dollars of saving for your organization.  Increased quality: Motivated employees will produce quality products, costing you less resources for rework. 10 | P a g e  Reduced turn over: Turn-over doesn't only cost you money to replace the individuals, but it also slows down your organization's progress while replacements are being trained.  Speed to market: Everyone wants their product or services yesterday! Actually, the day you release your new product, people will already want a newer version! Having a motivated workforce will ensure that your product release cycle is reduced minimally.  Increased product value: With motivated employees you will have a better product or service, because the staff will feel like this is their product and will want to make sure that it provides real value to the customers. They will go the extra mile to make your product stand out of from the competition!  Contributing to a better society: Motivated employees make happy people, who in turn contribute to a better society. 4) CONTINGENCY APPROACH

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The contingency approach to management finds its foundation in the contingency theory of leadership effectiveness developed by management psychologist Fred Fielder. A contingency approach to management is based on the theory that management effectiveness is contingent, or dependent, upon the interplay between the application of management behaviors and specific situations. In other words, the way you manage should change depending on the circumstances. The contingency approach to management is based on the idea that there is no one best way to manage and that to be effective, planning, organizing, leading, and controlling must be tailored to the particular circumstances faced by an organization. Managers have always asked questions such as "What is the right thing to do? Should we have a mechanistic or an organic structure? A functional or divisional structure? Wide or narrow spans of management? Tall or flat 11 | P a g e organizational structures? Simple or complex control and coordination mechanisms? Should we be centralized or decentralized? Should we use task or people oriented leadership styles? What motivational approaches and incentive programs should we use?" The contingency approach to management (also called the situational approach) assumes that there is no universal answer to such questions because organizations, people, and situations vary and change over time. Thus, the 12 | P a g e

right thing to do depends on a complex variety of critical environmental and internal contingencies (Barns, 1961). FACTORS INFLUENCING THE CONTINGENCY APPROACH OF MANAGEMENT INCLUDE:  The size of the organization  How the firm adapts itself to its environment  Differences among resources and operations activities  Assumption of managers about employees  Strategies  Technologies being used. EVOLUTION OF MANAGEMENT THOUGHT I. INTRODUCTION The systematic study of management began during the latter decades of the nineteenth century, after the industrial revolution had swept through Europe and America. With the introduction of steam power and sophisticated machinery and equipment, the industrial revolution changed the way things were produced. Large factories operated by semi-skilled or 12 | P a g e unskilled workers were replacing small shops run by craftsmen. 13 | P a g e

Owners and managers of the new factories found themselves unprepared for the challenges that accompanied the shift away from crafts production. Because they were unprepared for the social problems that occur when people work together in large groups, they began to search for new managerial techniques. II. F.W. TAYLOR AND SCIENTIFIC MANAGEMENT Frederick W. Taylor (1856 – 1915) is best know for defining the techniques of scientific management, which is the systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency. He believed that the production process could be made more efficient by using specialization and the division of labor to reduce the amount of time and effort expended by each worker to produce a unit of output. He also believed that the best way to determine the most efficient division of labor was by using scientific management techniques, rather than intuition or informal rule-of-thumb knowledge. Based on his experiments and observations, he developed the following four principles: Principle 1: Study the way workers perform their tasks, gather all the informal job knowledge possessed by workers, and experiment with ways of improving the way tasks are performed to increase efficiency. One of Taylor’s main tools was the time and motion study, which involves the careful timing and recording of the actions taken to perform a particular task.

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Principle 2: Codify the new methods of performing tasks into written work rules and standard operating procedures. Once the best method of performing a particular task was determined, it should be recorded so that the procedures could be taught to all workers performing the same task. 13 | P a g e Principle 3: Carefully select workers to ensure that they possess the skills and abilities that match the needs of the task and train them to perform the tasks according to the established rules and procedures. Principle 4: Establish a fair or acceptable level of performance for a task and then develop a pay system that provides a higher reward for performance above the acceptable level. By 1910, Taylor’s system of scientific management had become widely practiced. The most common problems associated with scientific management were: 1) Managers did not share gains in performance with workers through bonuses, and 2) The specialized, simplified jobs were monotonous and repetitive, resulting in job. ADMINISTRATIVE MANAGEMENT (MODERN OPERATIONAL MANAGEMENT (Contribution of Henri Fayol) Henri Fayol was real father of modern Management. Henri Fayol is the French industrialist in 1841-1925. He was a mining engineer. Henri Fayol spent his entire working career in French

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industry; French cool and iron combine of commentary fourchambault. Henri Fayol developed a general theory of Business Administration. Henri Fayol was concerned the principles of organization and the function of management. Fayol laid the foundation of management as a separate body of knowledge. He always insisted that if scientific forecasting and proper methods are used in management than company can get satisfactory results. According to Fayol, management was not personal talent; it is a knowledge base skill. Henri Fayol’s Administrative Management is based on six admin activities. They are1. Technical : Production and manufacture 14 | P a g e 2. Managerial : Planning, controlling, co-ordination 3. Commercial : Purchasing and selling 4. Financial : Use of capital 5. Accounting : Asset, Liabilities, cost, profits 6. Security : Protection of goods and Person FAYOL’S FOURTEEN (14) PRINCIPLES OF MANAGEMENT: Fayol derived the following fourteen principles. Division of work: Division of work means specialization. Each job and work should be divided into small task and should be assigned to specialist of it. 16 | P a g e

 Authority and responsibility: Authority means right to give order and command while responsibility means to accomplish objective.  Discipline: Discipline is required at every level in every organization. Fayol stated discipline in terms of obedience, application, and respect to superiors.  Unity of command: A subordinate should receive order from only one boss.  Unity of direction: It means that all the works of an organizati...