An Introduction toManagement 1- What is the management? Management is a set of activities including (planning and decision making, organizing, leading, and controlling) directed at an organization's resources (human, financial, physical, and information) with the aim of achieving organizational goals in an efficient and effective manner. Efficient:using resources wisely and in a cost-effective way. Effective:making the right decision and successfully implementing them. Management levels: Organizations have three basic levels of management: (top management, middle management, and operational management) Managers although can be differentiate by levels: (top managers, middle managers, first line managers) and differentiate by area include (marketing, financial, operations, human resources) Figure (1.1) Top managers Middle managers First line managers Marketing finance operations human resources others 2- The management process Management involves four basic activities ---- planning and decision making, organizing, leading, and controlling. Although there is a basic logic for describing these activities in this sequence. Most managers engage in more than one activity at a time often move back and forth between the activities in unpredictable ways. Planning: setting an organization's goals and deciding how best to achieve them. Decision making: part of the planning process that involves selecting course of action from a set of alternatives. Organizing: determining how activities and resources are to be grouped. Leading: the set of processes used to get members of the organization to work together to advance the interests of the organization. Controlling: monitoring the organization's progress toward its goals. Figure 1.2 The management process Planning and decision making Setting the origination's goals and deciding how best to achieve them Organizing Determining how best to group activities and resources Controlling Leading Monitoring and correcting ongoing activities to facilitate goal attainment Motivating members of the organization to work in the best interests of the organization 3- Kind of activities in business Basic managerial activities including planning and decision making, organizing, leading, and controlling. Managers engage in these activities to combine human, financial, physical, and information resources efficiently and effectively and to work towards achieving the goals of the organization. Figure 1.3 the managerial activities Inputs from the environment Human resources Financial resources Physical resources Information resources Inputs Planning and decision making Organizing Goals attained Controlling Leading Outputs Efficiently Effectively 4- The essential nature of planning Planning: setting an organization's goals and deciding how best to achieve them. The planning process is the first basic managerial function that organization must address. With an understanding of the environmental contexts, managers develop several different types of goals and plans. Decision making is the underlying framework of all planning because every step of the planning process involves a decision. Figure 1.4the planning process ''The environmental context '' The organization's mission Purpose premises values directions Strategic goals Strategic plans Tactical goals Tactical plans Operational goals Operational plans With this understanding of the control process, managers must establish the organization's mission. Mission: a statement of an organizational purpose. This mission outlines the organization's purpose, premises, values, and directions. Flowing from the mission are parallel streams of goals and plans: Strategic goals: a goal set by and for top management of the organization. They focus on broad and general issues. Strategic plans: A general plan outlining decision of resource allocation, priorities, and action steps necessary to reach strategic goals. It's set by board of directors and by top management. Tactical goals: a goal set by and for middle managers of the organization. They focus on how to take a necessary action to achieve the strategic goals. Tactical plans: A plan aimed at achieving tactical goals and developed to implement specific parts of strategic plans. Operational goals: a goal set by and for lower managers of the organization. They focus on short-term issues associate with the tactical goals. Operational plans: A plan that focuses on carrying out tactical plans to achieve operational goals. The Control System and Process in Organization Control:The regulation of organizational activities so that some targeted element of performance remains within acceptable limits. The purpose of control: Control provides an organization with ways to: 1) adapt to environmental change. 2) Limit the accumulation of error. 3) Cope with organizational complexity. Minimize costs. Figure 2.1 the purpose of control Adapt to environmental change Limit the accumulation of error Control Cope with organizational complexity Minimize cost 4) The purpose of control 1- Adapt to environmental changes: -Between the times a goal is established and the time it's reached, many events could be happened. -A properly designed control systems can result in organizational performance to be in accepted levels. 1- Limit the accumulation of errors: -Small mistakes and errors do not often inflict serious damage to the organizations. But, overtime, small errors may accumulate and become very serious. 2- Cope with organizational complexity: -Managers can maintain the control systems if systems very simple and basic. In a complicated organizations designed, need sophisticated system to maintain control. 3- Minimizing cost: -When the control is practiced effectively, control can reduce cost and boots outputs. Area of control Control can focus on any area of an organization. Most organization define areas of control in terms of the four basic types of resources they use (physical, human, information, and financial) Control of physical resources includes inventory management. Control of human resources includes selection and placement, training. Control the information resources includes sales, marketing forecasting, and public relation, production schedule. Control of financial resources involves managing the organization depts. so that it does not become excessive, ensuring that the firm always has enough cash on hand. Steps in the control process 1- Establish standard: the first step in the control process. Control standard is a target against which subsequence performance will be compared. 2- Measuring performance: the second step in the control process. Performance measurement is constant ongoing activity (valid, daily, weekly) for most organization. 3- Compare performance against standard: performance may be higher than, lower than, or identical to the standard. The timbale for comparing performance to standard depends on a variety of factors, including the importance and complexity of what is being controlled. 4- Determine need for corrective action: is the final step in control process. After comparing performance against standard, one of three actions should be made ( 1- change standard, 2- correct the deviation, 3- Maintain the status quo). Figure 2.2 steps in control process Establish standard Compare performance to standards Measure performance Maintain the status quo Correct the deviation Determine need for corrective action Change standard The levels of control: Managers use control at several different levels. There are four levels of control: 1- Operations control: focus on the process of the organization. Use to transform the resources into products and services. 2- Financial resources:concern with the organization's financial resources. 3- Structure control: concerned with how elements of the organization's structure are serving their intended purpose. 4- Strategic control: focuses on how effectively the organization's corporate, business, and functional strategies are succeeding in helping the organization meet its goals. Figure 2.3 levels of control Strategic control Structural control Operations control financial control Types of operational control: 1- Preliminary control: Attempts to monitor the quality or quantity of (financial, human, material, and information) resources before they actuallybecome part of the system. 2- Screening control: relies heavily on feedback processes during the transformation process. 3- Postactioncontrol: monitors the outputs or results of the organization after the transformation process is complete. Figure 2.4 forms of operation control Feedback Inputs Transformation Outputs Preliminary control Screening control Postaction control Focus on inputs to organizational system Focus on how inputs are being transforming into outputs Focus on outputs from the organizational system Forms of control Financial control Control of financial resources as they flow into the organization.Are held by organization, and flow out of organization. Budgetary:is a plan expressed in numerical terms. Types of budgets: 1- Financial statement: sources and uses of cash, include: a- Cash-flow or cash budget: all sources of cash income and cash expenditures in monthly, weekly, or daily periods. b- Capital expenditures budget: costs of major assess such as a new plant, machinery or land. c- Balance sheet budget: forecast of all the organization's assets in the event all other are met. 2- Operation budget: planned operations in financial terms. Include: a- Sales and revenue budget: income the organization expects to receive from normal operation. b- Expense budget: anticipated expenses for the organization during the coming time period. c- Profit budget: anticipated differences between sales or revenues and expenses. 3- Nonmonetary budget: planned operations in non-financial terms. Include: a- Labor budget: hours of direct labor available fours. b- Space budget: square feet or meters of space available for various function c- Production budget: number of unites to be produced during the coming time period. Tools of financial control: 1- Financial statements: is a profit of some aspect of an organization's finical circumstance. 2- Balance sheet: lists of assets and liabilities if of the organization at specific point in time. 3- Income statement: a summary of financial performance over period of time. 4- Ratio analysis: the calculation of one or more financial ratio to assess some aspect of the organizational financial health. 5- Financial audits: are independent appraisals of an organization accounting, financial, and operational systems. Bureaucratic control: A form of organizational control characterizes by formal and mechanistic structure arrangements. Clan control: An approach to organizational control characterized by informal and organic structure arrangements. Bureaucratic control Clan control Dimension Employee Employee Goal of control compliance commitment approach Strict rules, formal Group norms, culture Degree of formality 2 Directed toward Directed towards Performance 3 minimum level of enhance performance expectation acceptable above the minimum 1 control performance Tall structure, top Flat structure, shared down influence influence Directed individual Directed at group performance performance Limited and formal Extended and format Organization design 4 Reward system 5 participation 6 Strategic control Control aimed at ensuring that the organization's is maintaining an effective alignment with its environments and moving toward achieving its strategic goals. Managing the control process Effective control, whether at the operations, financial, or strategic level successfully regulates and monitors organizational activities to use the control process. Managers must recognize the characteristics of effective control and understand how to identify and overcome occasional resistance to control. Characteristics of effective control Control systems tend to be most effective when they are integrated with planning and are when they are flexible, accurate, timely, and objective. 1- Integrated with planning: Control should be linked with planning. The more explicit and precise this linkage, the more effective the control system, the best way to integrate planning and control is to account for control as plans develop. 2- Flexibility: The control system itself must be flexible enough to accommodate change. 3- Accuracy: Managers make a surprisingly large number of decisions based on inaccurate information. In each case the result of inaccurate information is in appropriate managerial action. 4- timeliness: A time line does not necessarily mean quickness. Rather, it describes the control system that provides information as often as is necessary. In general, the more uncertain and unstable the circumstances, the more frequently measurement is needed. 5- Objectively: The control system should provide information that is as objective as possible. Resistance to control Managers may sometimes make the mistakes of assuming that the value of an effective control system it self—evident to employees. This is not always accurate. However, many employees resist control, especially if they feel over controlled, if they think control is inappropriately focused or that it rewards inefficiently, or if they are uncomfortable with accountability. 1- Over control: Organizations try to control too many things. This situation becomes especially problematic when the control directly affects employee behavior. 2- Inappropriate focus: The control system may be too narrow or it may focus too much on quantitative variables and leave no room for analysis. 3- Rewards for inefficiency: Imagine two operating departments that are approaching the end of the fissile year. 4- Too much accountability: Effective controls allow managers to determine weather or not successfully done their responsibilities. Overcoming resistance to control: Perhaps the best way to overcome resistance to control is to create effective control to begin with if control systems are properly integrated with organizational planning and if the controls are flexible, accurate, timely, and objective. The organization will be less likely to over control, to focus on in appropriate standard or to reward in efficiency. Two other ways to overcome resistance are encouraging participation and developing verification procedures. 1- Encourage employee participation: The participation can help overcome resistance to change by the same token, when employees are involved. 2- Develop verification procedures: Multiple standard and information systems provide and checks and balances in control and allow the organization to verify the accuracy of performance indicators.