Introduction to Business

Management
Unit 2: Modern Approaches to
Management
 Learning Objectives
• Define what management is.
• Review the evolution of management thoughts and practices.
• Describe the four basic management functions: planning, organizing,
leading and motivating, and controlling.
• Distinguish among the various kinds of managers in terms of both level
and area of management.
• Identify the key management skills of successful managers.
• Explain the different types of leadership.
• Discuss the steps in the managerial decision-making process.
• Describe how organizations benefit from total quality management

Introduction to Business Management 2

 What Is Management?
• The process of coordinating people and other resources to
achieve the goals of an organization
– Material resources
• The tangible physical resources an organization uses

– Human resources
• The people who staff an organization and use the other resources to
achieve the goals of the organization

– Financial resources
• The funds an organization uses to meet its obligations to investors and
creditors

– Information resources
• The information about external business environmental conditions that
a firm uses to itsIntroduction
competitive advantage
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The Four Main Resources
of Management

Managers coordinate an organization’s resources to

achieve the goals of the organization.

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 Approaches To
Management Thoughts

• Classical approach
• Behavioural approach
• Integrative Perspective

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 Classical Approach
The classical approach comprises of two subgroups:
• Scientific Management
• General Administrative Theory

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 SCIENTIFIC MANAGEMENT

• Frederick Taylor’s findings became the basis for Scientific

management principles.
• The book titled ‘’ outlined his philosophy. The Principles
of Scientific Management

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 SCIENTIFIC MANAGEMENT
PRINCIPLES
• Develop a scientific approach for each step of an
individual’s work
• Scientifically select, train and develop the employee
• Cooperate with employees to make sure that the work
activities are carried out in accordance with the standards
set.
• Divide the work and responsibility between workers and
managers

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 SCIENTIFIC MANAGEMENT
PRINCIPLES (CONT.)
• Frederick Taylor was concerned about improving
efficiency through well defined principles.
• Offering more money for being efficient is one way to
improve productivity
• Taylor also argued that managers must introduce other
major changes as well, along with incentive payment.
• He emphasised workers’ training.

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 SCIENTIFIC MANAGEMENT
PRINCIPLES (CONT.)
• Scientific Management led to improvement in production
efficiency through time and motion studies.
– Matching the right person for the right job is another
major contribution of the theory.
– Scientific Management also emphasized the need to
seek out ‘one best way’ to get a job completed.
– Managers were able to achieve a greater level of
uniformity and standardization at the production line.
– Scientific Management encouraged division of labour
(work specialization).
– Wage incentive became the basis to motivate employees.
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 SCIENTIFIC MANAGEMENT
PRINCIPLES (CONT.)

• Some argued that scientific management reduced the role

of workers to that of a ‘cog in the machine of production’.

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 GENERAL ADMINISTRATIVE
THEORY
• Henri Fayol, a French national trained as mining engineer,
identified 14 principles of management.
• It offers guidelines to manage complex large organisation.

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Introduction to Business Management 13
BUREAUCRACY

Max Weber, 1864-1920

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BEHAVIOURAL APPROACH
THE HAWTHORNE STUDIES

• The Hawthorne studies was conducted between 1924 to 1934

at the Western Electric Company Works in Illinois.
• The engineers wanted to know the effect of illumination levels
on productivity. They set up a control group and an
experimental group.
• The employees in the experimental group were exposed to
different lighting intensity. The control group continued to
work under normal condition without any variations. The work
outputs of both the groups were monitored.

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THE HAWTHORNE STUDIES

• The engineers found that the output for both the

groups increased. When the engineers decreased the
lighting intensity for the experimental group, the
output continued to increase.
• Only when the light level was reduced to low
intensity did the productivity drop. But, they
recognized the fact that there is no connection
between the light intensity and productivity
experienced in both the groups.

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THE HAWTHORNE STUDIES
(CONT.)

• In 1927, Elton Mayo, a Harvard Business School

Professor, was asked to join in the experiment. For the
next 5 years, Elton Mayo and his associates
experimented by redesigning the jobs, duration of the
work day/hours, introduction of rest periods and group
versus individual wage plans.
• One of Elton Mayo’s experiments indicated that it is
group pressure and group norms which affect the work
behaviour and performance standards of an individual.
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 INTEGRATIVE APPROACH

• Systems theory
• Contingency theory
• Socio-technical theory

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 SYSTEMS APPROACH
• Recognizes the existence of sub-systems in an organisation
• It emphasizes the need to coordinate the work among various
sub-systems
• Managers should adopt a holistic point of view in managing
the firm
• Recognizes the importance of environment on the activities of
the organisation.

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The Organization as an Open System

2–20 Management
Introduction to Business
 CONTINGENCY THEORY

• The Contingency Approach ,also known as “Situational

Approach” , adopts a more flexible approach in managing a
given situation.
• One or more approaches/theories are used to cope with the
situation.
• Several management theories are integrated in managing the
given situation.
• Those who advocate this approach point out the presence of
diverse elements facing an organisation. They argue that in
such a situation , a single approach will not work. This theory
is based on ‘It depends’ approach.
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 Popular Contingency Variables
• Organization size
• As size increases, so do the problems of coordination.
• Routineness of task technology
• Routine technologies require organizational structures,
leadership styles, and control systems that differ from those
required by customized or non-routine technologies.
• Environmental uncertainty
• What works best in a stable and predictable environment may be
totally inappropriate in a rapidly changing and unpredictable
environment.
• Individual differences
• Individuals differ in terms of their desire for growth, autonomy,
tolerance of ambiguity, and expectations.

2–22 Management
Introduction to Business
 Socio-Technical Systems
• Socio-technical systems emphasizes the joint consideration of multiple aspects
of the system (e.g. the physical environment, work processes, organizational
structure) and increases the likelihood of interdependencies being identified.

• Workspace design has the potential to create conflict, for instance between what
is most appropriate or desirable for the staff and other stakeholders involved and
what is necessary or possible within organizational and technical constraints.

• Socio-technical theory acknowledges that design involves compromise, this can

be viewed as part of the process that establishes a balance between competing
elements of a work system.

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Basic Management Functions

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 Planning
• Planning
– Establishing organizational goals and deciding how to
accomplish them

• Mission
– A statement of the basic purpose that makes
an organization different from others

• Strategic planning
– The process of establishing an organization’s
major goals and objectives and allocating the resources to
achieve them
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 Planning (cont.)
• Establishing goals and objectives
– Goal
• An end result that an organization is expected to
achieve over a one- to ten-year period

– Objective
• A specific statement detailing what an organization
intends to accomplish over a shorter period of time

– Properly set goals are

• Set at every level in the organization
• Consistent with (supportive of) each other
• Optimized (balanced) to reduce conflicts between goals

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 Planning (cont.)
• SWOT analysis
– The identification and evaluation of a firm’s
• Strengths
• Weaknesses
• Opportunities
• Threats

• Core competencies
– Approaches and processes that a company performs
well and may give it an advantage over its competitors

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Elements and Examples of SWOT Analysis

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 Planning (cont.)
• Types of plans
– Plan
• An outline of the actions by which an organization intends to accomplish
its goals and objectives
– Strategic plan
• An organization’s broadest plan, a guide for major policy setting and
decision making
– Tactical plan
• A smaller-scale plan to implement a strategy

– Operational plan
• A plan to implement a tactical plan

– Contingency plan
• A plan of alternative courses of action if the organization’s other plans are
disrupted or become ineffective
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Types of Plans

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 Organizing the Enterprise
• Organizing
– The grouping of resources and activities to accomplish
some end result in an efficient
and effective manner
• Leading and motivating
– Leading
• Influencing people to work toward a common goal

– Motivating
• Providing reasons for people to work in the best interests of
an organization

– Directing
• The combinedIntroduction
processes of leading
to Business and motivating
Management 31
 The Control Function
• Controlling
– Evaluating and regulating ongoing activities
to ensure that goals are achieved
• Control function

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 Kinds of Managers
• Levels of management
– Top manager—guides and
controls the overall fortunes
of an organization
– Middle manager—implements
the strategy and major policies
developed by top management
– First-line manager—coordinates
and supervises the activities of
operating employees

• The coordinated effort of all three levels of managers is required to

implement the goals of any company.
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 Areas of Management Specialization
• Other areas may have to be added, depending on the nature of
the firm and the industry.

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Areas of Management Specialization
(cont.)

• Financial managers
– Responsible for an organization’s financial resources

• Operations managers
– Manage the systems that convert resources into goods
and services

• Marketing managers
– Responsible for facilitating the exchange of products between an
organization and its customers or clients

• Human resources managers

– Manage an organization’s human resources programs

• Administrative managers (general managers)

– Not associated with any specific functional area; provide overall
administrative guidance and leadership
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Key Skills of Successful Managers

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Key Skills of Successful Managers
(cont.)

• Key management skills

– Conceptual skills
• Ability to think in abstract terms

– Analytic skills
• Ability to identify problems, generate alternative
solutions, and select the best solution

– Interpersonal skills
• Ability to deal effectively with other people

– Technical skills
• Needed to accomplish a specialized activity
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Key Skills of Successful Managers
(cont.)

• Key management skills (cont.)

– Communication skills
– Ability to speak, listen, and write effectively

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 Leadership
• The ability to influence others
• Leadership versus management
• Formal leadership
– Legitimate power of position is the
basis for authority

• Informal leadership
– Not recognized formally by the
organization authority
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 Styles of Leadership
• Autocratic
– A task-oriented style. Workers are told what to do
and how to do it, and they have no say in the decision-
making process.

• Participative
– All members of a team are involved in identifying essential
goals and developing strategies to reach those goals.

• Entrepreneurial
– A personality-based style. The manager seeks to inspire
workers with a vision of what can be accomplished to
benefit all stakeholders.
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 Which Leadership Style Is Best?
• Matching style to the situation
• Effective leadership depends on
– Interaction among the employees
– Characteristics of the work situation
– The manager’s personality

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 Managerial Decision Making
• The act of choosing one alternative from
among a set of alternatives
• Major steps in the managerial
decision-making process

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 Managerial Decision Making (cont.)
• Identifying the problem or opportunity
– Problem
• The discrepancy between an actual condition and
a desired condition

– Opportunity
• A “positive” problem

– Problem-solving impediments
• Preconceptions about the problem
• Focusing on unimportant matters while overlooking significant issues
• Analyzing symptoms rather than causes
• Failing to look ahead

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 Managerial Decision Making (cont.)
• Generating alternatives
– Brainstorming
• Encouraging participants to come up with new ideas

– “Blast! then refine”

• Reevaluating objectives, modifying them if necessary, and devising a
new solution to a recurring problem

– Trial and error

• Selecting an alternative
– Satisficing
• Choosing an alternative that is not the best possible solution, but one
that adequately solves the problem
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 Managerial Decision Making (cont.)
• Implementing and evaluating the solution
– Requires time, planning, preparation of personnel, and
evaluation of the results
– An effective decision removes the difference between
the actual condition and the
desired condition
– If a problem still exists, managers may
• Decide to give the chosen alternative more time
• Adopt a different alternative
• Start the process all over again
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 Managing Total Quality
• Total Quality Management (TQM)
– The coordination of efforts directed at
• Improving customer satisfaction
• Increasing employee participation
• Strengthening supplier partnerships
• Facilitating an organizational atmosphere of
continuous quality improvement
• Benchmarking—evaluating another organization that is superior in
order to
improve quality
• Issues crucial to TQM
– Top management commitment
– Coordination of efforts
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 Summary
• Managers are the key personnel in an organization for meeting the
organization’s goals, using and deciding the four different kinds of
reseources: material, man, money and information.
• Management theories and practices evolved in the past. Three approaches
of management are classical approach, behavioural approach and
integrative approach.
• Managers differ their levels; top, middle and frontline.
• The management’s function can be counted as planning, organizing,
leading, motivating, directing and controlling. Managers are required to
possess the conceptual skill, analytical skill, interpersonal skill and
communication skill.

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 Summary (cont.)
• Managers play also the role of leaders in their organizations. There are two
types of leaders: formal and informal. The leaders differ in their style:
some use autocratic style, while the others use participative style or
entrepreneurial leadership.
• Managers are also to understand as decision-markers. The decision-making
is the most important function of managers distinguishing them from
others in the organizations.. Moreover, managers must be able to
understand the quality of their product or service and to adopt the concept,
Total Quality Management (TQM).

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