FOUNDATIONS OF MANAGEMENT
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EFFECTIVE - to be able to achieve organizational goals
EFFECIENT – to be able to achieve goals with minimal waste of resources
MANAGING IN THE NEW COMPETITIVE LANDSCAPE
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Globalization means that a company’s talent can come from anywhere. Companies that want to
grow often need to tap international markets, where incomes are rising and demand is
increasing.
Technology both complicates things and creates new opportunities. Technological change is an
ability that is both a convenience and a potential source of stress.
Knowledge management is the set of practices aimed at discovering and harnessing an
organization’s intellectual resources.
Collaboration across boundaries is one of the most important processes of knowledge
management to ensure that people in different parts of the organization collaborate effectively
with one another.
FUNCTION OF MANAGEMENT
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PLANNING- the management function of systematically making decisions about the goals and
activities that an individual, a group, a work unit, or the overall organization will pursue.
- The basic steps in planning process are the following:
Step 1: Situational analysis- planners should gather, interpret, summarize all information
relevant to the planning issue in question.
Step 2: Alternative goals and plans- the planning process should generate alternative goals that
may be pursued in the future and the alternative plans that may be used to achieve those goals.
Step 3: Goal and plan evaluation- managers will evaluate the advantages, disadvantages, and
potential effects of each alternative goal and plan. They must prioritize those goals and even
eliminate some of them.
Step 4: Goal and plan selection- once managers have assessed the various goals and plans, they
will select the one that is most appropriate and feasible.
Step 5: Implementation- once managers have selected the goals and the plans, they must
implement the plans designed to achieve the goals.
Step 6: Monitor and control- without this step, you would never know whether your plan is
succeeding.
- The levels of planning
a. Strategic planning involves making decisions about the organization’s long-term goals and
strategies.
b. Tactical planning translates broad strategic goals and plans into specific goals and plans that
are relevant to a definite portion of the organization. Tactical plans focus on the major
actions a unit must take to fulfil its part of the strategic plan.
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c. Operational planning identifies the specific procedures and processes required at lower
levels of the organization. These three levels of planning must e aligned- that is, they must
be consistent, mutually supportive, and focused on achieving the common purpose and
direction.
ORGANIZING- the management function of assembling and coordinating human, financial,
physical, informational, and other resources needed to achieve goals.
- The manager operates by organizing activities which include attracting people to the
organization, specifying job responsibilities, grouping jobs into work units, marshalling and
allocating resources, and creating conditions so that people and thins work together to
achieve maximum success.
- The managers will delegate effectively by using new forms of organizing and viewing people
as perhaps their most valuable resources. They will build organizations that are flexible and
adaptive particularly in response to competitive threats and customer needs.
LEADING- the management function that involves the manager’s efforts to stimulate high
performance by employees.
- To be a leader means that the leader is open to communicate with his employees,
individually and in groups and is capable of motivating them. He must be good at mobilizing
people to contribute their ideas.
- Vision is a mental image of possible and desirable future state of organization. It expresses
the leader’s ambitions for the organization. A leader can create a vision that describes high
performance aspirations, the nature of corporate or business strategy or even the kind of
workplace worth building.
CONTROLLING- the management function of monitoring performance and making needed
changes.
- Control- defined as any process that directs the activities of individuals toward the
achievement of organizational goals. It is how the effective the managers make sure that
activities are going as planned
- Budgetary control is the process of finding the out what is being done and comparing the
results with the corresponding budget data to verify accomplishments or remedy
differences. It ties together the feedforward control, concurrent control, and feedback
control depending on the point at which it is applied.
MANAGING FOR COMPETITIVE ADVANTAGE
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INNOVATION - the introduction of new goods and services.
QUALITY- excellence of your product.
SERVICE- speed and dependability with which an organization delivers what customers want.
SPEED - fast and timely execution, response and delivery of results.
COST COMPETITIVENESS- keeping costs low to achieve profits and be able to offer prices that
are attractive to consumers.
MACROENVIRONMENT – general environment includes governments, economic conditions, and other
fundamental factors that generally affect all organization.
(How does the Macro environment affect the organization?)
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LAWS AND REGULATION – the government can affect business through tax laws, economic
policies and international trade rulings.
ECONOMY – the economic environment dramatically affects managers’ ability to function
effectively and influences their strategic choices.
- Interest and inflation rates affect the availability and cost of capital, growth,
opportunities, and prices to consumer demand for products.
TECHNOLOGY – technological advances create new products, advance production techniques
and better ways of managing and communicating.
DEMOGRAPHICS – measure of various characteristics of the people who make up groups or
other social units.
SOCIAL ISSUES AND NATURAL ENVIRONMENT – how organization respond to social issues may
also affect their reputation on the market plan which in turn may help or hinder their
competitiveness.
MICROENVIRONMENT – include the organizations with which the organization directly interacts.
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- Includes rivalry among current competitors and the impact of new competitors.
COMPETITORS – organizations compete for the same customers and try to win market share at
others expense.
NEW ENTRANTS – new entrants into an industry compete with established companies.
SUBSTITUTE AND COMPLEMENTS –( substitute)a potential threat because customer use it as an
alternative, buying less of one kind of product but more of another; (complement) a potential
opportunity because customers buy more of a given product if they also demand more of the
complementary product.
SUPPLIERS – provide the resources needed for the production and those resources may come in
the form of people, raw materials and financial capital.
CUSTOMERS – customers purchase the goods or services an organization offers. Without
customers, a company won’t survive.
ENVIRONMENTAL ANALYSIS
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ENVIRONMENTAL SCANNING – searching and sorting through information about the
environment
FORECASTING – used to predict exactly how some variables will change the future.
BENCHMARKING – the process of comparing an organization’s practices and technologies with
those of other companies.
RESPONDING TO THE ENVIRONMENT
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ADAPTING TO THE ENVIRONMENT – adapt by decentralizing decision making.
INFLUENCING YOUR ENVIRONMENT – develop proactive responses aimed at changing the
environment. Two general types are independent action and cooperative action.
CHANGING THE ENVIRONMENT YOU ARE IN – making a conscious effort to change the
boundaries of its competitive environment.
CHARACTERISTICS OF MANAGERIAL DECISIONS
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LACK OF STRUCTURE – usual state of affairs in managerial decision making.
o Programmed decisions – decisions encountered and made before, having objectively
correct answers, and solvable by using simple rules, policies or numerical computations.
o Nonprogrammed decisions – new, novel, complex decisions having no proven answers.
UNCERTAINTY AND RISK
o Uncertainty – the state that exists when decision makers have insufficient information.
o Risk – the state that exists when the probability of success is less than 100 percent and
losses may occur.
CONFLICT- opposing pressures from different sources, occurring on the level of psychological
conflict or of conflict between individuals or groups.
STAGES OF DECISION MAKING
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Identifying and diagnosing the problem
-recognizing that a problem or opportunities exist
Generating alternative solutions
-making links problem diagnosis to the developments of alternative courses of action aimed at
solving the problem.
o Ready-made solutions – ideas that have been seen or tried before.
o Custom- made solutions – new, creative solutions designed specifically for the problem.
Evaluating alternatives
-making involves determining the value or adequacy of the alternatives that were generated
o Contingency plans – alternative courses of action that can be implemented based on
how the future unfolds.
Making the choice
-choosing the best alternatives after considering the possible consequences of your options
o Maximizing – a decision realizing the best possible outcome
o Satisficing – choosing an option that is acceptable, although not necessarily the best or
perfect.
o Optimizing – achieving the best possible balance among several goals
Implementing the decision
-it is very useful to take a little extra time to identify potential problems and identify potential
opportunities associated with implementation
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Evaluating the decision
-it involves collecting information on how well the decision is working
BARRIERS TO EFFECTIVE DECISION MAKING
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Psychological Biases- people have biases that interfere with objective rationality
a. illusion of control- a belief that one can influence events even when one has no control over
what will happen
b. framing effects- refer to how problems or decision alternatives are phrased or presented and
how these subjective influences can override objectives facts.
Time pressures- speed become more important than content in which they failed to consider
multiple alternatives, used little information and didn’t fully acknowledge competing views and
didn’t consult outside advisers
Social Realities- in slow moving firms, interpersonal factors decrease the decision making
effectiveness. Even the manager acting alone is accountable to the boss and others and must
consider the preferences and reactions of many people.
DECISION MAKING IN GROUPS
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Advantages:
o Larger pool of information.
-more information is available when several people are making the decision
o More perspective and approaches.
-the problem may be new to one group member but familiar to another
o Intellectual stimulation.
-It can get people thinking and unleash their creativity to a far greater extent than would
be possible with individual decision making.
o People understand the decision.
-people who participate in a group discussion are more likely to understand why the
decision was made
o People are committed to the decision.
-buying into the proposed solution translates into high motivation to ensure that it is
executed well
Disadvantages:
o One person dominates
-individual dominance has two disadvantages. First, the dominant person does not
necessarily have the most valid opinions and may even have the most unsound ideas.
Second, even if that person preference leads to a good decision, convening as a group
will have been waste of everyone else’s time
o Satisficing- this include criticizing members who want to continue exploring a new and
better alternatives
o Groupthink- occurs when people choose not to disagree or raise objections because
they don’t want to break up a positive up a positive team spirit.
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Goal displacement- a condition that occurs when a decision-making group loses sight of
its original goal and a new, less important goal emerges
EFFECTIVE GROUP DECISION MAKING
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LEADERSHIP STYLE – the leader of a decision-making body must attempt to minimize processrelated problems.
o Avoid domination
o Encourage input
o Avoid groupthink and satisficing
o Remember goals
CONSTRUCTIVE CONFLICT- total and consistent agreement among group members can be
destructive which it can lead to groupthink, uncreative solutions, and waste of the knowledge
and diverse viewpoints that individuals bring to the group.
o Air legitimate differences
o Stay task-related
o Be impersonal
o Play devil’s advocate
2 Structured Process to generate conflict
1. Devil’s advocate- has the job of criticizing ideas, requiring people to point out problems can
lessen inhibitions about disagreeing and make the conflict less personal and emotional
2. Dialectic- goes a step beyond devil’s advocacy by requiring a structured debate between
two conflicting courses of action
CREATIVITY – ready-made solutions to a problem can be inadequate or unavailable. In such
cases, custom-made solutions are necessary, so the group must be creative in generating ideas
o Brainstorming- a common technique used to elicit ideas which allows group members
generate as many ideas about the problem as they can be.
o Avoid criticizing
o Exhaust ideas
o Combine ideas